MENA PRIVATE EQUITY ASSOCIATION PRIVATE EQUITY & VENTURE CAPITAL IN THE MIDDLE EAST

ANNUAL REPORT June 2012

2011

REPORT STEERING COMMITEE

Ahmed Emara, ReAya Holding Anthony Hobeika, Gulf Capital Ali Arab, Zawya Aziz Moolji, Abraaj Capital Imad Ghandour, CedarBridge Partners Karim Ben Salah, Swicorp Samer Khalidi, NBK Capital Samer Sarraf, Amwal AlKhaleej

SPECIAL THANKS

Special thanks to our sponsors and all those who helped develop the Report.

REPORT SPONSORS
Abraaj Capital NBK Capital Qatar First Investment Bank Swicorp AfricInvest-TunInvest

KPMG

Dale Gregory, Brad Whittfield, Jawad Shafique and Zuhaib Khan

Zawya

Ali Arab, Hussam Muhieddine and Lara Ghibril

AMIC (Moroccan Venture Capital & Private Equity Association): Capital MSL
Nahed Ashour We would also like to thank all the survey participants.

Francoise Giraudon, Omar Chikhaoui, Stephanie Billard and William Fellows

TABLE OF CONTENTS
01. IMPORTANT NOTICE 1.1 1.2 1.3 1.4 02. BASIS OF PREPARATION MOROCCO DATA DEFINITIONS & ASSUMPTIONS DATA FILTERING 09 05

INTRODUCTORY MESSAGES THOUGHT LEADERSHIP: MENA MACRO FUNDAMENTALS IN 2.1 2.2 THE AFTERMATH OF THE ARAB SPRING MENA PEA INTRODUCTORY MESSAGE KPMG INTRODUCTORY MESSAGE

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PRIVATE EQUITY IN THE MENA REGION 3.1 3.2 SUMMARY FUNDS 3.2.1 3.3 FUNDS RAISED TO DATE THOUGHT LEADERSHIP: THE SHAKEOUT IS THE NUMBERS INVESTMENTS 3.3.1 3.3.2 3.4 INFORMATION LIMITATIONS INVESTMENTS MADE TO DATE

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REGIONAL FOCUS THOUGHT LEADERSHIP: REALITIES OF INVESTING IN KSA: OPPORTUNITIES AND DIFFICULTIES SECTOR FOCUS THOUGHT LEADERSHIP: HEALTHCARE SECTOR- OPERATING CHALLENGES IN A FAVORABLE MACRO ENVIRONMENT THOUGHT LEADERSHIP: INVESTING IN EDUCATION- LESSONS LEARNED FROM THE FIRST ROUND EXITS THOUGHT LEADERSHIP: PRIVATE EQUITY & THE ARAB SPRING

3.5

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04. SURVEY OF GPS OF THE MENA REGION 4.1 4.2 INTRODUCTION SURVEY RESULTS 4.2.1 4.2.2 4.2.3 4.2.4 05. 06. 07. 08. RESPONDENT PROFILE OUTLOOK REGIONS AND SECTORS OF INTEREST THE IMPACT OF THE FINANCIAL AND POLITICAL CRISIS 56 59 66 70 39

ABOUT THE MENA PRIVATE EQUITY ASSOCIATION & AMIC SPONSOR PROFILE MEMBERS DIRECTORY PRIVATE EQUITY & VENTURE CAPITAL FIRMS IN MENA

IMPORTANT NOTICE

IMPORTANT NOTICE

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IMPORTANT NOTICE

1.1 BASIS OF PREPARATION

This report has been prepared based on data provided by the MENA Private Equity Association, and sourced from the Zawya Private Equity Monitor. Historical data has been updated from that used in the 2010 Annual Report to reflect increased disclosure of information in the market. KPMG member firms have not initiated any primary research in relation to this draft report and have not sought to establish or confirm the reliability of the data provided by the MENA Private Equity Association and Zawya. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is or will continue to be accurate. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. In analysing and determining the parameters of available data, it has been necessary to apply certain criteria, the most significant of which are as follows: Private equity has been defined to include houses that have a General Partner / Limited Partner structure, investment companies and quasi-governmental entities that are run by, and operate in the same way as, a private equity house. Venture capital for the purpose of this report is defined as a fund specifically dedicated to venture capital investments. This includes funds by Venture Capital Firms, and Venture Funds under Private Equity Firms. Funds managed from MENA but whose focus is to invest solely outside the region are excluded from the fundraising and investment totals. MENA includes Algeria, Bahrain, Egypt, Iraq, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Palestine, Qatar, Saudi Arabia, Sudan, Syria, Tunisia, UAE, and Yemen. Investment size represents the total investment (both the debt and equity portions). However fund size only considers equity invested, as we have no visibility on debt exposure by funds. The fund raising totals are the amounts closed/committed for fund raising funds, closed funds, investing funds, fully vested funds and liquidated funds. Exits have been defined to include partial exits, although simple dilutions have not been included.

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1.2 MOROCCO DATA

We have worked with AMIC, the Moroccan Venture Capital & Private Equity Association on PE/VC data for Morocco. However, given time constraints and differences in collection format, we were not able to update all charts for the 2011 Annual Report. We are working toward unifying the data for next years report. For detailed information on the Moroccan PE/VC industry, refer to the 2011 AMIC Private Equity Report, available at: http://issuu.com/amicdocumentation

1.3 DEFINITIONS AND ASSUMPTIONS

For analytical purposes, we have considered the following types of funds, as defined by Zawyas Private Equity monitor: Announced: Official launch of funds which are yet to commence fund raising. Rumoured: Funds expected to announce their intention to commence fund raising. Fund raising: Funds which have been announced and are in the process of raising capital. Investing: Funds which have closed and are actively seeking and/or making investments. Fully invested: Funds that have invested all capital raised. Some of the investments may have divested in this stage but not all. Liquidation: Funds which have divested all investments and have fulfilled all obligations to shareholders.

1.4 DATA FILTERING

The primary data sourced from Zawya has been filtered according to the definitions used in the Emerging Markets Private Equity Association (EMPEA) research methodology. In particular we have used the following definitions: Fund Size: In the case of funds yet to make a first close, or where no close information is available, fund size is equivalent to the target amount, and is noted as such. For funds achieving at least one official close, fund size is reported as the capital raised to date, while for funds that have made a final close, the fund size is the total capital raised. All amounts are reported in USD millions. Rumoured funds are excluded. Currency: Where funds data has been provided in a currency other than USD, exchange rates applied are from the last day of the month in which each close is reported, e.g. first close reported in on 15 April 2011 would be calculated using the exchange rate for 30 April 2011, taken from publicly available sources.

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Funds of funds or secondaries are excluded. Region: Statistics are based on the market approach and funds are categorised based on the intended destination for investments (as defined in a funds announced mandate) as opposed to where the private equity firm is located. With regard to multi-region funds, we have included these to the extent that there is a focus on the MENA region. EMPEA methodology includes only those multi-region funds whose primary intention is to invest in emerging markets. However, the source data does not provide visibility on primary geographic intention. Funds established with a specific mandate to invest in real estate are excluded from the fundraising, investment and exit totals. The remaining real estate investments relate to funds with mixed investment mandates. Conventional infrastructure funds, or funds investing directly in greenfield infrastructure projects (e.g. bridges, roads etc.) are excluded from fundraising totals. However, funds that make private equity investments (determined based on target returns) in companies operating in the infrastructure sector are included. EMPEA does not track or report other alternative asset classes, including hedge funds, real estate funds and conventional infrastructure funds. In our analysis we have excluded data from investment-type companies, real estate firms and Sovereign Wealth Funds.

