No distressed assets in Dubai: Saudi firm

Contrary to general perception, there was no distressed asset in Dubai, a top official from the only Saudi-headquartered private equity firm has said.

Amwal Al Khaleej Board Member and CEO Ammar Al Khudairy said the firm had been actively looking for distressed assets in the emirate but there was not one to be found.

"If you are asking me whether I have found any distressed assets because of leverage in Dubai the answer is unequivocally 'No'. We have not found distressed assets in Dubai. If you have any, please let me know because I am looking for them," he told Emirates Business.

"I know of nobody who has done such a deal," he added. "It's not just us, everybody talks about these things because they are buzz words, they are sexy words, these turn people's attention but I know no colleague in this industry has been able to do a deal that is worth a hundred and did it for 50. I haven't seen it."

The company, which manages about SR2.5 billion (Dh2.44bn) has an office in Dubai and has investments in UAE-based companies Maritime Industrial Services and Dubai Contracting Group.

Al Khudairy said "excellent" opportunities abounded in the services sector in Dubai and the UAE as a whole.

"This is a developed affluent economy, it has moved into the service industry very quickly. It almost leapfrogged from the industrial to a service economy. There's a lot of tourism, entertainment, media, information and advertising. These are all viable opportunities we're looking at," he said.

According to Ahmed Heikal, Chairman and Founder of Citadel Capital, the crisis presents significant opportunities for private equity firms due to a "remarkable" confluence of distressed assets, distressed sellers and governments with overstretched balance sheets.

There are caveats, however. "Among them is the fact that the investments to come will not be the traditional large acquisitions of the type private equity has been making prior to the crisis," he said. The leverage perception of the region may be high but when compared to the rest of the regions, Mena has the lowest leverage.

Mustafa Abdel-Wadood, Managing Director, Abraaj Capital, said leverage of Mena was the lowest at 18 per cent compared to Europe's 55 per cent.

Mena's level is lower than South Asia's, which is at 25 per cent.

He said GCC GDP would remain flat or slightly negative this year but the low leverage and other growth factors such as increasing public spending, growing population and young population would have to be considered while looking at the medium- and long term outlook. In the GCC, Abdel-Wadood said, non-oil sector, which was 50-70 per cent of the economy and comprise 98 per cent of employment, continued to grow.

"Future outlook will be better as years of reform and state investment initiatives bear fruit," he said.

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