Assignment – 02 - PEVC

Group – 05

Group Members:

Y. Akshay Bharadwaj M054-18

Mobile: 6204960511

y.akshaybharadwaj18@iimranchi.ac.in

Sarthak Gupta M176-18

Mobile: 8130147480

sarthak.gupta18@iimranchi.ac.in

Rakesh Kumar M166-18

Mobile: 8237440458

rakesh.kumar18@iimranchi.ac.in

Q1. How is private equity in the Middle East different from that in Europe or US? How has Abraaj

Adopted the traditional model?

Ans. Private Equity Investments in the Middle East is different from that in Europe or US in the following

three important areas: -

1. For developed economies such as Europe or the U.S., project infrastructure means hard

infrastructure such as transportation, power, Utilities, and toll roads. Yet investments in

infrastructure projects available in Hard as well as Soft (Education and Health Care) in

the Middle East and other areas in North Africa and South East.
 2. Europe and the U.S. economy rely primarily on private-sector investment. The Middle

East countries had not historically associated themselves with the concept of

privatization. In recent years, however, these countries have decreased investment

barriers and started to sell state-controlled businesses, and it is expected that roads to

oil pipelines will be handed over to banks in the coming year.

3. Many corporations are corporatized and institutionalized in developed countries. Yet

company is prevalent in the Middle East family run and transactions involving family

businesses are highly complex compared to mere buyouts.

Adraaj identified, quantified, created and believed in the dynamics of Middle East and the

success resulted from capturing the available opportunities in growth and transformation.

Q2. How did Arif Naqvi get his new firm established in a novel market?

Ans. Arif Naqvi moved to Dubai to pursue investment opportunities, particularly in the sector of financial

advisory services.

 In 1994, it started with $50,000 of his personal fund to acquire Cupola to provide financial

advisory.

 Duty-free kiosk raised $8 million and earned $800,000. He also received several local franchises.

 Cupola's first LBO (purchase of Inchcape Middle East for $102 million) was made in 1999.

Divested Cupola and IME for $173 million.

 By 2001, the Cupola value had been $150 million.

 Separated investment arm from Cupolas operating business and this investment arm was called

Abraaj.
 Between 2002 to 2005 there was opportunities which Arbaaj capitalized like raising $65 mn for

its buyout and growth fund. He sold some equity to high net worth individuals which helped to

build the organization's insfrastructure and create credibility to penetrate into key countries.

Q3. How has Abraaj been so successful to date? Has it been skill or luck?

Ans. It is the foresight that Abraaj had to invest in opportunities available in the region that has

made it so successful.

1. Been able to recognize opportunities like Aramex, followed by emphasis on buyout funds

2. Thorough research led to identification of opportunities for investment

3. Leveraging strong personal relations for pitching their financial advisory services

4. Proper due diligence being followed like in the case of National Air services and Egyptian

Fertilizers company

5. Setting up advisory board aimed to assure Abraaj’s compliance of corporate governance

6. Providing greater returns for investors and attracting future funds

7. Embedding operational experience in investment teams

Q4. What strategic choices should Arif Naqvi make?

Ans. Abraaj should not partner with only one global firm. It has established its credibility, and strong

relations with clients, it has also developed the market on its own. It should form strategic alliances

with globally present firms that need assistance in the MENASA region. It should gauge its position if

it goes for an IPO.