With Mideast Unrest, Foreign Investment Is Again Interrupted

Due to the unrest and revolts going on in Mideast countries, the markets of these countries have faced terrible losses. Foreign buyers and investors, because of the unrest, have shown reluctance and resistance in showing any kind of interest in their market. Lately, with the gradual settlement of revolts and fights, the market has slightly started picking up momentum.

After 2 years of stagnancy, foreign investors had slowly started showing interest in the market. A private equity consortium has shown interest in selling its 93% stake in an Egyptian company which manufactures drugs, Amoun Pharmaceutical.  But on account of the student protests turning into a revolutionary event, none of these companies materialised for investments. Investors have again started baking out of this market. This had led to more economic volatility for this region and the world.

Sarah Alexander, president and Cheif of Emerging Markets Private Equity Association, stated that the deals have not been completely called off, they are up taking a “wait and see” attitude to analyse the situation further.

The market had started picking up pace lately, with buyers and sellers meeting at good prices, It is predicted that countries with similar economic profiles might get affected soon.  Financial professionals and private equity executives stated that deal makers are playing it safe, currently keeping in mind their interests. In order to overcome such reluctance it is important to make fund-raising efforts. Due to the weak and volatile market, this has become a complicated issue.

Jochen Duelli, Bain’s Head of Private Equity, stated that the I.P.O market suffered when the markets fell following the uproar in Egypt , making it very difficult for private equity companies to exit. Although there is stagnation in the market right now, the middle-east, just like any other emerging market, shows great promise for private equity companies. Oil exports also help strengthen the economic growth of the region.

For short term investments, the market does show disappointment, but if one looks at a long term view it does promise a lot of comfort.  Currently, across all regions there are private equity companies focused on consumer goods, commodities and tourism.

- Chris Termeer

Chris Termeer

Chris Termeer is an oil and gas consultant, industry commentator and analyst. His book, Fundamentals of Investing in Oil and Gas provides a comprehensive overview of all aspects of the oil and gas industry, including exploration, drilling, production, storage, transportation and refining, to name but a few.

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