INTRODUCTORY MESSAGES

INTRODUCTORY MESSAGES

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MENA Private Equity Association: Introductory Message

The conclusions of this report are surprisingly positive given the backdrop of the Arab Spring and the subsequent turn of events in the region. One would have expected that investors and funds would have shied away during 2011 given the overhang of political uncertainty but to the contrary, the volume of investments and divestments in the MENA region increased relative to 2010. This positive momentum within the private equity landscape is not surprising for those who are intimately familiar with the business activity in the region. From Morocco to the Arabian Gulf, there are numerous pockets of growth that private equity players are partaking of both to deploy capital and to return capital to their investors. Whether it is retail in Dubai, healthcare in Saudi Arabia, technology industries in Egypt, or oil services in Iraq, to name a few, there is a broad spectrum of investment opportunities that are attracting both private equity and strategic investors. The clouded macro environment may have affected the appetite of investing in regional private equity funds. But political risks in the region may have the same detrimental effect on equity value like regulatory risks in China or economic risks in Europe. Private equity as an alternative asset class - is about investing in growth opportunities that are less correlated to the general business environment, and, in some cases, take advantage of such unfavorable circumstances. Competent regional managers, like their counterparts elsewhere in developed and growth markets, have learned to navigate around regional risks, and are demonstrating their ability to deliver returns to their investors. The realized exits in a difficult year like 2011 clearly underscore their achievement. As the industry concretizes its accomplishments and distills better managers, our aim as an industry association is to communicate and celebrate our successes with our limited partners community, and to emphasize that private equity in the MENA region is here to stay and prosper.

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KPMG Introductory Message

KPMG is pleased to continue its association with the MENA Private Equity Association in, once again, producing the annual report on the private equity and venture capital industries in the MENA region. While 2011 continued to present certain challenges for the PE industry in the region, it was encouraging to see the total known number of transactions completed by MENA focused funds increase for the first time in recent years from 70 in 2010 to 73 in 2011. PE firms continue to be cautious in their investment strategies favouring the non-cyclical and defensive sectors with strong long-term fundamentals. Total fund raising decreased in 2011 compared to 2010, as there was a noticeable shift in the regions fund raising focus with 6 of the 10 major funds which successfully closed during the year having a growth capital investment focus (an increase from 3 in 2010). It is encouraging to see a greater number of funds focus on growth capital investing, since most private capital investing opportunities in the region are growth orientated in nature. In addition, to maximise investing flexibility, investors are now less willing to limit their investment focus by sector, and prefer the flexibility to look for value across a broad range of sectors. While strong macro-level fundamentals continue to play a strategic role in MENAs economic road to recovery, the establishment of political and social stability remain important elements for the investing environment in the short to medium term. With the ongoing slow down of more mature markets, MENA is likely to remain a region of opportunity and hub for private equity and venture capital activity. We would like to note that this report would not have been possible without the efforts of Zawya, the MENA Private Equity Association and the members of the Reporting Steering Committee. We are grateful to them for sharing primary data and industry insights, and we support the efforts of the Association in furthering the interests of Private Equity in the Middle East. Dale Gregory, Partner Transaction Services T: + 971 4 403 0300 - E: dgregory1@kpmg.com KPMG is a global network of professional firms with over 145,000 staff in member firms across 153 countries. KPMG in the UAE was established in 1974 and has grown to 650 professional staff led by 31 Partners, across 8 offices in the country. We work closely with our colleagues in offices throughout the MENA region and across the world.

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Thought Leadership: MENA Macro Fundamentals in the Aftermath of the Arab Spring: A Large Gap of Catch-Up Growth to Bridge by a Too-Big-To-Ignore MENA Economy Anthony Hobeika, Head of Research, Gulf Capital Pvt. JSC

The need for more equitable and sustainable economic expansion, alongside social benefits for unprivileged people, was a key socio-economic driver of the recent wave of political transformation in a number of MENA countries (such as Tunisia, Egypt, Libya, Yemen and Morocco). At the same time, the growing recognition that these social and economic needs cannot be ignored has further credited the reform process and stimulus packages in other countries (mainly the Arabian Gulf). For well-entrenched regional private equity (PE) investors, the Arab Spring represents a historic opportunity to gauge long-term growth prospects in many industries and geographies, notwithstanding the short-term challenges of investing in selected countries arising from the transitory aspect of the current events. Patient and informed PE players will be able to benefit from highly interesting success stories in many areas of the MENA economies.

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Specifically, with an aggregated GDP of circa USD 2.5 trillion, the MENA region has become a large, emerging economic zone that is hard to ignore on a global scale. Its size is now comparable to emerging economies such as Brazil, Russia and India offering a competitive depth for sizeable investments. It is also delivering healthy and steady growth in economic activity, supported by attractive fundamentals.

The economic dynamics look increasingly appealing, and may be further unlocked by the ongoing political

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transitions and reforms throughout the region. Although the different MENA countries are at uneven stages of their development, the average Arabian economy is at the catch-up stage of high growth. When coupled with its young, fast-growing population by global standards, the region offers investment opportunities in demographically-driven and income-driven niche sectors.

Consumer sectors such as food and beverage, healthcare, education, power and water, and retail are typical benefiters in such growth economies. PE firms that are able to identify the key trends within these industries will be best placed to outperform the wider economy. Specific opportunities will depend on where each country stands in the long-term economic cycle. For example, while in terms of depth the UAE, KSA and Egypt have comparable consumer market sizes, these countries are at different stages of their maturing process, which would imply different investment strategies and growth potential.

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In both the immediate and longer-term, the Arabian Gulf countries appear to be more immune from economic spillover effects when compared to the rest of the region, in particular in the aftermath of the regional political disturbances. In addition to having limited or no political unrest (barring Bahrain), it is the combination of several fundamental economic and policy factors that makes the GCC countries a more sustainable environment for economic prosperity.

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These factors include the sub-regions large base of natural resources, government capability and devotion to support local economies, progressive reforms, and diversification away from oil. GCC consumers are spending on the back of rising purchasing power and governments are implementing large-scale infrastructure projects. The GCC region is thus increasingly viewed as an attractive investment destination, in particular from a risk/ reward standpoint.

In the longer run, other MENA countries are also strong candidates for attracting investment, as a number of these economies are growing from an exceptionally low base when compared to global and emerging markets. Many have sufficiently large and fast-growing young populations yet to tap the labor market, thus fueling domestic demand and economic growth. In particular, the countries witnessing current political changes, such as Egypt, Morocco, Tunisia and Libya, have a historic chance to bridge the vast untapped potential for growth. However, the current political transitions, as well as the implementation of long-awaited reforms by the new political class, are key challenges to overcome in the near future.

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PRIVATE EQUITY IN THE MENA REGION

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PRIVATE EQUITY IN THE MENA REGION

3.1 SUMMARY
2011 was an encouraging year for the MENA private equity industry. Despite challenges posed by sociopolitical unrest in a number of countries, the industry began to show signs of recovery. Industry data reveals an increase in deal volumes, while a number of funds successfully raised capital, despite a challenging fundraising environment for the industry globally. A number of countries that experienced social unrest as part of the Arab Spring, which began with Tunisia and Egypt in 2010 and spread to Bahrain, Libya, Syria and Yemen in 2011, continue to face headwinds in their transition to a more stable political and social environment. However, it is anticipated that the Arab Spring has the potential to usher in improved governance, greater transparency and a more stable investment environment which should lead to the opening up of markets, which, with the exception of Egypt, have traditionally offered limited opportunities to private equity players. In addition to this the events of the Arab Spring highlighted the need for regional governments to adopt and institute broader reform policies encompassing education, job creation through investment in infrastructure and entrepreneurship and the development of a more competitive and participative private sector. As regional governments accelerate their drive to build sustainable, diversified economies, supported by strong underlying macroeconomic fundamentals (such as abundance of hydrocarbons and favorable demographics) which are expected to continue to drive economic growth in the medium and long term, reforms instituted will continue to increase the scope for investments supporting the PE industry.

Note: While we have included a total transaction value in the chart above, this excludes a number of transactions for which the value is unknown (some of which are estimated to be considerably large in value terms). Source: Zawya Private Equity Monitor and AMIC.

