Self-sustainability a renewed appeal for PE investors in the GCC

Ongoing tensions along the Strait of Hormuz had ramped up awareness among GCC-based investors on the need for regional self-sustainability initiatives, beyond purely seeking ROI, Nahda Capital Partners Founding CEO Inigo de Luna shared with IFN Investor.

This renewed focus has proven to be an unexpected appeal for the just-launched Nahda GCC Fund I in the UAE – which targets to handle US$300 million in Shariah compliant investments, run by asset managers with experience handling PE projects in Spain over the past two decades.

“Many investors seem to agree that regional capital should play a larger role in building regional champions, particularly in sectors that are essential to the future of the UAE and the broader GCC. Our fund seems to have touched a critical nerve, investors like the sector focus because it is practical, defensive and directly linked to the region’s long-term needs.”

The fund aims to scale up mid-market companies across four core sectors – industrials, food production and distribution, education and healthcare – as these are seen to be essential sectors supported by population growth, economic diversification, family business succession and the continued institutionalization of regional companies.

Adopting a hybrid approach, this fund allows co-investment by interested individuals and entities to enable a larger cash pool to be drawn upon. “We are focused on building Nahda Capital Partners as a long-term regional private equity platform, not simply raising a single fund.”

Using this model, the priority is to identify potentials, and Inigo said the firm has already done a review of over 70 prospects, with about 10 making the initial cut before a full due diligence process is conducted next. The prospects range from online teaching platforms to animal healthcare and food deliveries.

Only after a target firm is confirmed will the fund be making a cash call from investor commitments. On average, the investment period would be for a minimum of five years before an exit – either via a sale or an IPO.

Along the way, Nahda Capital Partners will be actively participating in the invested companies, including the provision of mentoring and guidance. “The central idea behind Nahda Capital Partners is to combine disciplined PE investing with hands-on operational value creation.”