January 31, 2018

NBK Capital Partners successfully exits pioneering $157m private debt fund

Alternative investments firm exits portfolio of eight mezzanine investments across the UAE, Saudi Arabia, Kuwait and Turkey

NBK Capital Partners – an alternative investments firm that advises on providing flexible capital to mid-sized companies in the Middle East and North Africa (MENA) – has successfully exited its inaugural US$157 million private debt vehicle.

Returning a 17% gross Internal Rate of Return (IRR) on investments in the UAE, Saudi Arabia, Kuwait and Turkey, NBK Capital Mezzanine Fund I ranks among the top performing private debt funds in its vintage year.

Raised in 2009, the region’s first mezzanine fund – a hybrid of debt and equity financing – was a pioneer for flexible long-term direct lending launched in the wake of the global financial crisis to meet the financing needs of mid-sized firms unable to secure attractive terms with banks constrained by regulatory and structural changes. The closure of NBK Capital Mezzanine Fund I represents the successful exit of eight investments in the portfolio for NBK Capital Partners, the alternative investments arm of NBK Capital.

Yaser Moustafa, Senior Managing Director at NBK Capital Partners, said: “I am delighted with this milestone, which demonstrates the superior returns that we continue to generate for investors and validates the tremendous opportunity for private debt strategies in the region. It builds on our track record that now totals 17 realizations from 29 investments, the highest number of profitable exits by an alternative investments firm in the region over the past decade. We remain focused on maintaining this level of success for investors across our private equity, private debt and real estate interests.”

Headquartered in the Dubai International Financial Centre, UAE – with a presence in in Bahrain, Kuwait and Turkey – NBK Capital Partners secured funding from prominent regional endowments, pension funds, family offices, HNWIs and affiliates of NBK Capital for the NBK Capital Mezzanine Fund I.

NBK Capital Mezzanine Fund I’s mezzanine debt portfolio included: UAE-based companies such as Eikon, a university operator that provides academic infrastructure and related services to Heriot Watt University of Scotland; Al Maaref Private School; and Metito Utilities Limited, the largest privately-owned water and wastewater treatment company in the Middle East. In Turkey, the fund invested in: Aras Cargo, a leading courier express and parcel provider; Dem Pharmaceutical, an importer and marketer of niche pharmaceutical products; and Kiliç Deniz, a leading aquaculture company. Its remaining two realized investments were Al Rowad Holding, one of the largest private K-12 educational operators in Saudi Arabia, and a regional bakery business.

In 2017, NBK Capital Partners – which has advised on investments exceeding US$1billion – raised $160m for NBK Capital Partners Mezzanine Fund II backed by strong demand from a broad base of regional investors. It will continue to advise on direct lending to firms with a proven track record of profitability, market-leading positions and strong management teams.

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