Private Equity in the Middle East Should Not Ignore Lessons of the Global Financial Crisis, Says HE Dr. Omar Bin Sulaiman

DIFC Governor Speaks at Private Equity International Middle East Forum

While the private equity sector in the Middle East is better placed to grow than their counterparts in other parts of the world, they should not ignore the lessons of the global financial crisis, said HE Dr. Omar Bin Sulaiman, Governor of the Dubai International Financial Centre (DIFC). He was speaking at the Private Equity International Middle East Forum that began in Dubai today.

“The private equity sector in the region cannot ignore the lessons of the global financial crisis. The turmoil in western countries has revealed the dangers of excessive debt levels and overly complex financial structures. It is very clear that private equity firms depending on easy capital alone will find it difficult to survive. Firms that over-leveraged for buy-outs will struggle,” he told the audience at the Forum.

Unlike in developed markets, the region’s private equity industry relies less on leverages and is more oriented towards growth capital, he pointed out. “Many regional equity funds have focused on the fundamental profitability and growth of the companies they invest in. Such firms are well-positioned to benefit from opportunities that exist in our region,” he said.

Despite the global financial crisis, the tremendous demand for infrastructure development, and the enormous levels of wealth in both private and government hands offers long-term opportunities for private equity in the Middle East region, HE Dr. Omar Bin Sulaiman said.

Some of the most exciting opportunities for private equity lie in the family business sector he said.  As family business groups seek exit strategies to monetise their assets and deal with succession challenges, private equity firms will have access to several new opportunities.

“Private equity can truly play a vital role in helping family businesses restructure and reposition themselves and become more fully institutionalized. Private equity can assist family-run organisations in creating sustainable businesses that can succeed across generations,” HE Dr. Omar Bin Sulaiman said.

The DIFC Governor also pointed to the opportunities that exist across the region, especially in sectors where valuations have dropped. Private equity firms that have liquidity, he said, are in an excellent position to take advantage of low valuations to clinch attractive deals.

Taking place from March 10 to 11, 2009, at the Madinat Jumeirah Hotel in Dubai, the Private Equity International Middle East Forum is the largest and most important gathering for private equity professionals in the region. Under the theme 'The Region Taking its Place on the World Stage', the Forum will see the region's key thought leaders and influencers joining international industry leaders to examine the development of the Middle Eastern private equity industry and the lessons that can be learned from what is happening in other regions around the world.