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Over the past three years, following the global economic slowdown, fundraising in the region has averaged USD 113 million per close, with USD 0.7 billion being raised in 2011, USD 0.8 billion lower than the total funds raised in 2010. More than 10 funds were successful in raising capital in 2011, with an increased focus on growth capital-focused vehicles. It is also encouraging to see the total number of transactions increasing for the first time in recent years, despite the political instability in the region. Egypt returned as one of the leading destinations, claiming 22% of the total number of investments in 2011 (compared to just 4% in 2010). Also, continuing the trend seen in 2010, the Kingdom of Saudi Arabia (KSA), Turkey and the United Arab Emirates (UAE) remained popular destinations for investment in 2011. PE firms continued to invest cautiously and favor non-cyclical sectors such as transportation, healthcare, energy and food/agriculture which accounted for nearly a third of total number of investments in 2011. Sectors that were most significantly impacted by the global financial crisis, such as real estate and construction, continued to see reduced activity. As the nascent PE industry in the region begins to mature, funds are beginning to approach the end of their expected life cycle and hence PE players are increasingly focusing on managing exits. In the immediate aftermath of the global financial crisis, most regional private equity players increased their focus on preserving and enhancing value within their portfolios. This strategy seemed to have paid off, and the number of exits in 2011 increased to 30, relative, to 7 and 23 in 2009 and 2010. This trend is likely to continue in 2012 with 23% of managers stating that they will be primarily focused on exits during this year.

3.2 FUNDS 3.2.1 FUNDS RAISED TO DATE

Global macro-economic headwinds, driven primarily by uncertainty in Europe created a challenging fundraising environment for the PE industry globally. Total capital raised reached its lowest point in 6 years with total funds raised representing a 2.5% decline relative to 2010 and 60.5% decline relative to 2008*. The adverse global macroeconomic backdrop, combined with the events of the Arab Spring, resulted in a
* Source: Bain & Company Global Private Equity Report 2012, p19.

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challenging fundraising environment in MENA in 2011, with only USD $ 0.7 billion of funds raised during the year relative to US$ 1.5 billion in 2010.

Note: Due to data limitations, excludes Morocco Source: Zawya Private Equity Monitor

Note: This graph does not reflect funds repaid to investors or management charges, both of which will reduce the cumulative funds under management. Due to data limitations, excludes Morocco. Source: Zawya Private Equity Monitor

Consequently, cumulative funds under management grew to USD 23.2 billion in 2011. The continuing

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lack of bank financing available and limited access to viable capital markets in the region have meant that companies continue to view PE as an attractive source of capital. Despite this, the regional PE industry remains significantly under penetrated with cumulative funds raised during the past decade reaching around 1% of 2011 GDP as compared to around 11% of GDP in more developed markets such as the US, highlighting the industrys strong growth potential. The average close per fund decreased from USD 141 million in 2010 to USD 62 million in 2011. The following table details major funds that successfully closed during 2011.

Note: Other relates to funds raising in Morocco. Due to data limitations, all average calculations pertaining to funding exclude Morocco. Source: Zawya Private Equity Monitor and AMIC.

Of the 8 new funds announced in 2011, 3 reached successful closes, raising a total of USD 254 million. This represented 74% of the combined initial target size (ITS) of these funds and 38% of the total funds raised in 2011. The five funds that were announced in 2011 that did not make a first close have a total ITS of USD 742 million. Omans first PE fund the FINCORP Oman Private Equity Fund was successfully launched in 2011. The fund intends to encourage entrepreneurship in Oman with a focus on industrial manufacturing, petrochemicals, infrastructure, healthcare, education, tourism and hospitality.

1Sources: Cumulative funds raised since 2001 in MENA: USD 23.2B (Source: MENA PE association current and past reports), GDP 2011 for MENA:

USD 2.5 trillion (Source: IMF April 2012), Cumulative funds raised since 2001 in U.S.: USD 1.7 trillion (EMPEA annual reports), GDP 2011 for U.S. : USD 15 trillion (Source: IMF April 2012)

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Note: Due to data limitations, excludes Morocco Source: Zawya Private Equity Monitor

2011 saw a noticeable shift towards growth capital funds, with 6 of the 10 major funds raised during the year having a growth capital investment focus. Collectively, these growth capital funds represent USD 0.5 billion or 81% of funds raised during 2011 (with an ITS of USD 1.1 billion). The rise of growth capital funds in 2011 is a reflection of the sort of opportunities fund managers are seeing. In a high growth region where returns are characterized by earnings growth as opposed to leverage, growth capital funds have become increasingly popular due to the perceived growth prospects yielding higher returns and better value.

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Note: Due to data limitations, excludes Morocco Source: Zawya Private Equity Monitor

A focus on managing existing portfolios and investing funds previously raised, coupled with a challenging fund raising environment has caused many fund managers to reduce their ITS. Consequently, in 2011, there was a shift away from funds greater than USD 1 billion towards funds with ITS of USD 500 million or lower. With the exception of the Abraaj RED Fund (ITS of USD 650 million), all of the funds that successfully closed in 2011 had an ITS of USD 500 million or lower.

Note: Due to data limitations, excludes Morocco Source: Zawya Private Equity Monitor

Nearly half of the total active funds are currently in the process of investing with 30% still raising capital.

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Thought Leadership: MENA Private Equity: The Shakeout is in the Numbers Samer Khalidi, Director, NBK Capital Much has been said about the expected rationalization of the MENA private equity industry following the global economic crisis and the many issues the region has faced since 2008. Commentators make reference to rumors of LP refusal to honor commitments, investments being under water and GPs being unable to raise new funds. There have been visible signs of problems at some firms and their portfolio companies, which support the suggestion that a winnowing of the field is in progress. However, there is no need to speculate, as the outcome will be clear by 2013 or 2014. Why this level of certainty? It is in the numbers. As shown in this report, 75 funds targeting the MENA region were raised between 2005 and 2008. By the end of 2013 the commitment period of all of these funds will have expired, with the bulk of these expirations 59 in fact occurring by 2012. That means that any of the managers that have not already raised money will have to seek funds between 2012 and 2014, assuming they attempt the exercise at all. As participants in what some call the purest form of capitalism in the world, we will see what verdict the market delivers on each and every member of our community. A related analysis points to a substantial opportunity for the survivors. Funds that invested during the boom will need to start disposing of assets as fund life deadlines approach and investor calls for liquidity events increase. Already many of the earlier vintage funds are bumping up to the end of their fund lives, even accounting for extensions. Again, looking at the numbers, we see that a total of 317 transactions closed from 2006 to 2008. Over the next two to three years these assets must come to market in one way or another. While the quality and attractiveness of the assets bought during the boom are unclear, there is no question that there will be a large pool of potential transactions for those firms able to take advantage of the opportunity. In addition to the volume of potential transactions, the conditions are expected to be favorable, as the sellers would be under significant pressure to dispose of the assets. Taken together, it would appear that the survivors could enjoy a substantial boost to their activities over the coming years at the expense of their less successful peers.

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These remaining teams that also focus on the middle market will also benefit from the economic realities facing this segment. Regional economic activity is picking up on the back of domestic and global economic recovery. However, many businesses are unable to take advantage of this improvement as their financial resources and those of their owners have been depleted over the past few years. Normally reluctant to lend to this segment at the best of times, banks are even less willing to support them today. Faced with limited resources and no access to debt, business owners who wish to grow must raise equity from a much diminished pool of institutional investors. Not only are there fewer PE firms to engage, but banks have retreated due to regulatory issues and large families are focused on their core businesses to invest actively elsewhere. Again, the future seems to offer an environment of reasonable deal opportunities with dynamics that at least dont overly favor sellers. This begs the obvious question: who will these survivors be? At this point any answer would be the result of conjecture since performance data and other indicators are not available. It is also not useful to try to describe the characteristics of the possible survivors, as this would be an overly generic discussion (e.g. track record, stability). What is clear is that the march of time will reveal starkly and clearly who are the last men standing. There are also signs that the future for this much reduced number of participants will be attractive.

