3i invests in Arabian Gulf via Ithmar Capital $250m Fund II
3i, a world leader in private equity and venture capital, has announced it is committing $15m to Ithmar Capital, the Gulf-based private equity firm, which is raising its second fund, Ithmar Fund II, expected to reach USD $250 million.
The strategic alliance between 3i and Ithmar Capital is the first example of a foreign private equity firm’s participation in a GCC (Gulf Co-operation Council) fund to date. It also builds on 3i’s strategy to expand its international network into high growth territories, adding value to its $10bn portfolio and to gain exposure to new markets.
Ithmar Fund II focuses on growth capital and buyout investments in various attractive sectors of the high growth six GCC markets: United Arab Emirates (UAE), Kuwait, Qatar, Bahrain, Oman and Saudi Arabia.
Ithmar Fund II is expected to be substantially oversubscribed, raising $250m in total, comfortably exceeding its initial US $150m target. Investors including major institutions and high net worth individuals were yesterday updated on the close of the fund and the alliance with 3i at Ithmar Capital’s first investor and shareholder meeting in Dubai.
“The expansion in fund size is not only due to high investor demand but, more fundamentally, due to the larger deal sizes that we have been witnessing over the past 12 months. Of the many opportunities in the region, Fund II will ideally finance around two to three of the best businesses a year with enterprise values of between $15m and $500m” said Faisal Belhoul, Founder and Managing Partner, Ithmar Capital.
Paul Waller, a member of 3i Group Management Committee and an advisor to Ithmar Capital’s Investment Committee added “This strategic alliance underscores growing international investor appetite for the Middle East and particularly the surging Gulf economies. 3i’s portfolio companies, like NCP, Hobbs and SR Technics, are increasingly interested in expansion opportunities in this region. 3i’s partnership with Ithmar Capital, a leading GCC private equity firm, enables us to help the companies we back to gain exposure to this important growth market in the best possible way.”
Khaldoun Haj Hasan, Co-Founder and Managing Partner, Ithmar Capital added “The 3i-Ithmar alliance is mutually beneficial, providing Ithmar with unique and proprietary deal flow to 3i’s international portfolio companies which have GCC expansion plans. It also allows Ithmar access to 3i’s international market intelligence, and best industry practices. Meanwhile 3i gains exposure to the GCC markets and increases its global network reach.
The Arabian Gulf countries stock markets have become substantial markets with a combined market capitalisation of over $1trillion in 2005, according to a report by Kuwait-based Global Investment House (Global).