ABU DHABI, 2 October 2005 — The recently formed Abu Dhabi Investment House (ADIH) has announced the launch of its maiden investment product — the $75 million Al-Arabi Private Equity Fund — which will allow investors to participate in the tremendous growth opportunities offered by the burgeoning private sector across the Gulf.
Promoted by a group of prominent businessmen, leading institutions and investors from the United Arab Emirates (UAE), and the Gulf region, ADIH, which was formally launched earlier last month, has a mandate to focus on existing as well as emerging potential for investments in private equity, capital markets, asset management and investment placement.
Announcing the launch of the Al-Arabi Private Equity Fund in Abu Dhabi yesterday, Rashad Yusuf Janahi, member of the Founder’s Committee, and chief executive officer of ADIH, said: “The global market for private equity, which according to a recent Pricewaterhouse Cooper’s report is valued at $107 billion, is witnessing a rapid growth both in terms of the number of deals as well as deal size.
“In the Middle East too, the private equity market is witnessing a tremendous growth, and is expected to reach the $1 billion mark by 2007 from its current level of approximately $300 million.”
Janahi further said that ADIH, which will also act as the fund manager for the Al-Arabi Private Equity Fund, would primarily focus on strategic equity investments in privately held companies with strong business models and management teams, that are either going through a transitory phase or need an injection of capital to realize their full business and market potential.
“Our primary focus will be on three types of investments — pre IPOs, strategic investments and mezzanine financing — that offer us full or effective management control. Our focus will be on working with the management of the companies that we invest in to create and execute a strong business strategy with a view to achieving rapid, sustained, and predictable profit and earnings growth.”
“With a view to distributing the risk associated with its investments, the Al-Arabi Private Equity Fund will not exceed an investment of more than 25 percent of the committed capital of the fund,” said Janahi, adding that “the fund would be targeting an attractive Internal Rate of Return (IRR) of more than 20 percent over the term of the fund.” The fund, which opened for subscription yesterday, will offer 7,400, 000 shares with a par value of $10 each and will be open to both individual and institutional investors. ADIH will retain 100,000 shares of the private placement as its contribution to the fund. The minimum investment for individual investment to the fund is $150,000, while for institutional investors the minimum investment stands at $250,000.