Gulf investors reportedly to raise $300m for hospitality

A hospitality investment fund set up by three Arab Gulf banks plans to raise $300m by the first quarter of next year, according to reports. It has already signed agreements for six deals in the Middle East and India.

The Abu Dhabi Investment House, Bahrain’s Ithmaar Bank and Gulf Finance House are reportedly set to raise $300 million for their latest hospitality private equity fund by early next year.

According to media reports in the Middle East, the Hospitality Development Fund – which is authorised to raise up to $1 billion – will raise its minimum target level of $300 million by the first quarter of 2009.

In August, the three banks announced the formation of three new Shariah-compliant funds – InfraCapital, AgriCap and the Hospitality Development Fund – to initially raise $2.8 billion from the companies’ balance sheets and private investors, but with the ability to raise up to $10 billion in total.

The Hospitality Development Fund will focus on developing new hospitality-centric vehicles, including hotels, transport solutions and apartment complexes as well as existing hospitality companies that show “tremendous potential for growth.”

A report by Reuters said the fund had already signed six agreements for investment in real estate developments in the Middle East and India.

The banks’ other two funds include the InfraCapital fund, which will raise $1.5 billion initially and will have a pool of up to $6 billion, and the AgriCap fund, which will focus on specialist investments across food production, livestock, biomedicine, bio-fuels and agricultural technology sectors.

The InfraCapital fund will invest in power, water and transportation infrastructure needed to support large property projects across the Middle East, while the AgriCap fund will have initial capital of $1 billion and proposed authorised capital totaling $3 billion.

Over the weekend, Vision3, the investment vehicle managing AgriCap said it had signed a memorandum of understanding with the Turkish government to invest in agricultural opportunities in Turkey.

Ithmaar Bank chairman, Khalid Abdulla-Janahi, said in a statement Turkey had a “centuries-old agricultural tradition” and was home to some of the most fertile arable land in the world.  He was joined by Esam Janahi, chairman of Gulf Finance House who added: “There is no time to waste in the development of visionary agricultural projects that provide effective solutions to the shortage in regional food production.”