DUBAI, 20 September 2005 — The year 2005 will be remembered, among other things, as being the dawn for the professional private equity industry in the Middle East and North Africa (MENA) region. In the first 8 months of this year, the industry has doubled in size to reach $5.6 billion of assets under management. It has defined itself as an independent segment in the financial services sector.

In order to serve this growing industry, Zawya.com has launched the Private Equity Monitor (PE Monitor - www.zawya.com/pe). It will encompass professional private equity investments in the MENA region, covering both structured funds and private equity houses. In the first stage, however, the monitor will focus on PE funds, and it has succeeded in covering almost all the PE funds operating in the MENA region. In addition to basic information about the fund - like size and investment focus - the PE Monitor includes information about the fund’s structure, fees, transactions, and other critical information. The second stage will expand the coverage of the PE Monitor to include all prominent PE houses with aggregate investments exceeding $100 million.

The PE Monitor gives Zawya users the normal flexibility and user-friendliness common to all Zawya sections. It allows the user to look at PE activity from the fund’s angle, institution’s angle, transaction’s angle, and the news angle. Many fields have hyperlinks and are cross-linked to other relevant information in Zawya’s various sections.

Status of the Private Equity Industry Today

Today, more than 46 private equity funds are operating in the MENA region. Most funds are structured along the classical Limited Partners-General Partners structure. However, outdated financial regulation and legal structure in many countries, along with experimentation by fund managers, resulted in several funds diverting from the classical PE fund model. Nevertheless, anything that looked like a PE fund was classified as one in the PE Monitor.

Up to 2004, the total raised by PE funds was about $2.2 billion, including the sizable IDB Infrastructure Fund. However, in the first 8 months of 2005, more than $3.4 billion were raised, or are in the process of being raised.

Of the $3.4 billion raised or being raised in 2005, only $344 million in funds have been closed. The balance is in the process of fund raising or second closing, and most funds are expected to meet (if not exceed) their targets - given that many have strong regional institutions behind them like Global, Abraaj, TNI, and Shuaa.

Previous and Current Trends

Funds raised prior to 2005 have totaled $2.9 billion, of which $523 million have been fully vested. The balance of $2.4 billion is still in the deployment period. Almost all have raised their money after 2001, and are most likely to complete within the deployment period suggested in their mandate.

A significant number of funds have kept their mandate as flexible as possible, given the youthfulness of the industry. Almost half of the funds are balanced, investing in all stages across the region, and/or with no sector focus.

However, the new wave of funds being raised is different. The median size of the fund has tripled from $55 million to $150 million. Prior to 2005, and with the exception of the IDB’s $981 million Infrastructure Fund, no fund size exceeded $150 million, with the majority of funds being below $100 million. Today, the new wave of funds contain several “mega” funds (by MENA standards), including Abraaj’s $500 million Buyout Fund II, Global’s $500 million Pre-IPO Fund, NTEC’s $330 million Technology fund, GCC Energy’s $300 million fund, Jordan Dubai Capitals $272 million fund, and Amwal Al Khaleej’s $267 million buyout fund.

There are other shifts in the industry worth noting. Technology funds are quickly losing attractiveness, while energy funds are gaining momentum with $465 million worth, in the process of being closed. It seems that the PE industry is becoming more attuned to the economic sectors within the MENA region.

Another shift is in the geographic focus of the funds. Prior to 2005, many funds were chasing opportunities in Levant and Egypt. Today, the GCC, with its buoyant economies, is the focus of close to half of the funds being raised.

Prior to 2005, country-specific funds raised about $803 million, but this number has declined to $488 million in 2005. This may be attributed to the unpleasant returns realized from investments in Lebanon, Egypt and Kuwait and the deployment problems facing country-specific funds. Today, funds focusing on the MENA, or one of its sub-regions constitute 85 percent of funds raised.

The UAE, Jordan and Saudi Arabia have attracted the most number of publicly disclosed transactions. The UAE has attracted $299 million in 18 investments, mainly in energy, construction, real-estate, and tourism. Jordan has attracted $142 million in 12 investments, and Saudi Arabia has attracted $126 million in 6 investments. All in all, 79 investments and 8 divestments of a total value exceeding $1 billion were publicly disclosed over the past 10 years.

— (For a comprehensive coverage of private equity activities in the Middle East and related news, visit www.zawya.com/pe.)