News

Pedersen & Partners and CMS UAE co-hosted the 3rd MENA Private Markets Investment Breakfast in Abu Dhabi, bringing together senior investment professionals to discuss the market outlook, private credit, valuations, value creation and exit strategies across MENA.

The discussion was co-hosted by Michael Al-Nassir, Partner & Head of Private Equity APMEA at Pedersen & Partners, and Graham Conlon, Partner, Head of Corporate, Middle East at CMS UAE, together with panellists Mateo Goldman, Head of Strategy & Capital Formation at Alcazar Energy Partners; Asad Hajiyev, Senior Executive Officer & Portfolio Manager at Gemcorp Capital; Samy Labbouz, Director, Private Equity at BlueFive Capital; Yaser Moustafa, Head of Emerging Market Private Investments at Janus Henderson Investors; and Matthew Singh, Chief Investment Officer at Emirates Growth Fund.

The discussion highlighted several themes shaping private markets across the region:

Market Outlook, Investment Trends & Geopolitical Risk

1. Persistent Regional Demand Despite Macro Headwinds: Strong demand continues across MENA, Eastern Europe, and Central Asia driven by energy transition and digital scaling, though rising interest rates are pressuring IRRs and financial models.
2. Private Credit Filling Bank Gaps: Tightening bank liquidity in Saudi Arabia and across the region creates excellent conditions for private capital to fund high-quality borrowers at attractive pricing, with flexibility on timing and without requiring equity exit rights.
3. Regional Private Credit Underrepresentation: Emerging markets represent only 10% of global private credit despite 50% of global GDP, with SMEs particularly underserved as banks focus on larger opportunities.
4. Maturing Legal and Enforcement Regimes: Enhanced regulatory clarity and demonstrated enforcement of guarantees and share pledges across Saudi Arabia, ADGM, and DIFC have de-risked regional deployment.
5. Navigating Geopolitical Risk: Geopolitical events have turbocharged regional developments—only investors who understand these risks are not binary can succeed. Political risk insurance remains surprisingly affordable, and government support programs help protect projects.
6. Opportunity in Disruption: There is opportunity in disruption for businesses with core regional operations where demand remains strong—focus on fundamentals and ignore noise, recognising that every country wants to grow its economy.

Valuations

1. Adapting Valuation Approaches: Traditional EBITDA multiples fall short for regional SMEs—investors prioritise risk-adjusted returns, downside protection, and earnout structures over contentious headline valuations.
2. Attractive Risk-Yield Profiles: Emerging market private debt delivers strong 14–15% yields at disciplined leverage (≤3x), offering better risk-adjusted returns than crowded Western markets.
3. Greenfield Strategy: Infrastructure players avoid high entry valuations by building from scratch with long-term financing packages, then exiting to lower-cost buyers via yield compression under long-term PPAs.
   Value Creation
4. Institutionalising Governance and Operations: Move from founder-dominated control to structured Boards with delegation frameworks, cadenced reporting for early risk detection, and professional management to eliminate key-person dependency.
5. Family Office Transitions: Managing sensitive founder and family office transitions involves rollover equity, external managers, sharper capital allocation, and increasing synergies across portfolio companies.
6. Value Creation Drives Exits: Value creation levers are key—cleaning up portfolio companies leads to more interested buyers and higher earnings, with exits dependent on local relationships with regulators, suppliers, and communities.

Exit Strategies

1. Trade Sales Over IPOs: Public listings remain impractical for most SMEs—focus on trade sales, secondaries, and refinancings, targeting strategic acquirers seeking unique regional assets, licenses, or distribution networks.
2. Engineering Exit Optionality from Day One: Structure investments from inception to appeal to diverse buyers—don’t rely on one exit route, keep all options open, and set up companies to look attractive in three years.
3. Debt Exit Strategies: Debt exits rely on improving borrower cash flows and governance so commercial banks can refinance, supported by continuation vehicles and creative restructurings for tail portfolios.
    

We thank our speakers and all participants for contributing their perspectives and experience to the discussion.