Abraaj raises $375m for acquisitions

The MENASA-focused firm will use the new capital to seed new funds and possibly acquire an Asia-focused rival.

Dubai-based private equity firm Abraaj Capital has completed a $375 million rights issue to its existing shareholders. The proceeds will be used to capitalise on strategic buying opportunities and expand its “geographic and product coverage”, according to a statement.

Abraaj may use some of the proceeds to acquire an Asia-focused asset manager, according to a source close to the firm. A report in the Financial Times said the firm would buy an international competitor.

“The days of ‘go west, young man’, have gone: we have to look east,” Arif Naqvi, founder and chief executive officer of Abraaj, told the Financial Times.

The fact that the rights issue was fully subscribed demonstrates investors' “strong confidence” in and commitment to Abraaj, the firm said. The latest fundraising increases to $1.5 billion the company’s paid-in capital.

Abraaj manages four vehicles: two generations of private equity buyout funds, a real estate fund and an infrastructure and growth capital fund. In total the firm has more than $2.6 billion in third party funds under management. Its largest fund, the Infrastructure and Growth Capital Fund, closed on $2 billion in December 2007 and has made 12 investments.

The new share capital raise by Abraaj will be used both to seed new funds and to potentially make strategic acquisitions for the firm itself, expanding its “sphere of operations”.

Abraaj’s investment activity is currently focused on the Middle East, North Africa and South Asia (the MENASA region).

Naqvi described the long-term prospects for the firm as being “better than at any point in the past”.

He said the economic environment has produced interesting opportunities. “Asset prices are more reasonable, aspiring regional and global competition has largely retreated, and consolidation opportunities, both for our firm and our portfolio companies, are available.”