3.3 INVESTMENTS 3.3.1 INFORMATION LIMITATIONS

Market experts estimate between 10% and 30% of PE investments in the region are unannounced. Furthermore, in some cases where investments are publicly announced, PE houses have not revealed the size of the investment. Approximately 30% of the announced transactions in the last decade have not publicly disclosed their size (26% in 2011). Further, in the absence of comprehensive information on the financing structures used by PE houses for funding transactions, we are unable to analyze and comment on the debt/equity financing strategies used for structuring investments. Hence, deal sizes are reported as total transaction size rather than equity investment by the fund.

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3.3.2 INVESTMENTS MADE TO DATE

Source: Zawya Private Equity Monitor and AMIC.

Despite a number of macro challenges in the region, including political instability, the number of PE deals increased slightly from 70 to 73 in 2011. From the investees perspective, PE investment as a means of funding growth continues to be an attractive method of raising finance and securing a strategic partnership. Obtaining banking finance continues to be a relatively costly form of finance for companies, in particular SMEs and start-up companies, while access to funding from most capital markets within the region continues to be challenging. For the transactions where reported data is available, the average size of transactions in 2011 decreased from 2010. However, it is important to note that there were some potentially significant investments made during 2011 for which the transaction value has not been made public, including Carlyles acquisition of a 42% stake in Alamar Foods and a 48% stake in Bahcesehir K-12 Schools. GPs in the region continue to fundamentally believe that there are attractive investment opportunities in the region.

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3.4 REGIONAL FOCUS

Source: Zawya Private Equity Monitor

Morocco hosts the largest number of investments, with a 29% market share from 2006, and 36% in 2011. When analyzing the number of transactions since 2006, we find that Egypt and the UAE have enjoyed similar deal volumes, with 77 and 72 investments respectively. We note that while Saudi Arabia has traditionally been popular, with 37 investments completed in the last six years, only five transactions were completed in the last two years. However, given the size of the economy in Saudi Arabia (the largest economy in terms of GDP in the Middle East), the country is expected to benefit from significant PE investment in the years to come. Despite the recent political instability, Egypt witnessed a significant increase in the number of transactions in 2011 (16 transactions) as compared to 2010 (three transactions). The UAE continues to be a popular destination for fund managers and, given the size and dynamic nature of the economy, it is unlikely that this trend will change going forward. During 2011, 5% of the transactions by funds whose main geographical focus is the MENA region involved target companies outside of the MENA region. The majority of these transactions were made in India and the United States.

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Thought Leadership: Realities of Investing in KSA: Opportunities and Difficulties Haitham Al-Foraih, Vice President, Amwal AlKhaleej With its immense resources, growing population and expanding middle class, Saudi Arabia is increasingly appearing as a compelling regional market for foreign firms. Efforts to liberalize and deregulate the economy have earned Saudi Arabia the 11th rank in World Banks Ease of Doing Business in 2011 ranking up from 38th place in 2007. While at the same time the share of the non-oil private sector has seen substantial growth increasing from 13% of GDP in 1970 to 48% in 2010. These efforts have led to the Kingdom more than doubling its foreign direct investment (FDI) inflow between 2005 and 2010 (source: United Nations World Investment Report 2011). The vast potential created by the Kingdoms buoyant economy, in addition to broad-ranging regulatory reform programs, has helped redefine the countrys business environment. Furthermore, with the institution of regulatory changes such as the much-anticipated mortgage law, a solid privatization pipeline and an increase in Public Private Partnerships (PPPs), many other sectors such as healthcare, education, oil and gas, financial services, infrastructure, and real estate are likely to see exponential growth over the next few years. This trajectory is further supported by numerous government led initiatives aimed at stimulating the private sectors interest in developing key underpenetrated sectors. For instance, the Saudi government provides qualified domestic companies with long-term interest-free financing to develop private hospitals and schools. This has translated into a wealth of primary and secondary investment opportunities in private education and healthcare. Furthermore, favorable demographics have also led to a surge in private consumption as the Kingdoms population continues to expand and purchasing power among the younger generation continues to rise. This surge in disposable income has generated a great deal of interest around investment opportunities in the Kingdoms high-growth retail market, which has been experiencing extended periods of strong growth and is expected to reach an estimated USD 112 billion by 2015, from USD 73.5 billion in 2011, according to a recent report by Business Monitor International.

Figures are at 1999 constant prices (real terms, not nominal terms)

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While there is undoubtedly much to be excited about in Saudi Arabia, there remains room for improvement through both faster adoption of existing reforms, and the introduction of further economic and legal reform. There is often a lag, and sometimes a discrepancy, between enacted reforms and their implementation in practice. This is, however, being addressed in the Kingdom, with many government entities taking great strides in streamlining their processes to enable quick adoption of new reforms, and more leaders from within the private sector assigned key public roles and tasked with addressing implementation challenges. Small and medium-sized enterprises (SMEs), a key driver of domestic competition and job creation, is one area that should be prioritized in future reform agendas by policy makers. SMEs continue to struggle to gain access to debt financing at favorable terms. This is primarily due to a combination of the banking industrys name-based and collateralized lending practice, and the Central Banks conservative loan-to-deposit ratio requirements. Private equity investors are also impacted by this conservative banking environment, as access to acquisition finance and cash flow lending is relatively tougher to secure compared to other markets Although the narrow funding options for SMEs makes private equity an attractive source of growth capital, many family businesses are yet reluctant to relinquish control due to pride and legacy considerations. Furthermore, recent valuation disparities among sellers and buyers (relative to the public equity market) have led to a scarcity of well-priced growth capital opportunities. Finally, private equity funds need to take into account the shareholder base of their investment vehicle in order to abide by foreign ownership limitations as well as tax implications. These challenges are being addressed in some form or other, with different expected timelines for their resolution. In the meantime, Saudi Arabia remains an attractive market with a unique operating climate. Local presence and expertise remains invaluable to a successful Saudi investment strategy.

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3.5 SECTOR FOCUS

Note: Due to data limitations, excludes AMIC data Source: Zawya Private Equity Monitor

The proportion of investments attributable to the technology, media and telecoms (TMT) and healthcare sectors has increased in recent years. TMT and healthcare collectively accounted for 38% of the total transaction volume in 2011. It is important to note that the majority of TMT transactions were venture capital in nature (12 out of 14 transactions), hence were smaller in terms of investment value. Healthcare has increased in popularity over the last two years, claiming 9 transactions. The healthcare sector is vast and made up of many different industries, from pharmaceuticals to hospitals. This sector continues to benefit not only from a growing population in the MENA region and a per capita healthcare spend at only about 15% of that in developed markets, but also a growing middle class with increasing ability to invest in healthcare services. It is also considered to be a sector relatively unaffected by the economic downturn, and, in some countries in the region, has benefited from an increasing scope of obligatory employer health insurance. Retail has also emerged as a popular sector, driven by high growth and rising consumer demand in many countries. As expected, the sectors most heavily impacted by the global financial crisis such as construction and real estate have fallen behind. Within the others category, the significant portion of transactions completed during 2011 is attributable to sectors such as consumer goods and education.

