Abraaj closes fund II on $500m

The Middle East private equity firm has closed its new fund, ABOF II, and looks set to invest nearly 25 percent of it in the next six months.

Dubai-based private equity firm Abraaj Capital has held a final close on its second buyout fund, ABOF II, which it claims is the largest private equity fund dedicated to the Middle East.
ABOF II was officially launched at the end of May and held a first close on $300 million at the end of June. The new fund was heavily oversubscribed, according to the firm, letting it meet the original target of $500 million ahead of schedule. Expressions of interest were said to total over $850 million.

Naqvi: strong track record helped attract investors for second fund

Arif Naqvi, executive vice chairman and CEO of Abraaj Capital, said that, along with commitments from high net worth individuals and family groups, state-owned pension funds and financial institutions in the region also contributed to the fund, as well as first-time commitments from international institutional investors.
Abraaj Capital’s three other funds – Abraaj Buy Out Fund I (ABOF I), Abraaj Special Opportunities (ASOF I) and Abraaj Real Estate (AREF I) – are now fully invested. The firm said that all three funds, including ABOFI, have generated IRR of over 50% and ABOF I returned its initial invested capital back to investors within 18 months of its final close on $116 million in June 2003.
Naqvi said that the first fund’s capital was largely repaid through its first two exits – Aramex International and Oman National Investment Corporation Holding (ONIC).
The success of the first fund helped Abraaj Capital to raise what Navqi says is the largest private equity fund in the region: “We kept fund one small to make sure we could prove the model to all of its participants. We’ve been involved in private equity for the last ten years, so we know the business and our track record is now strongly recognised.”
Naqvi added that the firm is already close to completing several investments from the new fund. “Our first call of 25 percent of the fund will get invested in five transactions we are proposing to do in the next six months, deals we’ve been working on for the last year and are now in the first stages of due diligence for.”
Sameer Ansari, CEO of Dubai International Capital, a limited partner in the new fund, said in a statement: “Abraaj Capital is the only private equity firm in the region which has been able to deliver an IRR of 50% or more on all of its past investment funds during both good and bad times.”
Private equity investment within the Middle East region is set to surge in 2006 as both local and international GP groups move to deploy what is estimated to be $4bn of equity capital allocated for the region. As debt providers became increasingly active financiers of buyouts also, so estimates made at last week’s Emerging Marlets Private Equity Forum hosted by sister publication Private Equity International and EMPEA now suggest that over $10bn of  corporate assets in the Middle East could be acquired.