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Global PE Insights
Global PE Insights
Mon, 03/28/2016 - 12:25


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What’s in Store for PE in 2016?
What’s in Store for PE in 2016?
Sun, 01/03/2016 - 15:39

On the eve of 2016, the MENA region seems to be in convulsion. An oil price collapse coupled with continued conflicts in almost 50% of the region’s territory (Syria, Iraq, Egypt, Libya, Yemen, Bahrain) do not necessarily create a conducive environment for long-term investments. PE in particular requires stability, continuity and predictability of markets to nurture investments and reap their benefits within a mid-term (5 to 7 years) horizon.

 

One should not despair. A closer look at the realities on the ground gives one much reasons for hope.

 

On the one hand, the oil price collapse will have severe effects on governments which will spend less causing parts of the private sector to shrink, contracting in particular. But privatizations will come to the fore again stirring the geriatric regional stock markets and non-oil related sectors will be reinvigorated (services, transport, tourism). PE investments in oil & energy in MENA are marginal at best and hence, all other sectors in which PE is engaged will become attractive.

 

On the other hand, the region’s conflict areas –at the exception of Egypt- include nations that never were, prior to the prevailing turmoil, a land of PE opportunity. In fact, PE investments whether regional or international, did not seek much entries into such markets due to the acute sense of risk calculus that such firms undertake prior to committing funds. So the areas of PE’s continued interest such as the GCC, Jordan, Morocco will remain prized locations for safe investing.

 

All told, PE will continue to focus on non-oil related sectors in safe and stable countries in the MENA region, and this picture is not changing in 2016 or the foreseeable future.