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Private Equity in Dubai

How does the whole world perceive Private Equity in Dubai? Has Dubai been raising billions to satisfy the thirst of the market? Are the private equity funds exiting regularly? Can anyone dream of working in private equity in Dubai as a potential candidate?

In this article, we will investigate all of the above questions and try to find answers for each.

Let’s have a look at the sequence of the article –

Private Equity Market in Dubai – Overview

According to The national.ae, the private equity market in MENA (the Middle East & North Africa) region has been struggling, but still, the investment opportunities have grown a lot.

Back in 2008, the private equity market in the Middle East had optimism, but in recent years the public markets have been outperforming and over-delivering.

The most challenging issue in the private equity market of Dubai is the sudden existence of many, many private equity firms. On the one hand, the investment opportunities have increased; on the other hand, there are a few crucial points like a negative geopolitical environment, continual changes in oil prices, and a reduction in government spending.

Despite all challenges, it is expected that the MENA region would be one of the fastest-growing regions globally by looking at the average annual growth in GDP (i.e., 4.1%).

The biggest strength of this region is Dubai, which has been one of the fastest-growing economies globally. In 2014, Dubai’s GDP was projected at US $107.1 billion, with a growth rate of 6.1%. Even by 2014, China has become the biggest International Trade refers to the trading or exchange of goods and or services across international borders. read moreinternational tradingInternational TradingInternational Trade refers to the trading or exchange of goods and or services across international borders. read more partner.

Seeing all this, the Dubai private equity market will grow irrespective of political and economic issues and challenges in the years to come. And maybe within a decade, we will witness a complete overhaul of the private equity market in Dubai.

Private Equity in Dubai – Services Offered

The services offered by private equity firms are few if we compare them with the European and American PE markets. As the volume of funds is low, the types of services are also different.

Private equity firms in Dubai offer three different services. Let’s have a look at them –

Advisory & Syndication Services: As the volume of funds is low, the relationships in the Dubai PE market are everything. PE firms’ advisory & syndication service is completely customized, which solves customers’ financial troubles. From structuring debt, equity & mezzanine transactions to offering advisory, Dubai PE firms are always well-equipped. In Dubai, they also strongly bond with top-notch banks, financial institutions, etc.Fund Distribution Services: Private equity firms in Dubai are MENA-region-focused, and that’s why they always keep looking for better opportunities for investments. From deal flow originationDeal Flow OriginationDeal Origination is a strategy used by firms to find investment prospects, either by gaining industry knowledge or by forming a deal for themselves using their connections with the involved parties.read more to finding out and tapping investors, PE firms know how to cut. The potential investors that PE firms in Dubai are always looking for are pension funds, insurance firms, private offices, sovereign wealth funds, large families, and other financial institutions under GCC (Gulf Cooperation Council).Capital Advisory Services: In this case, private equity firms in Dubai are mainly focused on Indian companies that would like to expand their businesses in the Middle East and Africa. That’s why they pursue large M&A deals and any acquisition or partnership route. Along with the Indian group of companies, PE firms in Dubai are also looking for small companies in Dubai and the Middle East which want to expand their business inorganically.

List of Top Private Equity Firms in Dubai

Even if the share of PE is pretty meager, Dubai has been becoming the hub of private equity investment. Let’s have a look at the most significant deals executed by top private equity firms in Dubai –

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Gulf Capital: Gulf Capital, an Abu Dhabi-based PE firm, raised its biggest private equity fund of US $750 million in 2014. This single deal has catapulted Gulf Capital’s total assets to US $3.3 billion. Gulf Capital has been looking for deals inInfrastructure refers to fundamental physical and technological frameworks that a region or industry establishes for its economy to function properly.read more infrastructureInfrastructureInfrastructure refers to fundamental physical and technological frameworks that a region or industry establishes for its economy to function properly.read more, logistics, energy & consumer.The Abraaj Capital: One of the biggest PE firms in Dubai is The Abraaj Group, founded in 2002 and currently has total assets of US $10 billion. It also has more than 300 employees working for them. In April 2015, this group alone had closed a deal of US $990 million to a sub-Saharan Africa fund. In July 2016, it raised US $526 million to invest in Turkey.Ithamar Capital: Ithmar Capital was founded in 2005, and the headquarters of this firm are in Dubai. It boasts of having coverage across Gulf Cooperation Council (GCC) countries. It has already invested and managed over US $1 billion in equity capital. It has been keeping an eye on the US $270 million Gulf PE deals.CedarBridge Partners: This is one of the top PE firms in the Middle East. It has expertise mainly in Healthcare, Retail Service & Education industries. Currently, every deal that this PE firm invests in is a minimum of US $2 million to $20 million per transaction. CedarBridge has coverage across the Middle East, North Africa, Cyprus & Turkey.NBK Capital Partners: This is another astounding private equity firm in the Middle East that has invested over US $875 million in private equity. NBK Capital is based in Dubai, and it also has a presence in Kuwait and Turkey. The chief focus of this firm is to find profitable investment opportunities in the MENA middle market, and every transaction is usually in the range of US $10 million to $60 million. The primary industry it focuses on is consumer-driven sectors and companies which can grow through acquisitionsAcquisitionsAcquisition refers to the strategic move of one company buying another company by acquiring major stakes of the firm. Usually, companies acquire an existing business to share its customer base, operations and market presence. It is one of the popular ways of business expansion.read more or organically.

