Private Equity in Dubai
How does the whole world perceive Private Equity in Dubai? Has Dubai been raising billions to satisfy the thirst of the market? Are the private equity funds exiting regularly? As a potential candidate, can anyone dream of working in private equity in Dubai?
In this article, we will investigate all of the above questions and will try to find answers for each of them.
Let’s have a look at the sequence of the article –
- Private Equity Market in Dubai – Overview
- Private Equity in Dubai – Services Offered
- Top Private Equity Firms in Dubai
- Private Equity in Dubai – Recruitment Process
- Private Equity in Dubai – Culture
- Private Equity Salaries in Dubai
- Private Equity in Dubai – Exit opportunities
- In the final analysis
Private Equity Market in Dubai – Overview
Back in 2008, the private equity market in the Middle East had optimism, but in recent years the public markets have been outperforming and over-delivering.
The most challenging issue in the private equity market of Dubai is the sudden existence of many, many private equity firms. On one hand, the investment opportunities have increased; on the other hand, there are few pressing points like negative geopolitical environment, continual changes in oil prices, and reduction in government spending.
Despite all challenges, it is expected that the MENA region would be one of the fastest-growing regions in the world by looking at the average annual growth in GDP (i.e. 4.1%).
The biggest strength of this region is Dubai which has been one of the fastest-growing economies in the world. In 2014, Dubai’s GDP is projected at US $107.1 billion, with a rate of growth of 6.1%. Even by 2014, China has become the biggest international trading partner.
Seeing all this, it can be concluded that Dubai private equity market will grow irrespective of political and economic issues and challenges in the years to come. And maybe within a decade, we will witness a complete overhaul of the private equity market in Dubai.
Private Equity in Dubai – Services Offered
The services offered by private equity firms are few if we compare it with the European and American PE market. As the volume of funds is low, the types of services are also different.
Private equity firms in Dubai basically offer three, distinct services. Let’s have a look at them –
- Advisory & Syndication Services: As the volume of funds is low, the relationships in the Dubai PE market are everything. PE firms’ advisory & syndication service is completely customized which solves customers’ any and all financial troubles. From structuring debt, equity & mezzanine transaction to offering advisory, Dubai PE firms are always well-equipped. They also have a strong bonding with top-notch banks, financial institutions, etc. in Dubai.
- Fund Distribution Services: Private equity firms in Dubai are MENA-region focused and that’s why they always keep looking for better opportunities for investments. From deal flow origination to finding out and tapping investors, PE firms know how to make the cut. The potential investors that PE firms in Dubai are always looking for are pension funds, insurance firms, private offices, sovereign wealth funds, large families and other financial institutions under GCC (Gulf Co-operation Council).
- Capital Advisory Services: In this case, private equity firms in Dubai are mainly focused on Indian companies that would like to expand their businesses in the Middle East and Africa. That’s why they pursue large M&A deals and any sort of acquisition or partnership route. Along with the Indian group of companies, PE firms in Dubai are also looking for small companies in Dubai and the Middle East which want to expand their business inorganically.
List of Top Private Equity Firms in Dubai
Even if the share of PE is pretty meager, Dubai has been becoming the hub of private equity investment. Let’s have a look at most significant deals executed by top private equity firms in Dubai –
- Gulf Capital: Gulf Capital, an Abu Dhabi based PE firm raised its biggest private equity fund of US $750 million in 2014. This single deal has catapulted Gulf Capital’s total assets to the US $3.3 billion. Gulf Capital has been looking for deals in infrastructure, logistics, energy & consumer.
- The Abraaj Capital: One of the biggest PE firms in Dubai is The Abraaj Group which was founded in 2002 and currently has total assets of US $10 billion. It also has more than 300 employees working for them. In April 2015, this group alone has closed a deal of US $990 million which is a sub-Saharan Africa fund. In July 2016, it has raised the US $526 million to invest in Turkey.
- Ithamar Capital: Ithmar Capital was founded in 2005 and the headquarters of this firm are in Dubai. It boasts to have coverage across Gulf Cooperating Council (GCC) countries. It has already invested and managed over the US $1 billion in equity capital. It has been keeping an eye on the US $270 million of Gulf PE deals.
- CedarBridge Partners: This is one of the topmost PE firms in the Middle East. Currently, every deal that this PE firm invests in is a minimum of US $2 million to $20 million per transaction. It has expertise mainly in Healthcare, Retail Service & Education industry. CedarBridge has coverage across the Middle East, North Africa, Cyprus & Turkey.
- NBK Capital Partners: This is another astounding private equity firm in the Middle East that has invested over the US $875 million in private equity. NBK Capital is based in Dubai and it also has presence in Kuwait and Turkey. The chief focus of this firm is to find out profitable investment opportunities in the MENA middle market and every transaction is usually in the range of US $10 million to $60 million. The primary industry it focuses on is consumer-driven sectors and companies which can grow through acquisitions or organically.
