Charles Crowell/Bloomberg News
Dubai is home to the private equity firm Abraaj Capital, whose investments have had average annual returns of about 50 percent.


In the Middle East, an equity oasis

As the most celebrated private equity firms in the United States and Europe face billions of dollars in losses because of the credit crisis, there is one corner of the world where the industry appears to be thriving.

In the Middle East, home to a small but rapidly growing leveraged buyout industry, two local funds, Abraaj Capital and Investcorp, are well on their way to completing major fund-raising events in the next few months as they continue to sell out of earlier investments.

Major private equity funds in the West, like the Blackstone Group and Kohlberg Kravis Roberts, are seeing their profits collapse. In some cases, the large private equity firms are unable to raise funds at the same rate as in recent years.

But their counterparts in the Middle East are expanding their investor base internationally, possibly at the expense of Western funds, as interest shifts to the region’s petroleum-financed renaissance.

In 2007, funds investing in private equity markets in the Gulf raised $4.1 billion compared with $3 billion a year earlier, according to Private Equity Intelligence, an investment newsletter based in London. Total assets under management are more than $25 billion. But, in a sign of how nascent the industry is, less than a third of the funds have an operating track record of more than two years.


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