Middle Market

The most prevailing myth in the private equity sector of the MENA region is that there are a few deals left. We cannot disagree more with this specious declamation.

 

In the MENA region and especially in the MUST markets of: Morocco, UAE, Saudi Arabia, Tunisia, middle market businesses are abundant, growing at healthy rates, rarely leveraged, and poised to scale up beyond their national environment and into the regional markets.

 

In excess of 90 percent of all businesses in MENA are family-owned, covering almost every non-utilities aspect of the economy, from banking to contracting, and from private transport to basic manufacturing. The medium-sized enterprises, in particular, generate the majority of non-oil exports (both products and services), create employment opportunities, develop talents and foster skills, and open new markets. They represent a wider selection of promising targets for private equity firms to choose from.

 

With prospective large deals (>$1 billion) having proven scarce, if not purely elusive, the smart money will be on value investing into the more reliable middle market. This segment is ill suited for bargain hunters, or short-term holders but more fitting for growth equity investors seeking to unlock the true potential of target companies over the medium-term (5 to 7 years) prior to harvesting an investment.