Gulf Capital launches MENA credit business

Gulf Capital has launched a credit business to provide growth capital and liquidity to Turkish, Middle Eastern and North African companies.

The firm plans to launch the debut fund for the business, called Gulf Credit Partners, in September. The debut fund will target $250 million to $300 million and provide corporate and private equity investors debt finance for acquisitions and growth capital. The fund may also invest in corporate bonds and loans.

The firm will try to attract limited partners from the Middle East, Asia and Europe for the fund, the firm said.

“Sometimes, [companies are] not able to get the capital and liquidity they need,” Gulf Capital chief executive officer Karim El Solh told Private Equity International in a recent interview. “There’s a huge demand for leverage and no provider.”

Financing from the fund will be based on the borrower’s cash flows, which will allow for more flexible maturity and repayment structures than traditional asset-backed lending, the firm said in a statement.

El Solh added that he expects the fund to have a total blended yield of 15 to 17 percent for investors when cash coupons, equity investments and equity warrants are taken into consideration.

Former Société Général managing director Christopher Baines will head Gulf Credit Partners. The firm also will hire a co-head for the team.

Gulf Capital closed its second Middle Eastern fund on $544 million in February 2010. The oversubscribed fund was the firm’s first to include significant capital from the US, Asia and Europe.