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|| Two new private equity firms launched in Iraq and Oman

fincorp-tbi.pngTwo new private equity firms have launched in Iraq and Oman.

In Iraq, Trade Bank of Iraq plans to set up a $500 million private-equity fund and is looking to identify a global player to act as the fund's general partner.

In Oman, the Financial Corporation (FinCorp) launched Oman's first private equity fund with a capital of $51.9 million. The primary objective of the Oman Private Equity Fund is to make private equity investments in select local companies and those firms that have cross border linkages.

To see a full listing of Middle Eastern private equity investors and funds, check our Middle East Investors Directory

More details follows from Reuters and Zawya

Reuters - A state-run Iraqi bank plans to set up a $500 million private-equity fund to invest in projects in the war-ravaged country and will next month look to identify a global player to act as the fund's general partner.

Hussein Al-Uzri, president and chairman of Trade Bank of Iraq, said the bank aims to launch the private-equity fund this year, which will invest in medium-sized projects in industries including oil services, power and hotels.

The bank, set up in 2003, also plans to open branches this year in London and Beirut, and eventually aims to open offices in North America and east Asia, with China a possibility, as Iraq looks to attract investment to fund its rebuilding.

"Iraq will need major investment in infrastructure -- in housing, oil, power, and so this will need capital investment into the country, and we are counting on the private sector, both Iraqi and foreign, to participate," Uzri said in an interview.

Iraq expects private investment to triple to $30 billion this year, a senior government official told Reuters last month. [ID:nLDE7101VD] Overall, Iraq needs $600 billion of investment to rebuild, according to the National Investment Commission.

Launched in 2003, Trade Bank of Iraq has been widening its product offerings beyond trade finance and plans to add eight domestic branches this year to its current 15, Uzri said.

The bank had $15 billion in assets at the end of 2010, a level it aims to expand by about 15 percent this year. It earned net profit of $386 million last year, and is looking to grow that by about 20 percent in the current year.

Uzri, who was in the Indian capital for a global banking industry conference, declined to identify the firms on the short list to help manage the planned private-equity fund. The fund will look to raise money from investors.

"What we want is somebody that is of course recognised internationally but at the same time, that they would invest time and money in Iraq," Uzri said.

"We want to make sure that for them, this is ... strategic, they want to come here, they want to put people in, and time," he said.

Security remains a concern for investors in Iraq, and Trade Bank of Iraq's headquarters was devastated by a deadly bomb blast last year.

Still, Uzri said it has become much easier to pitch the Iraq investment story than during 2005-2007.

"Almost every day we have visitors from outside coming in," he said.

Once a privatisation law is passed, the bank eventually intends to bring in investors to take a minority stake, with a foreign strategic investor a possibility, he said.

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Zawya - The Financial Corporation (FinCorp) launched Oman's first private equity fund with a corpus of $51.9 million (RO20 million). Addressing the media to launch the equity fund, Munir A. Makki, managing director and president of Fincorp, said the primary objective of the Oman Private Equity Fund -- is to make private equity investments in select local companies and those firms that have cross border linkages.

"The newly-launched fund intends to be fully invested in mid-market opportunities, focusing on industrial manufacturing, petrochemicals, infrastructure, healthcare, education, tourism and hospitality," Makki added.

"We feel that there is a strong growth potential in these sectors in the next five years due to heavy investment made by the government." Mid-caps constitute a substantial and overlooked segment in Oman and in other Gulf Cooperation Council states. The fund intends to review a number of opportunities to secure five to six suitable investments.

"Mid-caps find it difficult to hire advisors to raise capital; the fund is organised for direct sourcing of deals, therefore giving it access to proprietary deals. Mid-cap companies often need financial capital and management support to create additional value."

Corpus fund to go up

Makki said the issue has opened for subscription on February 20 and the first close is expected on March 10. "The issue is privately placed and the fund has received strong commitments from institutions, pension funds and corporates," he noted. He added that the corpus fund will be increased to $77.92 million (RO30 million), by raising another $25.9 million (RO10 million), at a later date and after successfully investing the initial fund.

"The fund's investment will be completed within a period of 30 months from the date of establishment of the fund and the time cycle for each investment is expected to be five to eight years."

The fund's strategy is to identify and structure growth opportunities and actively manage the growth of its investee companies.

The fund manager has in place an experienced and competent team with a proven international experience and track record in private equity investments.

Potential exits for the investments will be through initial public offering, selling the investment to a strategic investors or mergers and acquisitions.

Elaborating on the main objectives of the fund, Makki said the fund will look at opportunities for infusing capital for businesses primarily based in Oman that have viable growth plans.

More job

It will also assist in turning around viable sick units and encourage entrepreneurship and create additional employment opportunities.

"The fund will invest in unlisted as well as listed companies."

Apart from earning attractive financial returns to investors, the fund is expected to act as a catalyst in the promotion of Oman's industry and help to strengthen entrepreneurial skills of Omani companies.



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