Despite early indications that the Middle East would escape the effects of the credit crunch, the shockwaves of economic turmoil in Europe and the US are beginning to be felt.
In a survey conducted by research consultancy Arbor Square Associates on behalf of Deloitte, 30 global private equity firms were interviewed. Of this, 73% expected a decrease in exit activity, 53% predicted return values to decrease, and 83% foresaw a fall in entry multiples in 2009.
However, 60% expected private equity investment in the Middle East and North Africa (MENA) region to either increase or remain the same.
Chris Ward, CEO of financial advisory services at Deloitte Middle East, said “Irrespective of global challenges, MENA continues to attract investors. In fact, 75% of respondents expect an increase in investor appetite for MENA funds as a result of the continued underlying economic growth of the region, the significant financial resources here and, as yet, the wealth of untapped opportunities in the region. This does not mean that investors are being reckless, however, thorough due diligence will once again come to the fore and we are certainly going to see a return to traditional hands-on portfolio management.”