A heavyweight limbers up

Far from feeling the impact of the slowdown, one firm is charging ahead with growth plans

At a time when others may be easing off the accelerator, the Abu Dhabi Investment Company (ADIC) has had a busy time of it.

All the indications are that ADIC, jointly owned by the Abu Dhabi Investment Authority and the National Bank of Abu Dhabi, plans to use the opportunities created by the economic downturn to establish itself as a heavyweight in private equity, real estate and infrastructure.

In mid-April it announced the appointment of Alex Carré de Malberg, a former managing director at investment bank Rothschild, to lead a new independent advisory arm concentrating on mergers and acquisitions and capitalraising.

A week later, ADIC's new head of private equity, Samir Assaad, was quoted in various media reports stating that the firm planned to launch “an international real estate fund and four different funds in four weeks” at a private equity forum in Abu Dhabi. He declined to give any details of the four funds.

Most recently, at the beginning of May, ADIC and UBS Asset Management held a first close on their joint venture infrastructure fund, the ADIC-UBS Infrastructure Fund I. The fund, which was launched in February 2008, closed on $250 million – almost halfway to its $600 million target. More infrastructure vehicles are planned.

The arrival of the economic downturn in the Middle East around October 2008 does not seem to have given ADIC pause for thought – in fact, the firm has stepped up the pace as some of its regional peers have backed off.

In March this year ADIC appointed its first CIO, Anders Ljungqvist, to look after its proprietary investments, effectively separating their management from the group's third-party business. At the time, ADIC said growing the third-party fund management business – and moving further away from its former arrangement as a sole financial sponsor – was a priority for 2009.

Of Samaan's appointment in March, the firm said he would “lead a charge for buyouts in MENA at a time when the global economic crisis is starving promising companies of capital”.

Similarly, while the focus of the firm is on the MENA region, Samaan reportedly said at the Abu Dhabi private equity forum this was a “fantastic” time for ADIC to get into global real estate.

Global buyout giant Kohlberg Kravis Roberts (KKR) is to base its fledgling Middle Eastern operation in Dubai, after receiving a licence from the Dubai Financial Services Authority to operate from the Dubai International Financial Centre. KKR hired Makram Azar last year from the now-defunct investment bank Lehman Brothers with the remit of building a team in the region, where it will both raise funds and invest in private equity and infrastructure products.

Ford Fraker, the former US ambassador to Saudi Arabia, has joined Kohlberg Kravis Roberts as a senior adviser to the firm in the Middle East. Aside from time spent as ambassador to Saudi Arabia, Fraker has spent the majority of his working life in financial services. He co-founded London-based investment bank and placement agent Trinity Group in 1996, where is no longer chairman, but remains a shareholder.

SJ Berwin, the London-headquartered law firm credited with inventing the private equity limited partnership, is planning to open an office in Dubai to service the Middle Eas t and surrounding African and Asian countries. The firm currently has only one office outside Europe: its Hong Kong branch opened at the beginning of the month. The Dubai office will be led by private equity funds partner Benjamin Aller who will move from Paris and international arbitration partner Tim Taylor who will move from London.

Mohamed Abdelsalam has been appointed head of Kuwaiti investment bank Global Investment House's private equity business in Egypt. Previously, he was a partner at accounting firm BDO Khaled & Co, where he led its consulting and advisory services. Abdelsalam will “strengthen our knowledge about the Egyptian market, enhance our deal sourcing and attain a close relationship to the fund's portfolio companies”, says Shailesh Dash, managing partner at Global Capital Management, the bank's alternative investment asset management arm.

Global Capital Management, a wholly-owned subsidiary of Kuwaiti investment bank Global Investment House, has sold its stake in Indian refinery Reliance Petroleum. The firm has been liquidating its position in tranches and has achieved an internal rate of return of more than 70 percent on the transaction and a multiple of 1.84x, the firm says.

Mubadala Development Company, an Abu Dhabi government-backed investment vehicle, has written down the value of its 2007 investment in global buyout firm The Carlyle Group. The sovereign wealth fund's first annual report detailed a AED2 billion (€400 million; $544 million) impairment charge on its unquoted investment in Carlyle based on “prevailing market conditions”. The fund invested $1.35 billion in September 2007 for a 7.5 percent stake in the private equity giant.

The Carlyle Group has appointed Nader Sultan – a former deputy chairman and chief executive officer of Kuwait's national oil company – as senior advisor to the firm's MENA team. The appointment follows the firm's successful close of its $500 million Carlyle MENA Partners: its first fund targeting the region. As advisor, Sultan will help identify investments and trends in the region, particularly in the energy sector.

London-headquartered merchant banking group Capital Trust is nearing a $100 million close for EuroMena II, a private equity fund focused on the Middle East and North Africa. Besides Capital Trust Group, which is the anchor investor in the fund, other investors include the European Investment Bank, Proparco, and high-net-worth individuals from Saudi Arabia, Kuwait, Qatar, UAE, Jordan, Egypt and Lebanon.

Dubai-based Abraaj Capital is currently in talks to buy a stake of at least 15 percent in the ports unit of government-owned Dubai World, according to media reports. Dubai World is seeking to offload the stake in DP World in an effort to shore up its finances, said a report on newswire Zaywa Dow Jones. The stake could cost up to $900 million.

Beltone Private Equity, the private equity division of Middle Eastern investment bank Beltone Financial Holding, is raising a $200 million vehicle to invest in small- and medium-sized businesses in Egypt and the Gulf States. Three development banks have committed to the vehicle as anchor investors: the International Finance Corporation, the European Investment Bank and the Export Development Bank of Egypt.

World Bank's private investment wing The International Finance Corporation has committed $25 million to the MENA Joint Investment Fund, Citadel Capital's debut institutional fund. The fund is targeting $500 million and aims to hold a first close in the second quarter of this year. It will invest in up to 10 mid- to large-sized platform companies in the MENA region, to help them expand beyond their local markets.

Palestinian children and youth who lost their parents during violence in Gaza in December and January are to receive help from a $10 million welfare trust set up by private equity firm Abraaj Capital. The Welfare Association, the non-profit development foundation that will manage disbursements from the fund, has identified 1,257 children and youth, who either lost a sole parent or primary income-earner in the 23-day conflict.