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StanChart's Singapore-based private equity spinoff plans Middle East investment
[DUBAI] Affirma Capital, the private equity spinoff of Standard Chartered Plc, plans to complete at least one acquisition in the Middle East and Africa over the next year.
The Singapore-based emerging markets group is targeting deals between US$25 million and US$100 million in the region where consumer spending is on the rise, according to Taimoor Labib, Affirma's founding partner, head of the Middle East & North Africa and chairman of Africa.
The company has about US$700 million to spend after it completed a management buyout of the UK-based lender's private equity business in July.
Affirma, which already manages US$3.6 billion in assets, is particularly interested in Egypt, Nigeria and Jordan, Mr Labib said. The firm is also planning to exit one of its investments in the Middle East and Africa over the next 12 months.
"Post devaluation, for dollar-based investors, it's a great time to go into Egypt. It's still early, but we've looked at quite a few businesses especially in the food and beverage and retail sectors," Mr Labib said.
"We're positive on Saudi from a big-picture perspective. The strategic plans make sense and investors are waiting to see GDP growth and macro trends in 2019. If you see the improvement continuing, which we have seen in the first half, private equity will return in scale in 2020 or 2021."
"Nigeria is another country that went through a painful devaluation and are a year or two behind Egypt in their growth story. They need a decent 2019 to continue to recover, but Nigeria 2020 could be interesting as well. People want to consume and businesses want to expand," he added.
"An internal rate of return of 25 per cent, that's the goal, that has to be the target to get well-groomed limited partners into an emerging market fund."
"To say Abraaj hasn't hurt the Middle East or it hasn't hurt all emerging markets would be disingenuous. We and others are going to have to prove ourselves more to LPs. It's going to be longer fundraising cycles and the know-your-customer requirements for US and European institutions will increase."