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Thought Leadership: Healthcare Sector Operating challenges in a favorable macro environment Amitava Ghosal, Partner, Al Masah Capital Limited and Board Member, Healthcare Mena Limited It has been well documented and widely accepted that the Middle East and North Africa (MENA) is an attractive market for healthcare providers. The region spent a massive USD 71 billion (or 4.1% of its GDP) on healthcare in 2010, compared to USD 27 billion at the start of the millennium. Several factors strengthen the belief that MENA will continue to be an attractive market for healthcare providers: the regions increasing elderly population; prevalence of non-communicable or lifestyle diseases such as diabetes, cardiovascular ailments and cancer; growing aspiration for healthcare services of international quality (an outcome of rising income and literacy levels); and introduction of mandatory health insurance in some parts of the region. However, for investors and operators, there are issues to tackle to transform these opportunities into success. The regulatory changes that are anticipated to happen in the near term in some of the major locations in GCC will present some challenges for healthcare operators. The rising cost of healthcare across the globe is leading governments to increasingly seek long-term sustainable solutions to make healthcare more affordable. For instance, the US, which spent USD 2.6 trillion (or 17.9% of its GDP) on healthcare in 2010, recently passed the healthcare reform bill to tackle burgeoning healthcare expenses. The new bill extends health insurance to all uninsured Americans, provides subsidies to low-income individuals and families to purchase health insurance, and ensures that insurers do not deny coverage to those with pre-existing conditions. Some countries in the MENA region are following similar strategies and are likely to implement the Abu Dhabi model of compulsory insurance for all residents. While this will contribute to rising demand for healthcare services, the healthcare operators need to significantly enhance their systems and processes to allow for efficient management of the increase in insurance-related services. Operators must also be prepared to comply with new regulations regarding fair pricing, payment cycle monitoring, cost efficiency and ethical standards.

World Health Organization, International Monetary Fund, Al Masah Capital Research

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A shortage of qualified medical staff has also long been an issue in the MENA healthcare market. Staff compensation continues to rise considerably, especially for the better qualified. Hence, employee management and retention is a key challenge for healthcare operators, although the intensity of this challenge varies across markets. The nature of healthcare service sector staffing requires attention from top management, and should not be just the responsibility of a human resource department. In current times, staffing may be the topmost priority for healthcare operators, demanding the greatest share of management attention. With more competition coming especially in the large hospitals sector, availability of proper information systems across all aspects of delivery and management of medical care is gaining importance. There are still quite a number of mid-to-large scale operators who rely on rudimentary systems to process all patient information and are hesitant to invest in modern technology. However, with increasing competition, patients will be demanding faster, more efficient and better quality service for which investment in robust IT platforms is of strategic importance. With the rapid changes happening in the medical field, one needs to be vigilant in looking for new opportunities, as well as recognizing where technologies are becoming obsolete. For example, one noticeable trend in the regional healthcare market has been the growing shift from active treatment to preventive care, which is opening up a huge market for diagnostic centers. The use of diagnostic services has risen notably in the region due to the aging population and prevalence of ailments (such as diabetes and high cholesterol levels) that require continuous monitoring and recurring medical treatments. Moreover, with the number of tests per capita in the MENA region still below international levels, there is clear potential for growth in diagnostic companies in the region. In summary, the healthcare sector provides a very favorable environment for investors. However, it is important to appreciate the challenges ahead in order to develop the right strategies for success.

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THOUGHT LEADERSHIP

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Thought Leadership: Investing in Education Lessons Learned from the First Round By Imad Ghandour, Managing Director, CedarBridge Partners The education sector offers a unique proposition for investors: sticky and growing demand, stable cash flow, positive cash cycle, and healthy margins. These characteristics became more relevant after the financial crisis as investor prefer defensive sectors with stability and predictability. Private equity investors in MENA wanted to follow the same trend, and fund managers tried to focus on education and other definitive sectors post-crisis. Education in particular seemed to benefit from favorable demographics, increasing disposable income, a shift from public to private education, and huge fiscal expenditure. However, the education sector in particular remained elusive to private equity. Only few transactions were registered. Fund managers complained that there are few deals available, and those available were fully priced. Moreover, those that invested in the sector faced the inevitable scrutiny attached to social services, limiting their maneuverability in terms of tuition increases, new licenses, new services, and even exit possibilities. The media and the regulators are increasingly debating private equitys role in education. Yet, family groups continue to reap significant dividends from the education sectors. As I have examined hundreds of investment opportunities in the sector, I have invariable noticed how lucratively the initial investors have been rewarded and how significant the business margins were. Hence, the problem may not be with the sector, but with the standard private equity approach when investing in education.

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In my view, private equity investors have taken home lessons from its first round of investments: Think long term: the traditional time frame of a private equity investment of 3 to 5 years seems unfit for education because you can only affect change (e.g. increase tuition, open a new branch) once a year. Focus on capacity building before margin improvement: private capital is most welcomed when it initially seeks to build new capacity. Focusing in the early stages on tuition increases and margin improvement brings unwanted friction. Enter early: entering at the early stages of the business life cycle allows you to be rewarded by the growth in enrollment, which remains the highest contributor to profit growth. This will also increase the investible space. Talk education before finance: drop the financiers hat and talk about educating the kids. Also, private-equiters are keen to publicize their achievements and their investments, but this is a sector where less talk will improve returns. Look at other subsectors: K-12 maybe the biggest subsector, but other subsectors like nurseries, e-learning, higher education, etc may be more lucrative and attractive.

Education remains an attractive and growing sector, but a sector that has its operational particularities and social sensitivities. The second round of investments may benefit from these experiences and yield even better outcomes.

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PRIVATE EQUITY IN THE MENA REGION

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3.6 EXITS

Source: Zawya Private Equity Monitor and AMIC.

Similar to the data limitations mentioned previously in relation to investments, a significant portion of PE divestments are either unannounced or, where the divestment is announced, the value is undisclosed. As a result, we have focused on analyzing the number of divestments as opposed to the total value. 2011 saw a significant increase in the number of divestments (30 divestments) compared to recent years (23 divestments in 2010). However, despite an increase in divestments, the impact of the global financial crisis on liquidity, valuations and investor appetite has resulted in longer than anticipated holding horizons for private equity investments. The PE industry has increased its focus in recent years to maximizing value within the portfolio through strategic and operational performance improvements. Going forward, and as the regional economies stabilize and liquidity in the market improves, one would expect a further increase in the number of divestments. Trade sales to other companies continue to be the most popular exit strategy and in most instances, they still offer a more viable exit than a public market exit, due to the lack of liquidity in most regional markets.

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THOUGHT LEADERSHIP

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Thought Leadership: Private Equity and the Arab Spring Saad Zaghloul, Managing Editor, Alborsa newspaper Numerous articles and books have been written about the shocking revolutions that stormed the Arab world in 2011. Most of these writings are political in nature. Very few have written about the impact of the Arab Spring for risk-takers. Very few have highlighted the lifetime opportunity the Arab Spring has revealed for patient investors. However, today, this enormous opportunity is unfolding for those who have the vision to grab it. This is explained taking one example from the largest Arab Spring country: Egypt. Egypts revolution came as a shock for everyone. If we focus on the business and investment community, the revolution re-set all pre-set business plans and investment projections. Egypts economic boom had already been impacted by the effects of the global economic crisis beginning two years earlier, with Real GDP growth declining from 7.2% to 5.1% in 2010. In the midst of revolution, Egypts economy still managed to record positive growth in 2011 of 1.8%. Astonishingly, this rate exceeded the MENA oil importers average, which recorded 1.4%. However, Egypt is consciously aware that the cost of its revolution will extend through 2012, with projected GDP growth at just 1.6%. The Egyptian stock market has also suffered severe capital flight by both foreign and Arab investors, receiving the dubious label in 2011 of the worlds worst performing market. Egypts bourse dropped by 49% in 2011 and daily volumes hit record lows. As negative scores poured in from the rating agencies, Egyptian T-bills and T-bonds rates rose to record highs, making it more and more difficult for Egypt to raise debt and attract investment.

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When we reflect on how the revolution has affected investment decisions, we find that it has taken all of the political uncertainty which had concerned investors before the revolution and forced it to move from the future to the present. This is not actually a bad thing for investment. Risk is friendlier to investors than uncertainty. Investors can price risk, while they find it hard to put a price on uncertainty. Egypt decided to answer all its political what-if questions in 2011 and 2012, resulting in a clearer, more stable political system. This is a very different view to the impact of the Arab Spring. Overall, Egypt is not the right place for a short-term oriented investor. Egypt is the ideal place for a patient long-term investor.

