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New equity fund for infrastructure to raise $2 billion

SHARM EL SHEIKH — Abraaj Capital, one of the leading private equity firms in the Middle East, North Africa and South Asian region, has entered into a joint venture with Deutsche Bank and Ithmaar Bank, to raise a $ 2 billion Shariah Compliant Alternative Assets Fund. The announcement was made at the World Economic Forum.

The "Infrastructure and Growth Capital Fund" (IGCF) will be one of the largest ever raised in the region. It will be managed by Abraaj Capital and co-sponsored by Ithmaar Bank and Deutsche Bank.

The fund will have a target internal rate of return of 15 per cent per annum and have a life of ten years. The predominant focus of the fund will be to take majority or minority stakes in greenfield projects, participate in large scale privatisation and invest in buyout and restructuring opportunities. The fund will also look to provide mezzanine funding to companies in its targeted sectors.

The key targeted sectors for the fund will be oil & gas, petrochemicals, telecom, power, water, roads, healthcare and education. The investment opportunity in these sectors exceeds well over $1 trillion.

Commenting on the announcement, Arif M. Naqvi, CEO and Executive Vice-Chairman of Abraaj Capital, said: "We are delighted to partner with two outstanding institutions in this ground-breaking fund. Shariah compliant finance is the fastest growing area of the global financial industry and private equity the fastest growing asset class in the Middle East. Bridging the two together creates an enormous opportunity for investors to participate in the regional success."