“In the 2010 MENA Private Equity Confidence Survey we can see some signs of a positive shift in sentiment among GPs in the region compared to the results of the 2009 survey,” said Chris Ward, CEO of Deloitte Corporate Finance in the Middle East. “Strong domestic economies and favorable demographics, for example, are just two of the many strengths cited by GPs that MENA has to offer.”

Most GPs surveyed for Deloitte expect investment activity to rise in the next 12 months, with valuations beginning to stabilize, albeit at stubbornly high levels in the eyes of many. However, many GPs cite a shortage of quality opportunities as a concern. These factors are contributing to an increase in competition levels but whereas reputation and brand remain key defining attributes when it comes to winning deal, as does demonstrable ability to add value to firms’ portfolios, the importance of trust and “personal chemistry” also appears to be rising.  However, while there is now perceived to be less uncertainty in the global economy and more encouraging signs within the Middle East and North Africa (MENA) region itself, GPs participating in the survey still view the next 12 months with an element of caution.

“Going forward, the major challenges to overcome in the region are acceptance of private equity as an asset class and market regulation, and there is a way to go yet in this respect,” added Ward. “Fundraising in MENA remains tough, though there is a widely held view that global Limited Partner (LP) appetite for the MENA region will increase in the coming year, fueled by the market recovery and, in particular, interest in new and specialist sectors,” he added.

The key survey findings include: Over the next 12 months entry multiples are expected to remain at the same levels, the majority of participants (45 percent) expect returns achieved from private equity exits to stay the same over the next 12 months, the environment for exits is difficult, but trade sales are expected to be the most common exit route in the next 12 months followed by initial public offerings (IPOs), more defensive sectors such as health care and education will continue to be popular in the coming year along with oil and gas, the consumer sector and infrastructure, and the lion’s share of deal activity is likely to remain in the three key “hubs” of Saudi Arabia, Egypt and the UAE.