The Dubai-based private equity firm Abraaj Group plans to exit between 12 and 20 businesses a year globally, with half of them coming from the Middle East and Africa.
Abraaj, one of the largest private-equity players in the region, also plans to make an equal number of investments globally, said Mustafa Abdel-Wadood, partner and global head of Abraaj’s regional funds business.
Divestments in the Mena region are set to increase, according to the non-profit Mena Private Equity Association, as fund managers seek to exit pre-financial crisis investments. Total disclosed exits last year rose to 20 from 16 in 2013, according to the association.
Abraaj, which has about $9 billion in assets under management globally, made two exits this week alone.
The company said yesterday it sold its 49 per cent stake in Network International, a Dubai-based card payment processing company, to affiliates of New York-based investment firms Warburg Pincus and General Atlantic for an undisclosed sum.
Abraaj and the International Finance Corp (IFC), a unit of the World Bank, sold their stakes in the African insurer Saham Finances to its Moroccan parent company Saham Group, and to South Africa’s financial services firm Sanlam Group. Abraaj did not reveal the value of the transaction but Sanlam said it bought a 30 per cent stake in Saham Finances for $375 million from Abraaj and the IFC.
Most of Abraaj’s exits are trade sales, but exits as initial public offerings (IPOs) are few and far between.
“Increasingly you are starting to occasionally see financial sponsors looking to acquire stakes in our businesses,” said Mr Abdel-Wadood. “For the assets that we hold we feel that some of them can be actually strong IPO candidates but the market is challenging in general.”
Nonetheless, Abraaj in May sold 80 per cent of its stake in Egypt’s medical diagnostics company, Integrated Diagnostics Holdings, on the London Stock Exchange, valuing the company at about $670m.
Abraaj is ploughing ahead with investments after closing two funds this year – its second North Africa fund at $375m and its $990m sub-Saharan Africa fund.
“These markets have generally seen occasional volatility around currencies, and occasional political challenges, but as we move away from the day-to-day headlines there are positive trend lines,” said Mr Abdel-Wadood. “These are young and growing populations with a growing middle class, a growing consumer class.”
Disclosed investments in Mena last year rose 118 per cent to $1.5 billion as more and bigger deals were announced, with the consumer sector one of the highlights of investments, according to the Mena Private Equity Association. Total funds raised in Mena increased to $1.23bn last year from $744m a year earlier, marking the highest level of annual fundraising by value since 2008, according to the association.