Page 98 - Aamir Rehman Gulf Capital and Islamic Finance The Rise of the New Global Players

82 PART I Background and Context

Private Equity Shops Are Dynamic and Growing

Private equity has been a growing industry in the GCC region, and its
rise is one of the hallmarks of the boom of the 2000s. The Gulf Venture
Capital Association, a key industry body, estimated that the cumula-
tive funds of private equity and venture capital funds in the MENA
region reached nearly $20 billion by 2008. 49 Figure 2.5 illustrates the
explosive growth in this sector in recent years:
It is estimated that since 2005, the pool of assets under man-
agement by regional private equity and venture capital (PE and
VC) firms has increased in volume about five times. At the same
time, the average size per fund has also grown (although far more
modestly) to over $250 million per fund. Therefore, growth in
the industry has come mainly through the introduction of new
funds by both established players and new entrants. This is to
be expected, since private equity and venture capital funds are

FIGURE 2.5

Middle East and North Africa Private Equity and Venture Capital
Assets Reached about $20 Billion by 2008

Cumulative Funds under Management
25,000 270
258
240
20,000 19,629
213 210
191
180
177
15,000 13,195 150
$ million Average Fund Size ($ million)

10,000 120
7,413 90
4,768 60
5,000
30
- -
2005 2006 2007 2008
Cumulative funds Average funds
Source: Gulf Venture Capital Association, “Private Equity and Venture Capital
in the Middle East,” 2008 Annual Report, p, 16.