GCC

Very interesting article on how GCC firms are increasingly listing in UK to access international capital and a higher profile.

Link: http://gulfnews.com/business/markets/gulf-firms-eye-london-over-local-markets-for-listings-1.801989?localLinksEnabled=false%26 

M&A volumes in the GCC are expected to increase by 20% in 2011 over 2010, with Saudi Arabia set to witness the bulk of activity. This is according to a report titled “2011 Middle East M&A Barometer” released by M Communications. The survey polled 30 investment bankers across the region. Most were of the opinion that midmarket deals will continue to dominate the volumes while financial services sector is expected to see the most M&A activity owing to a need for consolidation.

Link: http://twentyfoursevennews.com/gcc/banking-finance/mergers-acquisitions/gcc-ma-expects-20-increase-in-volume-this-year-report/ 

A recent report published by Alpen Capital highlights the growing trend of PE investment in the education sector. This is corroborated by evidence from Zawya: more than $242m invested in GCC education sector across 6 deals since 2006 (with a few more undisclosed). PE has helped these companies grow organically as well as through acquisitions. I see a rising trend of PE investment in both education and healthcare in GCC during the medium term.

Link: : http://www.alpencapital.com/includes/GCC-Education-Industry-Report-September-2010.pdf

This article by Simeon Kerr on FT last week gets it absolutely right in terms of current dynamics in GCC PE. As leverage disappears from the market, PE firms are increasingly concentrating on small and mid-market companies. The most telling quote in the article is from a PE practitioner: “Before people were making money without thinking, but now it’s time to roll up our sleeves and get to work”

Link: http://www.ft.com/intl/cms/s/0/77bf387a-a558-11df-b734-00144feabdc0.html#axzz1MiltNIEH

Middle Eastern investors are likely to put far more money to work in emerging markets than in Europe, Japan or North America over the next three to five years, according to a recent article in the Financial Times.

A survey of more than 200 Gulf investors, ranging from sovereign wealth funds to advisers in retail banks, found 82 per cent planned to hold emerging market investments, while just 30 per cent wanted exposure to North America, 14 per cent to Europe and 8 per cent to Japan.

The survey found more than a third of institutional investors had a time horizon of 12 months or less and 12 per cent looked beyond five years, making the region “more short term” than most parts of the world. Saudi and Bahraini investors were found to be the most conservative, with a strong preference for local equities and a dislike of hedge funds, while those in Kuwait and the UAE favored global equities.

There is clearly growing demand for emerging market equities. This will likely impact global asset allocation as major investors seek to diversify from the West to the East.

Source: Financial Times