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F OR B E S M ID D L E E A S T // TH E IN V ESTOR FOR SECU RITIES

ARABIAN GULF
INVESTMENTS:
MAGNETIZING
MATURE MARKETS
The GCCs liquidity, attractiveness and
flexibilityare providing a money-spinning
opportunity for both buyers andsellers
from the private equity andventure capital
ecosystem of mature markets.

Aboveaverage growth opportunities have


become the standardin emerging markets, especially in theGulf region. Realizing
this potential has given high-growth market (HGM) companies access to funds
and a competitive advantage. However,in
order to nurture such advantagesand
succeed in maintaining their growth potential, HGMs must be willing to acquire
mature market technology, know-how,
brands and distribution channels.
For buyers and sellers continents
apart when faced with choices of a global
market, a network of contacts and experienced professionals is a good approach
to narrowing down the possibilities. People with awareness and understanding of
local industries are a very important part
of any potential agreement. Relationship
building should be seen as an investment.
Participating in regional and global investment conferences, investment summits
and industry events is a great way to stay
ahead of the competition.
Moreover, investors can widen their
network with people across different
markets by collaborating with a repu-

table investment banking firm that has


developed international connections. According to recent research conducted by
PwC, for the past five years investment
from emerging to mature markets has
beengreater than the investment going
in the opposite direction. Approximately
$151 billion has been invested in emerging markets from mature economies versus $161 billion invested in mature markets from emerging markets.
Having said that, we strongly believe
that the GCC is an important market to
observe. The following are several key attributes that the GCC market possesses:
1. High liquidity: The total liquid wealth
in the region is around $1.5 trillion, with
most of that wealth in the hands of local
families.
2. Attractiveness to foreign venture capital
and private equity investors.
3. The congruency between Islamic finance and private equity/venture capital.
However, no matter how strong the
market, no transactions are likely to take
place if they are not based on solid relationships, innovation and a mutual vision,

that is cause-driven and long-term. The


best way to achieve success between
the Gulf and mature markets is by assigning advisors and investment bankers
with local market expertise who serve as
liaisons between mature market participants and the GCC. Investment banking
firms must take the lead role of guiding
and directing the local market towards
sustainability and growth by leveraging
their position in the region to increase the
presence of foreign investors in the GCC
and vice-versa.
Moreover, in order to take on such
responsibility and be successful, there
are some key challenges that investment
banks will face. The key challenges are
unemployment, limited economic diversification and difficulty in obtaining
financing.
In conclusion, all institutional and high
net worth investors interested in climbing
up the economic ladder andtaking advantage of opportunities inemerging markets
should look out for the next Arabian Gulf
Investment Summit and treat relationship
building as an investment.

Mohamed El-Masri is Corporate Finance Advisor & Jitendra Garg is Senior Financial Analyst at The Investor for Securities.

IMAGE FROM SOURCE

By Mohamed El-Masri and Jitendra Garg