Private Equity and Venture Capital Report 2014

The report addresses key topics such as:

• Investment trends across the region
• Venture Capital activity
• Divestments
• Key drivers of deal activity
• Regional trends
• Fundraisings and appetite of PE firms to invest

2014 was a significant year for the industry as investment levels by value and fund raisings reached a new high since the end of the last cycle in 2008. In addition, investment and divestment volumes were both above 2013 levels. Investment values at USD 1.5 billion were more than double those achieved in 2013. On a macro level there was a sense of returning confidence and increased opportunities as the region continued to emerge from the impact of the Arab Spring.

The year was characterised by some of the largest PE deals seen in the region. Fund managers had demonstrable success in assembling and working with consortium partners, including international PE investors, to close major transactions. Activity ranges widely across the region. While the UAE and KSA were the largest markets for private equity investment, investment values in Egypt continued to increase and fund managers estimate that Egypt will be one of the three most active markets in the region over the next 12 months. As noted, fund raisings for the year at USD 1.2 billion were at the highest level since 2008. However, the nature of fund raisings suggested that while those participants able to do so, are raising larger funds, the traditional fund raising approach is proving challenging for many and alternative structures, such as deal by deal fund raising, are becoming increasingly prevalent. Over half of managers surveyed believe that fund raising will become more difficult over the next 12 months.

While the medium term outlook for the industry is positive there is no doubt that the impact of geopolitical instability and a reduction in short term economic confidence resulting from the shock to oil prices has more recently led to increased short term caution among some GPs and LPs. Almost a third of surveyed managers expect there to be a deterioration in economic conditions over the coming year, impacting their outlook in respect of both investment activity and fund raising.

However, the longer term underlying fundamentals of the region remain strong with the demographic profile, relative economic stability, increasingly developed entrepreneurial outlook and underlying liquidity all supporting the view that the PE and VC industries are poised to continue developing positively across the region.