Abraaj boosts Egypt investment: Chief executive

Reuters, Tuesday 1 Nov 2011

Region's largest private equity firm tells newspaper it is eying oil acquisition but that doubts over Egypt's economic future make choosing investment strategies difficult

Abraaj chief
Caution is advised for Egyptian investments, says Abraaj chief Mustafa Abdel Wadood (Photo: Reuters)

Abraaj Capital, the Middle East's largest private equity firm, has boosted investment in Egypt despite the country's political turmoil and is now eyeing the acquisition of an oil services firm, its chief executive said in remarks published on Tuesday.

"We are currently studying the acquisition of a firm in the field of petroleum services," Mustafa Abdel-Wadood said in an interview published in Egyptian newspaper al-Shorouk.

Dubai-based Abraaj manages assets of around US$6 billion. Its total investments in Egypt are around $1 billion, Abdel-Wadood said, adding Abraaj has stakes in Egyptian groups Orascom Construction Industries and Al-Borg Laboratory.

"Our total investments in Egypt in 2011 reached around $50 million, the highest annual investment size in the country since 2009," Abdel-Wadood said.

Egypt saw an exodus of investors in the wake of the uprising that toppled President Hosni Mubarak early this year.

Street protests, a widening budget deficit, a murky political outlook and legal challenges to state land sales are still discouraging foreign investment.

Abdel-Wadood said Abraaj had taken a more cautious strategy in Egypt since the uprising, focusing on sectors serving a wide consumer base, and said he expected Egypt's pre-uprising GDP growth of 5-6 per cent would not return for three years.

"The future of Egypt's economic growth in the short term is not clear ... This leads to difficulty in placing investment strategies," Abdel-Wadood said. "Prolonging the transitional period will add to the uncertainty." 

In July this year, reports said Abraaj was in preliminary talks about entering into a strategic partnership with Citadel Capital, Egypt's largest private equity firm.

Abraaj terminated acquisition negotiations later that month but said it did not exclude the possibility of resuming the deal in the future "should performance, deal terms and/or circumstances change."


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