The post-financial crisis consolidation of the Gulf’s private equity industry has left a core of around 12 experienced major players, which is re-shaping the types of deals being done in the region and how they’re being managed.
That’s according to Yaser Moustafa, the newly-appointed senior managing director of Dubai-based NBK Capital Partners.
Speaking to AltAssets from NBKCP’s offices in the Dubai International Financial Centre earlier this week, Moustafa said, “If there were 50 major private equity firms here in 2008, in terms of serious players, I think you’d be stretched to name 12 now.
As a result, the deals that are being done now are much more sophisticated than the ones that were being done maybe five years ago – [in terms of] the types of deals, the owners of the assets and the sellers of the assets, and for us buyers as well.
“The industry has moved on from the purely financial types of deals, to those which also offer operational advantages and strategic thinking.”
This, Moustafa noted, is a type of private equity strategy that NBKCP happens to specialises in.
NBK Capital Partners is the private equity and mezzanine funds arm of Kuwait-based NBK Capital, which in turn is the asset management, brokerage, research and investment banking arm of National Bank of Kuwait. Moustafa’s appointment came as part of a recent effort to create a distinct identity for NBK Capital’s private equity business, which has been operating under NBK Capital’s auspices for more than nine years.
Moustafa is by nationality an American whose family originally came from Egypt. He received a BA from the University of Chicago, and an MBA from the Kellogg School of Management at Northwestern University, after which he began his career in the investment banking operation of Lehman Brothers in New York.
He joins NBKCP from Alvarez & Marsal, where for the past three years he headed up its private equity advisory practice for the Middle East as managing director.
At NBK Capital Partners, Moustafa succeeds Amjad Ahmad, who left NBK Capital Partners earlier this year, after seven years there, and 10 years altogether at NBK Capital. He reports to Faisal Al-Hamad, who was named CEO of NBK Capital in January.
Moustafa says that the rebranding of NBK Capital Partners hasn’t meant a change in the entity’s business model, which he says has produced solid PE returns for NBK Capital and its clients. The division focuses on consumer- facing Middle Eastern, Turkish and North African businesses, such as restaurants, as well as companies in the healthcare and education sectors.
“We’re in the process of exiting NBK Capital Equity Partners Fund 1, a $250m private equity fund that was fully deployed across Turkey and the Middle East,” he says.
“I can’t say what the returns will be, but they’re very very healthy. We’ll also be exiting one of our investments in our $157m NBK Capital Mezzanine Fund I over the next year to 18 months.
“We recently closed what we call Equity Partners Fund II, which was $310m, and we’re beginning to deploy that. We’ve already made two investments in Turkey, and we’re actively looking at additional investments in Saudi Arabia and in the UAE.
“In the fourth quarter of this year or first quarter of 2016, we will be raising our second mezzanine debt fund.”
Asked to name a couple of NBK Capital Partner’s current PE portfolio stand-outs, Moustafa cited Yatsan, a Turkish mattress manufacturer and retailer, and Shakespeare & Co, a Dubai-based restaurant chain that began in 2001 and now consists of 21 company-owned outlets in the UAE and some 17 franchises in Lebanon, Jordan, Qatar, Oman, Bahrain, Iraq and the United States. NBKCP acquired a 49 per cent stake in the chain in November 2013, according to the company’s website.
NBK Capital Partner’s ultimate parent, the National Bank of Kuwait, is one of the Gulf’s largest banking institutions. Based in Kuwait City and publicly held, it is one of the top 10 constituents of the MSCI’s Frontier Markets 100 Index, which returned 5.34 per cent in 2014, compared with 26.33 per cent the year before. These returns compare with returns of -2.19 per cent and -2.6 per cent, respectively, for the MSCI’s Emerging Markets Index.