RPT-Private equity chiefs look to MidEast in LBO lull

(Repeats story that initially moved on Dec 7)

By Michael Flaherty

NEW YORK, Dec 9 (Reuters) - In recent years, leveraged buyout executives scoured the Middle East mainly in search of investors. The hope was to find an oil-rich institution willing to commit capital to a buyout firm's next fund.

Now, private equity executives are headed to the region seeking a lot more: deal partners, shareholders, exit opportunities, lenders. The promise of a lucrative deal, plus red sand camel rides, Lebanese belly dancing and cigar sessions awaits a few LBO chiefs this week in Dubai.

The booming growth of sovereign wealth funds and their search for investments abroad has had a huge impact not just on private equity firms but on the investment banks and the entire mergers and acquisitions industry.

With the funds flush with cash, Western private equity chiefs are courting their business, as a credit crunch across the United States and Europe has dramatically cut off lending and deal-making within their borders.

Private equity executives have been particularly focused on sealing relationships in the Middle East, where the soaring price of oil has left countries loaded with cash to spend.

"The Middle Eastern funds have huge, available free cash flow right now," said Brad Setser, a fellow at the council on Foreign Relations, who focuses on the global flow of funds and sovereign wealth funds.

The global explosion in central bank reserves has led to the growth of state-owned investment vehicles with assets estimated at more than $2 trillion.