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Deloitte Survey: 2009 sees Private Equity Confidence in MENA region holding fast


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A report published today by Deloitte, the business advisory firm, highlights continued, albeit cautious, optimism for private equity (“PE”) activity in the MENA region for 2009.  The report summarizes the results of a survey carried out for Deloitte by Arbor Square Associates who interviewed senior executives of PE firms operating in the region.

 

60% of respondents said that they expect PE investment activity to increase or at least maintain existing levels in the next 12 months, with consumer, power, and healthcare expected to be the most active sectors.  The global downturn has not left the region unaffected, however, with 73% of respondents expecting a decrease in exit activity and a further 83% expecting entry multiples to decrease.

 

Chris Ward, CEO Financial Advisory Services, Deloitte Middle East, comments: “Irrespective of global challenges, MENA continues to attract investors.  In fact, 75% of respondents expect an increase in investor appetite for MENA funds as a result of the continued underlying economic growth of the region, the significant financial resources here and, as yet, the wealth of untapped opportunities in the region.   This does not mean that investors are being reckless, however, thorough due diligence will once again come to the fore and we are certainly going to see a return to traditional hands-on portfolio management.

 

“The dramatic global events of the past six months have had an impact on the region, however.  Whilst 60% of respondents noted that they expect investment activity to either increase or stay the same, 53% expect returns to decrease, reflecting reduced valuations of existing investments. PE firms are likely to hold onto their investments until multiples improve, but those with capital to deploy will be looking to pick up what they see as bargains.” 

 

 

Key facts:

 

  • In the first half of 2008 (H108) 94% of PE houses expect investment activity to increase, compared to 47% in H108;
  • In the second half of 2008 (H208) 73% of respondents expect exit activity to decrease, compared to H108, which saw just 6% of respondents expecting exit activity to decrease;
  • 83% of respondents expect entry multiples to decrease, compared with 11% in H108;
  • 60% of respondents note that development capital will remain the most popular type of transaction in 2009.

-end-

 

 

 

Note to editors

 

Deloitte spoke with 30 global private equity houses, with an estimated total of USD $46.5bn assets under management

 

In this press release references to Deloitte are references to Deloitte Corporate Finance Limited

 

About Arbor Square Associates

 

Arbor Square was formed in 2006 as an independent research-driven consultancy firm focused on the private equity industry and other alternative asset classes.  Arbor Square’s aim is to play a pivotal role in helping its clients create value.  This is achieved by working closely with clients to generate insights that help them explore new opportunities, improve existing operations and communicate more effectively.

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Contacts

Name:
Nada Haddad
Company:
Deloitte
Job Title:
ME Communications Manager
Phone:
+961(0) 1 748 444
Email
nadahaddad@deloitte.com
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Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not provide services to clients. Please see “About Deloitte” for a more detailed description of DTTL and its member firms.

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