Private Equity in Dubai – Recruitment Process
Since the private equity market in Dubai is still emerging, the chance of private equity entry-level jobs is still easy to get. Many private equity firms source entry-level analysts from local colleges and universities. They are either graduate or postgraduate students who would like to make their mark in the private equity market.
Usually, the following process is being taken by private equity firms in Dubai to recruit private equity professionals (other than sourcing from universities & institutes) –
- Sending your resume & cover letter: The first step is really preliminary. All you need to do is to go to the website of the targeted private equity firm where you would like to work for. Then find out the HR/Career contact details. And send your resume and cover letter to that email id. Make sure that your resume is just one-two page long and full of private equity “lingos”. In the case of a cover letter, try to make it minimalistic.
- Shortlisting for interviews: You can understand how many resumes and cover letters are being submitted to private equity firms! Thus, only 5-10% of all the applications are short-listed and called for interviews. To ensure that your resume and cover letter are shortlisted, make sure that you read any instruction given in the “career” page of the website of that private equity firm. Or else you can check back on the job description and match it up with your own experience and credentials.
- Conducting interviews: The next round is an interview round. For topmost private equity firms in Dubai, usually, a recruitment agency is recruited. The recruitment agency will take your first interview to see whether you are really fit for the job or not. If you are a perfect match for the job, you need to go for the second round of interviews. During the second round, you will be interviewed by the partner and a solicitor of the private equity firm and you can expect a few technical and few personality type questions. Since private equity salaries are much higher than most of the jobs in Dubai, you need to be the best of the lot to get to the final round. In the final round, you will be sitting with the HR and the managing director of the private equity firm. And very few best candidates will be selected for the jobs.
- Checking for reference: In Dubai, private equity deals are done on the basis of the relationship. Since the PE market in Dubai is still emerging, if you can network and build relationships with partners, associates of PE firms, it would help you get ahead during interviews. Having a reference or two at the end of the interview helps you renegotiate the salary as per your desired range.
Private Equity in Dubai – Culture
The most important part of the private equity market in Dubai is the inclusion of women in the senior-most positions. Dubai Private Equity firms have been realizing that the diversity of both men and women will help them succeed in the long run.
And the good news is they have been successful to a large extent; at least the numbers are telling so. According to MENA Private Equity Associations, 18% of the sector’s senior leadership teams are women. This is an astounding feat in comparison with Asia, North America, and Europe. According to Preqin, women in the same sector in Asia are around 11.8%; in North America, 11%; and in Europe, 9.7%.
In December 2012, the United Arab Emirates cabinet has declared that companies and agencies have to include women on their board of directors as compulsory.
The work culture in Dubai PE firms is amazing. And that’s maybe due to the fact that women are not behind in capturing important roles in PE firms.
Private Equity Salaries in Dubai
The banking and finance industry in the UAE has been maintaining an upward trend since 2013. In 2013, many banks and financial institutions concentrated on corporate governance to protect themselves from regulators; still, there are some serious growth indicators. For example, in 2013-14, the Dubai Financial Market General Index had increased by 78.1%.
In 2014, according to Morgan McKinley’s report, the basic salary in UAE would increase by 6-8% as there was an increase in the cost of living and rising rents. Let’s have a look at the gross salaries of private equity professionals in UAE –
As you can see the more you grow in experience, your salary also increases proportionately. As an Analyst, you will earn around AED 18,000 to 25,000. And as you grow more, you will eventually hit the sweet-spot of AED 130,000 to 150,000 per month.
Now, let’s look at the salary of private equity professionals in the year 2016 and then we will compare the data given in 2014 and in 2016 –
If we compare the salary of Principal Equity & Head – Equity in 2014 and in 2016, we will see that the range of salary didn’t change much. That means we can clearly say that AED 130,000 to 150,000 is the saturated point from which rarely salary would increase. However, receiving a salary in the range of AED 130,000 to 150,000 is not a small deal by any means.
Private Equity in Dubai – Exit opportunities
As there are a number of exits by private equity funds, the job market is always volatile. There’s less stability in the private equity market.
If you are currently starting out in the private equity market, you may look for other options after 2-3 years of work. You can switch to real estate, investment banking, or corporate finance profile. In general finance profiles, you may find more stability than the private equity market.
However, if you have more than 8+ years of experience, there is no reason to exist because you already have established yourself as a core professional in private equity. After having 8+ years of experience, you will reach at least the partner level in private equity firms. Moreover, you would have fewer options to exit because there would be more barriers to entry in other domains of finance.
In the final analysis
Private equity market in Dubai is not stable yet, but there is optimism that this emerging market will grow and become one of the most attractive destinations for investors worldwide.
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