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SURVEY OF GPs IN THE MENA REGION

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SURVEY OF GPs IN THE MENA REGION

ANNUAL REPORT

SURVEY OF GPs IN THE MENA REGION

4.1 INTRODUCTION

The survey focuses on GPs in the MENA region. The survey consisted of 36 questions and was conducted during the first quarter of 2012. The aim of the survey was to obtain a greater understanding of the sentiments of the MENA regions private equity industry from the perspective of GPs. Methodology The survey was prepared by Zawya and was conducted online with participation from representatives of 26 private equity houses in the MENA region (including the top ten private equity firms by funds under management). Participating firms had investments in a range of industries across a wide geographical spread. Scope of the survey The survey looks briefly at the impact of the economic downturn and political instability in the region during 2010-2011, and aims to understand GP expectations and views around the outlook for 2012. Profile of the respondents Half of the respondents established their private equity firms within the last five years, with approximately a quarter being less than four years old. The private equity industry in the MENA region is relatively young by international standards. 65 percent of participating firms have less than $500 million worth of assets under management.

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4.2 SURVEY RESULTS 4.2.1 RESPONDENT PROFILE

When was the company established?

While the private equity industry in the MENA region is still nascent compared to more developed markets, more than half of the participating private equity firms have been in operation for five or more years. It is interesting to note that despite the impact of the global financial crisis and political uncertainty in the region, three of the respondent firms were established during 2011. Who owns the fund management company?

73 percent of respondents stated that management holds ownership in the fund management company, with one third of those being a majority share.

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How many funds have you managed since establishment?

Greater than 5 Given the relative young age of the private equity industry in the region, it is not surprising that 42 percent of respondents have managed just one or two funds to date. What is the total value of assets under management?

45 percent of respondents had less than $250 million worth of assets under management.

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How many companies are there in your portfolio?

Not Disclosed

With half of the private equity firms in the region having been established for five years or less, it is logical to expect the majority of respondents (58 percent) to have fewer than ten companies in their current portfolio.

4.2 .2 OUTLOOK
Do you expect the economic situation to: improve/decline/status quo/unclear

Respondents were fairly optimistic with almost half of the respondents anticipating improved economic conditions during 2012. 38 percent of the respondents were either unclear in terms of the economic outlook or believed that the current economic situation will continue, and 16 percent believed the economic situation would worsen.

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What do you expect to be the main challenges during 2012?

Fund raising has proven challenging since 2009 and 42 percent of respondents were of the view that this will remain a challenge for the industry in 2012. Just over a half (54 percent) of respondents anticipated finding new investment opportunities and exiting of existing investments to be key challenges for the industry in 2012.

What are the main challenges in 2012 for the MENA Private Equity Industry?

Whilst no one response stands out, 37% of respondents believe that finding the right deal at the right price (quality of deal flow, high valuations and acceptance of PE funds as partners) will be a key challenge during 2012. 40% of respondents are more concerned about portfolio level issues (corporate governance, bank financing, growth prospects and lack of control over deals).

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SURVEY OF GPs IN THE MENA REGION

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In 2012

38 percent of respondents were not confident in LPs meeting their expectations in 2012, while 35% were confident that LP expectations would be met. 50% of the respondents believe that valuations will be lower in 2012 compared to 2011. Lower valuations may potentially offer attractive investment opportunities but may also potentially have an impact on timing of exits. What will managers focus on during 2012?

During 2011, fund managers primarily focused on managing existing portfolios. As the investing and economic environment improves, the majority of respondents believe focus will shift towards finding new investment opportunities and exiting current investments.

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What is the most important attribute for a private equity firm to win a deal? The existence of a good network is seen by a large proportion of respondents (46 percent) as the most important attribute required to successfully complete acquisitions in the region. This is presumably linked to the challenges in sourcing deals as highlighted by many respondents. Flexibility on acquisition terms together with management and operational expertise are considered by many to be most important.

During 2011, how do you view entry multiples? Opinions were equally split on whether entry multiples during 2011 were too high. This reflects a narrowing in the expectations gap between sellers and investors in relation to the valuation of targets. During 2010, 58 percent of respondents felt that entry multiples were too high.

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SURVEY OF GPs IN THE MENA REGION

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How many entry deals do you expect to see in 2012?

The vast majority of respondents expect 2012 to be a relatively quiet year in terms of deal activity. What types of deals are expected to take place in 2012?

Almost half of respondents (49 percent) believe that growth and venture capital investments will continue to be popular in 2012. It is interesting to note that 27 percent of respondents expect buyout deals to be popular in 2012 which is in contrast to last years survey which saw just 8 percent of respondents expecting buyout deals in 2011.

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In your opinion, what will be the average deal size in 2012?

The majority of respondents anticipate the average deal size in 2012 to be between $20 million and $40 million. This marks an increase on actual average deal size in 2011. How many funds do you expect to be launched/raised in 2012?

The vast majority of respondents remain cautious about fund raising prospects for 2012 and believe that fewer than five funds will be successfully launched. This expectation is in line with 2011s actual results which saw six funds successfully launching and raising during the year.

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In your opinion, what will be the main source of funds for new funds launched in 2012?

In line with last years survey, the majority of respondents (64 percent) expect funds to come from within the region through high net worth individuals, institutional investors and Sovereign Wealth Funds.

If you plan to launch a new fund, what would be the fund type and target market?

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ANNUAL REPORT

Growth capital funds continue to be the preferred type of fund for 35 percent of respondents. This further reflects the increasing popularity of growth capital funds. In contrast to last year (25 percent in 2010), 35 percent of private equity firms in the region perceive international institutional investors as the target market for funds to be launched. This is in line with the expectation of 42 percent of respondents that international investors are seeing value and seeking opportunities to invest in the region. In your opinion, what will be the average size of funds raised in 2012?

92 percent of respondents expect the average size of new funds raised in 2012 to be less than $250 million. 45 percent of all funds raised during 2011 had an ITS of less than $500 million.

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In your opinion, what will be the holding period of private equity investments?

The majority of respondents (84 percent) believe that firms will hold onto investments for four years or more, which is in line with the typical investment holding period for private equity firms. What is the most important role of private equity firms in their portfolio companies?

Private equity firms see strategic planning as the most important role to provide to portfolio companies. This is a departure from the 2010 survey in which the majority of respondents (29 percent) viewed the provision of operational support as the most important role.

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What will be your target IRR in 2012?

The vast majority (65 percent) of fund managers are targeting an IRR between 20 and 29 percent for 2012. This is in line with responses received during the last two years (63 percent from the 2010 survey and 64 percent from the 2009 survey). What will be the most attractive exit routes during 2012?

In line with last years survey, trade sales continue to be the most attractive exit strategy amongst fund managers while financial sales, IPOs and management buy backs are considered less attractive.

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4.2.3 REGIONS AND SECTORS OF INTEREST

Regions of interest

Despite the impact of the economic crisis and recent political uncertainty, the MENA region continues to be the focus of private equity firms in the region. This is primarily because of the regions large and growing population, growing middle class, increase in per capita income, continuing demand for infrastructure and high government spending budgets. What sectors were private equity firms interested in during 2011?

In line with 2010s survey results, private equity firms continue to focus on non-cyclical and defensive sectors such as healthcare, FMCG and education.

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4.2.4 THE IMPACT OF THE FINANCIAL AND POLITICAL CRISIS

How did the global economic turmoil impact the private equity industry in the MENA region?

With the global economic environment limiting opportunities for investment in stagnant western economies, 42 percent of respondents feel that international private equity firms will look to target the MENA region. Is the political uncertainty in the region affecting investment decisions in terms of sector focus?

The majority of respondents (58 percent) believe that political unrest in the region is not impacting their investment decisions in terms of sector focus. Many were already focused on more defensive sectors in response to the economic situation.

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How is the political shakeout impacting investment decisions in countries with unrest?

Political uncertainty in the region continues to encourage a strategy of delaying investments in the countries with unrest. and being increasingly selective with investment opportunities.

