Private equity in Gulf Arab countries is set to flourish as the world's biggest oil-exporting region looks to invest its excess cash, an executive from Abraaj Capital said.
"There is a low penetration rate for private equity in the region and there are still a lot of funds here," Executive Director Frederic Sicre told Reuters on Sunday.
"There will be a need to invest that money and private equity players should benefit from that excess liquidity."
The global financial crisis has slowed economies across across Gulf Arab region, but Gulf countries are still sitting on surplus revenues amassed from an oil-price rally that saw crude prices hit a high near $150 a barrel in July.
Sicre said Abraaj Capital still saw long-term value in the healthcare and education sectors in the Middle East and North Africa, as well as India.
"Social infrastructure, hard infrastructure -- there is pent-up demand there because of chronic low investment in these sectors. There is a huge opportunity in that respect," he said.
Abraaj also sees value in energy investments, in particular in the downstream sector, Sicre said, adding that the firm has allocated around $400 million.
In addition, as the region's family-owned businesses are increasingly focusing on core assets, Abraaj Capital is ready to snap up "peripheral" investments being sold as part of that process, he said.
"The base of this region is family-owned businesses. Entrepreneurs are wanting to focus on core assets and are spinning off what is non-core," he said.
"It's moved from the founding fathers who amalgamated all these assets, such as hospitals and schools, to the younger ones ... who are taking a much sharper look at the books and getting rid of non-performing assets," he said.