NBK Capital Partners gearing up for second mezz fund

The Gulf-headquartered firm has held early stage discussions with investors and is developing terms for the new fund.

Dubai-based NBK Capital Partners is getting ready to launch its second mezzanine fund, according to a source close to the situation. The firm has fully invested its $160 million NBK Capital Mezzanine Fund I across financing for eight different companies and could target as much as $200 million for the successor fund.

The firm just realised its fifth mezzanine investment in Turkish firm, Dem Pharmaceutical.

Like the first mezz fund, the new vehicle will be focused on Middle East and North Africa and primarily in UAE, Saudi Arabian and Turkish investments, the source said, adding that the new fund may also consider Egyptian deals as the potential pipeline there looks good.

“The investment environment continues to look compelling given the tight financing market for SME’s in the MENA region. Our next fund will continue to provide investors access to an attractive segment of the market through a proven instrument with robust risk-adjusted returns,” said the firm’s chief executive, Amjad Ahmad in a statement.

NBK Capital has two private equity funds, as well as the mezzanine investment vehicle. It has held early discussions with existing regional investors about the new fund and also plans to gauge appetite from investors beyond the GCC region for the vehicle too, the source added.

NBK Capital Mezzanine Fund I made cash-flow loans with average EBITDA multiples of around 3.5 times to companies unable to access the bank market. The fund was established in 2009 with an eight-year lifespan plus a two-year extension option.

NBK Capital Partners has raised $750 million in capital and invests in mid-market growth companies across consumer sectors.