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ABOUT THE MENA PRIVATE EQUITY ASSOCIATION & AMIC

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MENA PRIVATE EQUITY ASSOCIATION

ANNUAL REPORT

MENA Private Equity Association

The MENA Private Equity Association is a non-profit entity committed to supporting and developing the private equity and venture capital industry in the Middle East and North Africa. The Association aims to foster greater communication within the regions private equity and venture capital network and facilitate knowledge sharing in order to encourage overall economic growth, and will actively promote the industrys successes to local stakeholders and build trust with investors, regulators and the public regionally and internationally. www.menapea.com

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AMIC

ANNUAL REPORT

MOROCCAN VENTURE CAPITAL & PRIVATE EQUITY ASSOCIATION (AMIC)

Founded in 2000, AMIC is an independent professional association whose mission is to unite, represent and promote the private equity profession to local and international investors, entrepreneurs and governmental bodies. AMICs main mission is to strengthen the private equity industrys competitiveness in Morocco and abroad through: Effective and clear communication on the private equity industry Executing reliable reports and surveys on the state of private equity in Morocco Active participation in discussions on any draft law regulating the sector Establishing a good governance and ethics code for the private equity industry and promoting compliance with such code Providing support services to members on regulatory issues related to the profession Development of a quality training program on all aspects of the private equity industry

Contact : Franoise Giraudon De Donder fgiraudon@amic.org.ma Address : 23, Boulevard Mohamed Abdou (sige CGEM) Quartier Palmier 20 340 Casablanca - Maroc

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SPONSOR PROFILES

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ZAWYA

ANNUAL REPORT

Zawya is the leading online business intelligence platform focusing on the Middle East & North Africa, enabling nearly 1 million professionals to find and connect to the right business and investment opportunities in the region. Our wide range of unique content and tools include detailed profiles on the top companies and projects in the Middle East and North Africa, Zawya Dow Jones live news, comprehensive industry and asset class research, as well as an exclusive online network for professionals focusing on the region. For more information, please visit www.zawya.com

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ABRAAJ CAPITAL

ANNUAL REPORT

The Abraaj Capital group is a leading private equity manager investing in growth markets. Since inception in 2002, the group has raised over US$ 7 billion and distributed in excess of US$ 3 billion to investors. With over US$ 6 billion in assets under management, the group has helped accelerate and facilitate the growth of more than 50 companies in 15 countries in the Middle East, North Africa and South Asia (MENASA) region in sectors as diverse as healthcare, education, energy, aviation and logistics. Employing over 95 investment professionals, the group is headquartered in Dubai and has a presence in Algiers, Amman, Beirut, Cairo, Casablanca, Istanbul, Karachi, London, Mumbai, Ramallah, Riyadh, Singapore and Tunis. Funds managed by the Abraaj Capital group have holdings in over 35 companies including Air Arabia, the Middle Easts leading low cost carrier, Network International, the largest independent payment solutions provider in the Middle East and Africa, IHH Healthcare Berhad, one of the largest private healthcare groups in growth markets and Al Borg Laboratories, the Middle Easts largest privately owned medical testing laboratory. In 2011, Abraaj Capital was ranked the largest private equity firm in emerging markets worldwide by Private Equity International. In addition, Abraaj Capital has won many regional and international awards, including the Middle Eastern Private Equity Firm of the Year for seven consecutive years, awarded by Private Equity International. With the completion of the Aureos Capital acquisition in 2012, Abraaj Capital has a presence in more than 30 countries across growth markets, over 150 investments managed by a dedicated team of investment professionals and approximately US$ 7.5 billion in assets under management. Abraaj Capital Limited, a member of the Abraaj Capital group, is licensed by the Dubai Financial Services Authority (DFSA).

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AFRICINVEST-TUNINVEST

ANNUAL REPORT

AfricInvest-TunInvest Group was founded in 1994 and is part of an investment and financial services group: Integra Partners (www. integrapartners.com). Integra Partners offers Private Equity, Brokerage, Asset Management and Corporate Finance services. AfricInvest- TunInvest Group is one of the leading private equity firms in North and sub-Saharan Africa with over $700 million of funds under management across 11 PE funds sponsored by prestigious DFIs, international private and institutional investors. The covered and targeted region evolved during the life of the Group from Tunisia for the first generation of funds with relatively small investments, to the Maghreb region (Maghreb Private Equity Funds I ,II & III) and Sub-Saharan Africa (AfricInvest Funds I & II and AfricInvest Financial Sector Fund) with larger investments. AfricInvest-TunInvest Group has today over 17 years of experience in impact investments in SMEs and supported over 100 SMEs in Africa. The Group relies on a team of 40 investment professionals with over 120 years of cumulative PE experience, operating out of 6 offices: Tunis, Abidjan, Algiers, Casablanca, Lagos and Nairobi. AfricInvest - TunInvest Group is a co-founder and active member of the African Venture Capital Association (www.avcanet.com), the MENA PE Association (www.menapea.com) and the Euromed Capital Forum (www. euromed-capital.com).

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NBK CAPITAL

ANNUAL REPORT

NBK Capital is a leading investment company established in 2005 by the National Bank of Kuwait one of the Middle East regions oldest and highest rated banks. NBK Capital delivers its products and services through four principal lines of business: Alternative Investments, Asset Management, Brokerage & Research and Investment Banking. With over 170 professionals and offices in Kuwait, Dubai, Istanbul and Cairo, NBK Capitals local knowledge and expertise allows the firm to deliver superior results to investors and clients. The Alternative Investments Group at NBK Capital manages c.USD 550 million in assets under management focused on growth capital for mid-market companies located throughout MENA and Turkey. The groups track record includes private equity and mezzanine investments across the Region in Saudi Arabia, Kuwait, Qatar, UAE and Turkey. Leveraging a highly skilled investment team, NBK Capital has delivered value for investors through an active investment approach implementing strategic, operational and financial initiatives at portfolio companies.

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QATAR FIRST INVESTMENT BANK

ANNUAL REPORT

Qatar First Investment Bank (QFIB) is a pioneering Islamic financial institution providing a full-fledged suite of investment banking services well positioned to work across the broader MENA region. The Bank launched in 2009 with an authorized capital of QAR 3.65 billion (US$ 1bn) and a paid up capital of QAR 1.6 billion (US$ 430 million) providing the financial strength to capitalize on lucrative investments. QFIB is the first independent Shariah compliant investment bank licensed by the Qatar Financial Centre Regulatory Authority (QFCRA) and is ISO 27001 certified, offering Principal Investments, Asset Management and Corporate Finance Advisory services. QFIBs dynamic business strategy is driven by its management team with an entrepreneurial outlook that encourages innovation and creativity in meeting client needs. The Banks medium to long-term view ensures clients can benefit from the leaderships insight and connections in providing strategic advice, raising capital and delivering risk management solutions. QFIB is unique in Qatar, simultaneously independent and central to the market, providing clients and counterparties with access to one of the regions deepest pools of capital. Adopting an investment strategy that centers on sector and geographical diversification, QFIBs focus areas include energy, financial services, industrials, real estate, and health care services. QFIB invests in businesses that maximize shareholder value through robust growth and significant capital appreciation. Since inception, QFIB has executed a number of transactions in five different sectors across three geographies, and successfully exited two investments. Reaffirming its stature as a growing Shariah compliant investment bank, QFIB aims to list its shares on the Qatar Exchange in Q4 2012. This move will provide existing shareholders with the ability to trade their shares and, further, will provide QFIB the means and capital to realize its growth plans. QFIB was recognized as the Best Investment Bank in the GCC under Islamic Business & Finance category by CPI Financial in 2011 and has won the accolade of the Best Financial Service Industry Deployment of the Year by Computer News Middle East.

