INTERNATIONAL. Middle East private equity and venture capital investors are set to play a pivotal role in increasing global moves towards green technology and alternative energy, according to a leading industry observer.
“The region has amassed new fortunes from the rising worldwide price of oil and gas and now sees huge opportunities in green investing,” said Swati Taneja, Director of the Private Equity Forum organised by IIR Middle East, which recently concluded in Dubai.
“Green investing is emerging as the new theme for the region,” Taneja added.
“Private equity investment in clean technologies was identified as a major opportunity in a special stream session of the forum attended by leading regional and international financial players.
“It is not hard to discover why. The recent World Wealth Report by Merrill Lynch estimated that about 20% of wealthy investors in the Middle East had already allocated part of their portfolios to green technologies and alternative energy, the highest proportion of any region in the world.
The move is a reflection of increasing global investment interest in the clean technology sector. “The first two quarters of 2008 demonstrate that interest and investment in the clean technology sector continues to increase, despite global economic instability,” said Nicholas Parker, co-founder and Chairman of the Cleantech Group, and a participant in the Private Equity Forum.
“Private equity and venture capital is clearly becoming increasingly important in the process of diversification away from oil and gas,” Taneja said. “The wealth report also found that while half of those in the west who had invested in green technologies had done so out of a sense of social responsibility, in the Middle East two-thirds said it was because of the potential high returns. Regional investors have identified a new source of income.”
Private equity encompasses investing in companies whose shares are not traded on stock exchanges, from small venture capital investments in start-ups to multi-billion dollar buyouts of public companies. There are estimated to have been US$13 billion worth of private equity deals in the region in the past decade.
The recently-concluded Forum also heard how in the Middle East new private equity opportunities are emerging as family-dominated companies rationalise operations, extend their geographic spread or form new partnerships. In the Gulf Co-operation Council countries, 90% of all commercial activity is estimated to be controlled by family firms with combined assets of US$500 billion and employing 70% of the workforce.
Dubai-based Ithmar Capital was headline sponsor of the Private Equity Forum. Ithmar currently has US$500 million worth of assets under management through two existing funds. Diamond sponsor was M’Sharie, the private equity arm of Dubai Investments, which has 17 subsidiaries.
See also www.iirme.com