Private Equity in Dubai – Recruitment Process

Since the private equity market in Dubai is still emerging, the chance of private equity entry-level jobs is still easy to get. Many private equity firms source entry-level analysts from local colleges and universities. They are either graduate or postgraduate students who want to make their mark in the private equity market.

Usually, the following process is being taken by private equity firms in Dubai to recruit private equity professionals (other than sourcing from universities & institutes) –

Sending your resume & cover letter: The first step is preliminary. All you need to do is to go to the website of the targeted private equity firm where you would like to work for. Then find out the HR/Career contact details. And send your resume and cover letter to that email id. Your resume is just one-two page long and full of private equity “lingos.” In the case of a cover letter, try to make it minimalistic.Shortlisting for interviews: You can understand how many resumes and cover letters are being submitted to private equity firms! Thus, only 5-10% of all the applications are short-listed and called for interviews. To ensure that your resume and cover letter are shortlisted, make sure that you read any instructions given on the “career” page of the website of that private equity firm. Or else, you can check back on the job description and match it up with your own experience and credentials.Conducting interviews: The next round is an interview round. For top private equity firms in Dubai, a recruitment agency is usually recruited. The recruitment agency will take your first interview to see whether you are fit for the job or not. If you are a perfect match for the job, you need to go for the second round of interviews. During the second round, you will be interviewed by the partner and a solicitor of the private equity firmPrivate Equity FirmPrivate equity firms are investment managers who invest in many corporations’ private equities using various strategies such as leveraged buyouts, growth capital, and venture capital. The top private equity firms include Apollo Global Management LLC, Blackstone Group LP, Carlyle Group, and KKR & Company LP.read more, and you can expect a few technical and personality-type questions. In the final round, you will be sitting with the HR and the managing director of the private equity firm. Since private equity salaries are much higher than most of the jobs in Dubai, you need to be the best of the lot to get to the final round. And very few best candidates will be selected for the jobs.Checking for reference: In Dubai, private equity deals are done based on the relationship. Since the PE market in Dubai is still emerging, if you can network and build relationships with partners, and associates of PE firms, it would help you get ahead during interviews. Having a reference or two at the end of the interview helps you renegotiate the salary as per your desired range.

Private Equity in Dubai – Culture

The most important part of the private equity market in Dubai is the inclusion of women in the senior-most positions. Dubai Private Equity firms have realized that the diversity of both men and women will help them succeed in the long run.

And the good news is they have been successful to a large extent; at least the numbers say so. According to MENA Private Equity Associations, 18% of the sector’s senior leadership teams are women. It is an astounding feat compared to Asia, North America, and Europe. According to Preqin, women in the same sector in Asia are around 11.8%; in North America, 11%; and in Europe, 9.7%.

In December 2012, the United Arab Emirates cabinet declared that companies and agencies must include women on their board of directorsBoard Of DirectorsBoard of Directors (BOD) refers to a corporate body comprising a group of elected people who represent the interest of a company’s stockholders. The board forms the top layer of the hierarchy and focuses on ensuring that the company efficiently achieves its goals. read more as compulsory.

The work culture in Dubai PE firms is amazing. And that’s maybe because women are not behind in capturing important roles in PE firms.

Private Equity Salaries in Dubai

The banking and finance industry in the UAE has been maintaining an upward trend since 2013. In 2013, many banks and financial institutions concentrated on corporate governance to protect themselves from regulators; still, there are some serious growth indicators. For example, in 2013-14, the Dubai Financial Market General Index had increased by 78.1%.

In 2014, according to Morgan McKinley’s report, the basic salary in UAE would increase by 6-8% as there was an increase in the cost of living and rising rents. Let’s have a look at the gross salaries of private equity professionals in the UAE –

source: morganmckinley.ae

As you can see, the more you grow in experience, your salary increases proportionately. As an Analyst, you will earn around AED 18,000 to 25,000. And as you grow more, you will eventually hit the sweet spot of AED 130,000 to 150,000 per month.

Now, let’s look at the salary of private equity professionals in the year 2016, and then we will compare the data given in 2014 and 2016 –

source: resume.ae

If we compare the salary of Principal Equity & Head – Equity in 2014 and 2016, we will see that the range of salary didn’t change much. That means we can clearly say that AED 130,000 to 150,000 is the saturated point from which salary would rarely increase. However, receiving a salary in the range of AED 130,000 to 150,000 is not a small deal.

Private Equity in Dubai – Exit opportunities

With several exits by private equity funds, the job market is always volatile. There’s less stability in the private equity market.

If you are currently starting in the private equity market, you may look for other options after 2-3 years of work. You can switch to real estate, investment banking, or corporate finance. You may find more stability in general finance profiles than in the private equity market.

After having 8+ years of experience, you will reach at least the partner level in private equity firms.

However, if you have more than 8+ years of experience, there is no reason to exist because you already have established yourself as a core professional in private equity. Moreover, you would have fewer options to exit because there would be more barriers to entryMore Barriers To EntryBarriers to entry are the economic hurdles that a new entrant must face in order to enter a market. For example, new entrants must pay fixed costs regardless of production or sales that would not have been incurred if the participant had not been a new entrant.read more in other finance domains.

In the final analysis

The Private equity market in Dubai is not stable yet. Still, there is optimism that this emerging market will grow and become one of the most attractive destinations for investors worldwide.