In a significant development, the recently formed Abu Dhabi Investment House (ADIH), announced the launch of its maiden investment product – the US$ 75 million Al-Arabi Private Equity Fund – which will allow investors to participate in the tremendous growth opportunities offered by the burgeoning private sector across the Gulf.
Promoted by a group of prominent businessmen, leading institutions and investors from the UAE, and the Gulf region, ADIH, which was formally launched earlier this month, has a mandate to focus on existing as well as emerging potential for investments in private equity, capital markets, asset management and investment placement.
Announcing the launch of the Al-Arabi Private Equity Fund in Abu Dhabi Saturday, Mr. Rashad Yusuf Janahi, member of the Founder’s Committee, and Chief Executive Officer (CEO), Abu Dhabi Investment House (ADIH), said: “The global market for private equity, which according to a recent Pricewaterhouse Cooper’s Report is valued at US$107 billion, is witnessing a rapid growth both in terms of the number of deals as well as deal size.
“In the Middle East too, the private equity market is witnessing a tremendous growth, and is expected to reach the US$ 1 billion mark by 2007 from its current level of approximately US$ 300 million.”
Mr. Janahi further said that ADIH, which will also act as the fund manager for the Al- Arabi Private Equity Fund, would primarily focus on strategic equity investments in privately held companies with strong business models and management teams, that are either going through a transitory phase or need an injection of capital to realize their full business and market potential.
“Our primary focus will be on three types of investments – Pre IPOs, strategic investments and mezzanine financing – that offer us full or effective management control. Our focus will be on working with the management of the companies that we invest in to create and execute a strong business strategy with a view to achieving rapid, sustained, and predictable profit and earnings growth.”
The investment process that the fund will follow will be based on four key pillars – a comprehensive due diligence & research exercise prior to the investment; the execution of the deal in strict compliance with the primary objectives of the fund; a multi-tiered monitoring process of the investment; and finally a viable exit and realization strategy.
“With a view to distributing the risk associated with its investments, the Al Arabi Private Equity Fund will not exceed an investment of more than 25 per cent of the committed capital o the fund,” said Mr. Janahi, adding that “the fund would be targeting an attractive Internal Rate of Return (IRR) of more than 20% over the term of the fund.”
The Fund, which will open for subscription on October 1 2005, will offer 7,400,000 (Seven million four hundred thousand) shares with a par value of US$ 10 each and will be open to both individual and institutional investors. ADIH will retain 100,000 shares of the private placement as its contribution to the Fund. The minimum investment for individual investment to the fund is US$150,000, while for institutional investors the minimum investment stands at US$250,000.
“As a local entity, ADIH is clued in to the positive economic developments taking place in the region and we are in a position to offer an array of investment options linked to the performing sectors of the regional economy through tailor-made packages. In the next several months we will be unveiling several new products that will provide investors with high-yielding, untapped productive investment avenues and enable them to reap the dividends of the economic growth of the region.”
