Abraaj founder: MENA returns to skyrocket

Past private equity successes ‘will be dwarfed’ by future returns, as the MENA region adjusts to the global financial crisis, according to Arif Naqvi. The Abraaj Capital chief executive warned, however, that among key risks facing the region today is the possibility of the price of oil shooting back up to over $100 a barrel.

Private equity firms in the Middle East and North Africa are now in a position to begin to take advantage of an historic investment opportunity as the region adjusts to the global economic crisis, according to Arif Naqvi, founder and chief executive of Dubai-headquartered Abraaj Capital.

“The returns private equity in MENA has achieved in the past will be dwarfed by what the industry can achieve in the coming years,” Naqvi told more than 350 senior private equity practitioners gathered at PEI's annual Middle East Forum in Dubai.

Arif Naqvi

A growing number of private equity firms from outside the region are counting on finding such opportunity; just this week, for example, the Carlyle Group closed its maiden MENA fund with $500 million in commitments.

Naqvi, whose firm is currently raising $4 billion for its third buyout fund, was sharing the stage with Pakistan's former prime minister, Shaukat Aziz.

As discussion moved towards the future of the Middle East and North Africa region, Naqvi highlighted the hazard that an increased price of oil per barrel would encourage a degree of complacency amongst market participants.

Reminding the audience that the GCC economies could accommodate a barrel price of between $30 and $50 without moving into deficit, Naqvi showed little nostalgia for the era of “easy capital” that was part driven by a three digit oil price.
In the same discussion, an audience poll revealed that the majority were predicting a barrel price in 12 months time of $45 – notably lower than the prevailing consensus price of $75 for 2010 currently referenced by many.