Investing In An Arab Summer

Via The Financial Times, a report on MENA investment opportunities:

“Don’t be afraid of the Middle East.” That, in short, is the message of private equity investor Mustafa Abdel-Wadood at the World Economic Forum in Davos this week.

“Despite the headlines, there are a lot opportunities in the region,” Abdel-Wadood, whose Abraaj Group has $7.5bn EM assets under management, told beyondbrics. “It comes with challenges, and the perception may not always be positive, but our investments have done well.”

The Abraaj group itself doesn’t just talk the talk. In 2013, Abdel-Wadood said the Abraaj Group would continue to invest in emerging markets all over the world, with possible acquisitions in sub-Saharan Africa, the Andean region and Asia. But a region in which the former Young Global Leader is specifically eyeing investments is the troubled Middle Eastern and northern Africa.

“These are still large and growing consumer markets,” Abdel-Wadood said. “Fifty per cent of the population is below 25 and population is growing.” His vision is already reflected in the current Abraaj portfolio, with stakes in 27 companies in the region, of which five have been added in the last year.

The uncertainty surrounding countries such as Egypt, Turkey and Tunisia doesn’t worry Abdel-Wadood for the year to come. “At the end of the day, where do you want to be? In developed markets with a growth of 1 or 1.5 per cent? Or in a country where the growth rates are 5, 6 per cent?”

So the Emirates investor said he’d continue to put money into such MENA companies as Integrated Diagnostics Holding, an Egyptian group of medical laboratories bought in 2012 by Abraaj. IDH grew successfully in Jordan and other MENA markets last year, and could be heading for an IPO this year.

“We are optimistic about opportunities next year” he said. “Of course, the world has been through a challenging few years. But we’ve done more than 20 exits in the last year. That shows there’s an appetite to acquire EM companies even in the most challenging of times – contrary to what you might believe. Those exits are the ultimate validation of the business we do in EMs.”

Yet there are countries where even the most audacious EM investor is nervous, the Davos conference showed. Klaus Schwab, the founder of the WEF, called Syria a “black swan” that could threaten stability in the world. Abdul-Wadood fully agreed with that viewpoint: “I wouldn’t invest in Syria or Libya,” he said. “You need at least a minimum rule of law.”

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About This Blog
Wildcats & Black Sheep is a personal interest blog dedicated to the identification and evaluation of maverick investment opportunities arising in frontier - and, what some may consider to be, “rogue” or “black sheep” - markets around the world.

Focusing primarily on The New Seven Sisters - the largely state owned petroleum companies from the emerging world that have become key players in the oil & gas industry as identified by Carola Hoyos, Chief Energy Correspondent for The Financial Times - but spanning other nascent opportunities around the globe that may hold potential in the years ahead, Wildcats & Black Sheep is a place for the adventurous to contemplate & evaluate the emerging markets of tomorrow.