Unfazed by Turkey’s economic woes, security threats and botched coup, the Dubai private equity firm Abraaj Group has launched a US$526 million fund to tap the country’s long-term growth prospects.
Abraaj’s first fund with a focus on Turkey, which included $40m in co-investments, attracted a slew of investors, with the majority coming from Europe and North America, the firm said yesterday. Institutional investors and sovereign wealth funds represented 78 per cent of committed capital.
“The successful closing [of fundraising] of our first dedicated Turkey fund reflects our strong conviction on the Turkish economy, and the attractive investment opportunities available,” said Arif Naqvi, the founder and group chief executive at Abraaj. “Turkey is on track to become one of the 15 largest economies in the world by 2030, driven by a young population, a growing and aspirational middle class and a vibrant entrepreneurial culture.”
Turkey, which has attracted big private equity players such as US funds Caryle Group and KKR, is reeling from a failed coup this month.
The Turkish authorities have rounded up thousands of suspected coup supporters and organisers, sending a ripple through the country’s economy, which was already buckling under the weight of terrorist attacks and an influx of refugees from Syria.
As of yesterday afternoon, the Turkish lira had fallen 5 per cent against the US dollar since the coup attempt on July 15, while the country’s main stock index was down by 10.7 per cent. Standard & Poor’s has lowered its rating of Turkey’s sovereign debt by one level to BB, two notches below investment grade, and gave it a negative outlook citing political uncertainty.
Moody’s has put Turkey’s Baa3 credit rating, the lowest level of investment grade, under review for a possible downgrade. Any debt downgrade will make it more expensive for Turkey to borrow from international markets.
“Investor confidence, which remains very low, will likely fall further, depriving the economy of a key source of investment,” said Nafez Zouk, an economist at Oxford Economics.
“Investors are likely to remain on the sidelines as they wait to see how the government will respond.”
However, Selcuk Yorgancioglu, a partner and regional head for Turkey and Central Asia at Abraaj, brushed aside the economic and security concerns. He said the firm was a long-term investor in the country and expected growth given that, among other factors, Turkey is a market of 80 million people and a G20 member.
“Private equity is a long-term investment and it is not like public markets, where you can open up a position and close it tomorrow,” Mr Yorgancioglu said. “Recent volatility does not impact our appetite.”
Abraaj, which has about $9.5 billion in assets under management, has invested in 11 companies in Turkey, deploying about $900m for about a decade, he said, and it has reaped more than $800m from exits in Turkey.
The fund will target midsized businesses, with a focus on consumer goods and services, health care, financial services, retail and logistics. Abraaj expects to make four to five deals and deploy the fund over a period of two years, Mr Yorgancioglu said. The ticket size will range between $35m and $75m, but could go higher with co-investments.
The fund has already invested in two businesses, e-commerce company Hepsiburada and the lender Fibabanka.
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Manchester City 0
Wolves 2 (Traore 80', 90 4')
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England 35-15 Japan
Italy 7-26 Australia
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Company Profile
Name: JustClean
Based: Kuwait with offices in other GCC countries
Launch year: 2016
Number of employees: 130
Sector: online laundry service
Funding: $12.9m from Kuwait-based Faith Capital Holding
Brolliology: A History of the Umbrella in Life and Literature
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Melville House
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COMPANY PROFILE
Name: Mamo Year it started: 2019 Founders: Imad Gharazeddine, Asim Janjua Based: Dubai, UAE Number of employees: 28 Sector: Financial services Investment: $9.5m Funding stage: Pre-Series A Investors: Global Ventures, GFC, 4DX Ventures, AlRajhi Partners, Olive Tree Capital, and prominent Silicon Valley investors. Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
The Brutalist
Director: Brady Corbet
Stars: Adrien Brody, Felicity Jones, Guy Pearce, Joe Alwyn
Rating: 3.5/5
Anghami
Started: December 2011
Co-founders: Elie Habib, Eddy Maroun
Based: Beirut and Dubai
Sector: Entertainment
Size: 85 employees
Stage: Series C
Investors: MEVP, du, Mobily, MBC, Samena Capital
Our legal consultants
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
The biog
Favourite Quote: “Real victories are those that protect human life, not those that result from its destruction emerge from its ashes,” by The late king Hussain of Jordan.
Favourite Hobby: Writing and cooking
Favourite Book: The Prophet by Gibran Khalil Gibran
2025 Fifa Club World Cup groups
Group A: Palmeiras, Porto, Al Ahly, Inter Miami.
Group B: Paris Saint-Germain, Atletico Madrid, Botafogo, Seattle.
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Group H: Real Madrid, Al Hilal, Pachuca, Salzburg.
Washmen Profile
Date Started: May 2015
Founders: Rami Shaar and Jad Halaoui
Based: Dubai, UAE
Sector: Laundry
Employees: 170
Funding: about $8m
Funders: Addventure, B&Y Partners, Clara Ventures, Cedar Mundi Partners, Henkel Ventures
57%20Seconds
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How to apply for a drone permit
- Individuals must register on UAE Drone app or website using their UAE Pass
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- Upload the training certificate from a centre accredited by the GCAA
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What are the regulations?
- Fly it within visual line of sight
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- Should have a live feed of the drone flight
- Drones must weigh 5 kg or less
Analysis
Members of Syria's Alawite minority community face threat in their heartland after one of the deadliest days in country’s recent history. Read more
UPI facts
More than 2.2 million Indian tourists arrived in UAE in 2023
More than 3.5 million Indians reside in UAE
Indian tourists can make purchases in UAE using rupee accounts in India through QR-code-based UPI real-time payment systems
Indian residents in UAE can use their non-resident NRO and NRE accounts held in Indian banks linked to a UAE mobile number for UPI transactions
The specs
Engine: 1.5-litre turbo
Power: 181hp
Torque: 230Nm
Transmission: 6-speed automatic
Starting price: Dh79,000
On sale: Now
