(Adds details, background)
By Nadia Saleem and Stanley Carvalho
DUBAI/ABU DHABI, July 17 United Arab
Emirates-based private equity firms Ithmar Capital and Gulf
Capital are looking to sell shares to the public as they seek
cash for new investments, according to sources, in a move
emulating global peers.
Private equity in the Middle East suffered a difficult
period at the end of the last decade, as challenging global
market conditions and the bursting of local asset bubbles left
groups unable to exit existing investments without major losses.
The economic rebound seen both locally and internationally
has seen deal-making revived in the last two years, with many
now divesting stakes and looking for new opportunities.
Dubai-based Ithmar Capital, which manages over $800 million
in investments, is looking to raise 3 billion dirhams ($816.8
million) for new assets, particularly in the education and
healthcare industry, two sources said.
An Ithmar executive confirmed plans for an initial public
offering but declined to elaborate.
A third source, who like the others did not want to be
identified because of the sensitivity of the deal, said the fund
is expected to finalise details in the next few weeks, while a
separate source said the fund had always planned a Dubai IPO.
Meanwhile, Abu Dhabi-based buyout firm Gulf Capital is
considering an IPO to access more capital and expand its
offering in the region, three people said, with one saying the
listing was earmarked for the Abu Dhabi Securities Exchange
before the end of the year.
Gulf Capital declined to comment when contacted by Reuters.
While a number of Western private equity funds are publicly
listed, including Blackstone and Carlyle Group,
there are currently no such entities on the UAE exchanges.
Restrictive local regulations, which forced companies to
list 55 percent of their capital and prevented the selling down
of existing shares held by owners, have put off many companies -
including private equity firms - offering shares to the public.
This has driven UAE private equity groups to look abroad -
mostly to London - when floating stakes as part of an exit
strategy: Gulf Capital sold some of its holding in Gulf Marine
Services in March, while Ithmar offloading part of Al
Noor Hospitals last year.
However, UAE authorities are introducing changes which will
loosen these restrictions, with provisions allowing existing
stock to be sold to the public published earlier this month.
Set up in 2005, Ithmar currently has a portfolio of six
companies but expects to do deals worth over 1 billion dirhams
in 2014 in the healthcare and education sectors across the Gulf,
Faisal bin Juma Belhoul, founder and managing partner of Ithmar
told Reuters in March.
Gulf Capital, which has more than $3 billion of assets under
management according to its website, was established in 2006 and
is backed by regional financial institutions, pension funds,
family groups and businessmen.
($1 = 3.6729 United Arab Emirates Dirhams)
(Editing by David French and Jeremy Gaunt)