Private investment firms doing business in the Middle East have just two things to say about the uprisings in Egypt, Tunisia and elsewhere: No comment. Actually, some aren’t even being that loquacious.
For years, private equity shops have been bulking up their activities in the Middle East. Most of the operations are centered in Dubai, but often have satellite offices elsewhere in the region. For example, The Carlyle Group operates a Cairo office to support a $500 million Middle East and North Africa (MENA) fund that closed in early 2009.
But a Carlyle spokesman said that no one at the firm would be able to discuss the unrest, or how it might reshape the region’s investment landscape. No reply at all yet from KKR, which two years ago formed a MENA practice led by former Lehman Brothers sovereign wealth boss Makram Azar.
We also got radio silence from some of MENA’s largest homegrown players, including Abraaj Capital and Dubai International Capital.
Overall, more than $24 billion has been raised by MENA-specific private equity funds since 2005, according to industry research firm Preqin. Over half of that has been for Egypt-focused vehicles, while another 43 Egypt-focused funds are currently in market. And, just last week, a new firm called Sawari Ventures launched to invest in seed-stage Egyptian companies.
“My big concern is the economic reforms that yield results in the long term will be abandoned in the short term which will reduce investment into Egypt as the country becomes more short-term populist,” said an Egyptian businessman who only would speak on the condition of anonymity.
“We’re closely monitoring the situation, but don’t think it’s prudent to comment publicly until we have more clarity on the situation,” added an investor in the region. “We’re obviously concerned about what’s going on in Egypt, and also if there could be some sort of wildfire effect throughout the Middle East — including in countries that we had thought to be stable.”