Abraaj named world’s largest emerging market private equity firm

Farooq Tirmizi May 11, 2010

KARACHI: Abraaj Capital, a Dubai-based investment firm, is the only firm from outside North America and Europe named in the top 50 of Private Equity International magazine’s list of the largest private equity firms in the world.

The firm, led by Pakistani financier Arif Masood Naqvi, managed to raise $6.46 billion over the past five years, the sole criterion by which PEI judges the size of private equity firms. PEI, one of the leading magazines in the world covering the alternative investments sector, has come out with the PEI 300 rankings of the largest private equity firms in the world for the past four years, the only such ranking available. Abraaj Capital invests primarily in the Middle East, North Africa and South Asia (MENASA) region, which includes Pakistan.

Both its senior management, including the CEO, as well as its board of directors include several Pakistan members. “Getting into the top 50 shows that there is enormous interest and potential in the emerging markets, and the MENASA region in particular, where the opportunities for growth are remarkable,” said Mustafa Abdel-Wadood, the CEO of Abraaj Capital’s private equity business, in a statement released to the press.

The firm has made $500 million worth of investments in Pakistan including BMA Capital (a financial services firm), the Karachi Electric Supply Company, Bosicor Refinery and Mannan Shahid Forgings (a steel forging company). Abraaj first caught the Pakistani imagination in late 2008, when it invested $361 million in KES Power, parent company of the KESC, promising to turn the loss-making public sector utility around.

The firm took over KESC’s management in September of that year, coming in with a five-year plan to increase power production by up to 1,100MW and turn the utility’s losses into profits before selling it off. Yet the firm has found its effort to turn around the company to be very difficult and fraught with political difficulties in addition to a slowdown in the Pakistani economy. Private equity investors usually buy out entire companies with the intention of selling them off at a higher price, either by improving their profitability or by selling off the assets of their acquired company for more than what they paid for the entire enterprise.

Goldman Sachs Group’s private equity division was named the largest such investor in the world. None of Pakistan’s nascent private equity firms made it onto the list of the top 300 private equity investors, with American and European firms dominating the list.

Published in the Express Tribune, May 12th, 2010.