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SWICORP

ANNUAL REPORT

Swicorp is a leading corporate finance advisory, private equity and principal investment firm with a specific regional focus on the Middle East and North Africa (MENA) region. Founded in 1987 and licensed by the Capital Market Authority of the Kingdom of Saudi Arabia, and the Dubai Financial Service Authority of the United Arab Emirates, Swicorp has an extensive track record of pioneering M&A and Advisory transactions across the MENA region over the last 20 years. Headquartered in Riyadh with regional offices in Jeddah, Geneva, Tunis, Dubai and Algiers, the firm has over 100 employees across its offices and activities, including 30 private equity professionals from both within and outside the region. Since the launch of its private equity activities in 2004, Swicorp has established itself among the leading private equity managers in the MENA region, with nearly USD1.4 billion currently under management across two separate investment programs, including Intaj Capital and Swicorp Joussour. Intaj Capital is a pan-MENA focused private equity fund investing in companies operating in sectors driven directly or indirectly by growth in consumer demand. Sectors include consumer goods, retail, food and beverage, media and communications, consumer financial services, healthcare and consumer-facing construction materials, among others. Intaj pursues two main investment strategies for building a platform of value creation in its portfolio companies: growth and buy & build investments. Intaj Capital I, the first fund launched in 2005, invested USD187 million, USD290 million including co-investments from limited partners, in eight investments across seven countries, well diversified in terms of both geographic coverage and sectors. Intaj Capital II, which represents the second private equity vehicle of the Intaj franchise, had a first closing in September 2010 with commitments from leading international institutional LPs. Joussour was founded in 2005 with USD1 billion in capital commitments. Joussour focuses on large-scale investments in the energy sector, petrochemicals and ancillary businesses to the petrochemical industry, and energy-intensive sectors, through greenfields and joint ventures with international partners or buy-out/ relocation of international players in the sector.

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MEMBERS DIRECTORY

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MEMBERS DIRECTORY
Abraaj Capital Dubai, UAE Egypt, Jordan, KSA, Lebanon, Pakistan, Singapore, Turkey, Palestine Tunisia, Algeria, Morocco, London +971 4 5064400 info@abraaj.com www.abraaj.com AfricInvest-Tuninvest Tunis, Tunisia Algeria, Ivory Coast, Kenya, Morocco, Nigeria +21671189800 contact@tuninvest.com www.tuninvest.com Al Masah Capital Dubai, UAE Kuwait +971-4-453-1500 nishakhiara@almasahcapital.com www.almasahcapital.com Amwal AlKhaleej Riyadh, KSA Egypt, UAE +966 1 216 4666 riyadh@amwalalkhaleej.com www.amwalalkhaleej.com Eastgate Capital Group Dubai, UAE +971 4 329 7171 info@eastgategroup.com www.eastgategroup.com Dubai Silicon Oasis Authority Dubai, UAE +971 4 501 5206 tig@dso.ae www.dso.ae Citadel Capital Cairo, Egypt Algeria, Kenya +202 2 7914440 smurphy@citadelcapital.com www.citadelcapital.com Cedar Bridge Partners Cairo, Egypt UAE info@cedar-bridge.com www.cedar-bridge.com Capital Trust Group Beirut, Lebanon UK, USA +961 1 368968 Wassim@capitaltrustltd.com www.capitaltrustltd.com

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Emerging Capital Partners (ECP) Tunis, Tunisia Ivory Coast, Cameroon, France, Morocco, Nigeria, South Africa, Washington DC +216-71-962-590 vidaln@ecpinvestments.com www.ecpinvestments.com EFG Hermes Private Equity Cairo, Egypt UAE +971 4 364 1961 pegroup@efg-hermes.com www.efg-hermes.com Gulf Capital Abu Dhabi, UAE +971 2 671 6060 info@gulfcapital.com www.gulfcapital.com

Malaz Capital Riyadh, KSA +966 1 4601644 info@malazcapital.com www.malazcapital.com Masdar Capital www.masdar.ae Mubadala GE Capital PJSC Abu Dhabi, UAE +971 2 4013108 sales@mubadala-ge.com www.mubadala-ge.com National Bank of Abu Dhabi Private Equity Abu Dhabi, UAE + 971 2 6112268 www.nbad.com NBK Capital

International Finance Corporation (IFC) Washington, DC, USA +1 (202) 473-3800 www.ifc.org Investcorp Bank Manama, Bahrain UK, USA +973 1 753 2000 www.investcorp.com

Kuwait Egypt, Turkey, UAE +965 2 2246900 corp.comms@nbkcapital.com ww.nbkcapital.com N2V Egypt, Jordan, KSA, UAE, USA +971 55 2100706 Nagi.salloum@n2v.com www.n2v.com

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MEMBERS DIRECTORY

ANNUAL REPORT

New Silk Route Dubai, UAE India, USA +971 4 3211772 ahsan@nsrdubai.com www.nsrpartners.com Qatar First Investment Bank Doha, Qatar +974 4 483333 information@qfib.com.qa www.qfib.com.qa ReAya Holding Jeddah, KSA +966 2 6676777 info@reayaholding.com www.reayaholding.com Riyada Enterprise Development Dubai, UAE Egypt, Jordan, Lebanon, Palestine +971 4 5064400 dubai@riyada.com www.riyada.com SEDCO Jeddah, KSA UAE +971 4 3637166 ramib@sedco.com www.sedco.com

Swicorp KSA, UAE, Tunisia, Algeria, Switzerland +966 1 211 0737 info@swicorp.com www.swicorp.com TVM Capital Dubai, UAE Germany, USA schuehsler@tvm-capital.com www.tvm-capital.ae

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PRIVATE EQUITY & VENTURE CAPITAL FIRMS IN MENA

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PRIVATE EQUITY & VENTURE CAPITAL FIRMS IN MENA

ANNUAL REPORT

PRIVATE EQUITY & VENTURE CAPITAL FIRMS IN MENA

Abraaj Capital Abu Dhabi Capital Management Abu Dhabi Investment Company Abu Dhabi Investment House Accelerator Technology Holdings ADCB Macquarie Corporate Finance Al Imtiaz Investment Company Al Mal Capital Al Masah Capital Management Limited Alcazar Capital Limited Amundi Amwal AlKhaleej Commercial Investment Company Arbah Capital Attijariwafa Bank Aureos Morocco Advisers Beltone Agriculture Management Beltone Private Equity Berytech BMA Capital BMCE Capital Capital Invest Capital Trust Capivest Investment Bank Carlyle Mena Investment Advisors Limited Catalyst Investment Management Company CDG Capital CedarBridge Partners CERT Capital Citadel Capital Concord International Investments Corporate Finance House Daman Investments DB Climate Change Advisors Delta Partners Deutsche Bank Dubai Islamic Bank Eastgate Capital Group Education Capital EFG-Hermes Private Equity Emerging Capital Partners Emerging Markets Partnership (Bahrain) EVI Capital Partners Evolvence Capital Fincorp Foursan Group Global Capital Management Limited Gulf Capital HBG Holdings HSBC Private Equity Middle East Limited IdeaVelopers Injazat Capital Instrata Capital Intel Capital Investcorp Bank IT Ventures/Nile Capital Ithmar Capital KIPCO Asset Management Company Kuwait Finance and Investment Company Kuwait Finance House Bahrain Kuwait Financial Centre Levant Capital Limited Malaz Capital Masdar Venture Capital MerchantBridge and Co Middle East Capital Group

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PRIVATE EQUITY & VENTURE CAPITAL FIRMS IN MENA

ANNUAL REPORT

Middle East Venture Partners Moroccan Information Technopark Company National Bank of Abu Dhabi Private Equity NBK Capital Limited Upline Investments Unicorn Investment Bank Venture Capital Bank Viveris Management PrimeCorp (France) Qatar Capital Partners RAIS (Netherlands) Rasmala Holdings Limited Riyada Enterprise Development Riva y Garcia Financial Group Sabre Abraaj Management Company Saffar Saham Group Samena Capital Sawari Ventures Siparex Group Siraj Fund Management Company Sphinx Private Equity Management Swicorp The Financial Corporation Company The National Investor TVM Capital MENA Limited

Disclaimer: This publication is intended only to provide a summary of the subject matter covered. It does not purport to be comprehensive or to render professional advice. No reader should act on the basis of any matter contained in this publication without first obtaining professional advice.

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