ADQ-backed Aliph Capital expects to close the maiden deal by the end of 2022 | Jobi Cool

Aliph Capital, the manager of a GCC-focused private equity fund that recently raised $125 million from Abu Dhabi holding company ADQ, expects to close its first investment deal by the end of this year.

The firm, which has a strong deal pipeline, “should do something very soon,” said Huda Al Lawati, founder and managing director of Aliph Capital. The National on the sidelines of the Future Investment Initiative in Riyadh.

It plans to make two to three investments a year after “deep due diligence.” Overall, Aliph Capital will do 10 to 12 deals over the life of its $250 million debut fund, Aliph Fund I (LP), Ms Al Lawati said.

“We always have 10 to 12 contracts of which we look at four or five very closely. However, we do not take more than two or three deep plans at any given time,” she said.

“Equity funds are pension funds with an investment period of four to five years. So we’re going to distribute $250 million in the process.”

Private equity deals in the Middle East and North Africa have increased to 214 in the first half of this year 2022 from 76 in the second half of 2019 before the start of the coronavirus pandemic, due to the increase in technological and digital platforms, according to the 2022 Mena Data Insight report from the Global Private Capital Association (GPCA).

Investment has increased to about $19.5 billion from $570 million in the aforementioned period, with the largest private equity deal in the region being in the technology sector as Blackstone Group acquired technology and visa services company VFS Global for $1.1 billion in May 2022. , according to GPCA report.

Last year, PE activity was led by Silver Lake’s $800 million investment in Abu Dhabi’s AI and cloud computing firm Group 42.

Aliph is already evaluating several deals targeting companies with a good growth track record and an average annual turnover of Dh100m, said Ms Al Lawati, a former managing director of Abraaj Capital.

The average ticket size of Aliph Capital investments will be between $15m and $40m, mainly invested as growth partners in companies.

A typical setup for target companies includes “a good product, a good brand and market share … and they should have good management,” she said.

Aliph Capital secured the backing of ADQ as a cornerstone investor in its Abu Dhabi Global Market fund earlier this week.

ADQ, which in March merged its venture capital activities under DisruptAD, said the formation of a strategic partnership with an Abu Dhabi-based private equity fund aimed at serving SMEs “further supports our objective of accelerating sustainable economic development and growth within the UAE and [the] area”.

Aliph Capital plans to take large, active positions in private middle-market companies, and then “our job is to help them get to the next level [of their growth]”, she said.

We always have 10 to 12 deals of which we look at four or five very closely. However, we do not take more than two or three deep plans at any given time

Aliph capital is sector neutral and focuses exclusively on the quality of a target company. However, there are investment themes within the GCC region that the firm likes, including consumer and specialty sectors and niche categories such as lifestyle and health and wellness.

The company is also bullish on the logistics and logistics sector as an investment theme, driven by supply chain issues and rapid growth in the region’s e-commerce market, Ms Al Lawati said.

Private equity, venture capitalists and government-backed investors, including ADQ, are promoting investments in start-up and growth-stage companies as they become an increasingly important part of the global economic development agenda.

Globally, the value created by startups is about $3 trillion, almost on par with the economic output of the G7 economies, according to consulting firm Startup Genome.

Funding for these companies hit a record in 2021 when it reached $621 billion, according to CB Insights.

Startups in the United Arab Emirates raised $699 million in the first half of 2022, ranking the Emirates as the leading country for venture capital in the MENA region, according to data platform Magnitt.

The United Arab Emirates also led the region in deals, up 10 percent in the six-month period from a year ago, with the biggest deal being a $181 million convertible note for Pure Harvest in Abu Dhabi in June. .

The Arab world’s second-largest economy attracted more than $1.47 billion in venture capital in 2021, according to data from Magnitt.

Aliph Capital has already achieved the first close of its maiden investment fund.

It is currently in talks with government investors, foundations, family and high net worth investors to raise more funding to reach the fund’s target size of $250 million.

“There is no specific target date in mind,” Ms Al Lawati said when asked when she expected the fund to be finally closed.

The company also has no immediate plans to launch another fund and will only consider it as it expands operations and grows in size, she added.

Updated: October 30, 2022, 10:34 am

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