The Middle East is home to a large concentration of multisector investment companies, including sovereign wealth funds, private equity firms, and diversified conglomerates, many of them family-owned. These multisector investment entities contribute to the majority of their country’s value creation and growth, in terms of GDP, employment, and foreign direct investments. They typically own investments across asset classes such as operating companies, financial investments, real estate, and infrastructure; across sectors such as banking, construction, consumer, and manufacturing; and across geographies such as the GCC, other MENA countries, or globally.
Strategy& serves all multisector entities in the Middle East, including sovereign wealth funds, private equity companies, diversified conglomerates, and family principals.
We have extensive regional and global experience working with diversified entities on a wide range of topics, including investment strategy, corporate operating model, corporate finance, and governance. We also support the institutionalization of family-owned conglomerates as they evolve from family-focused entrepreneurial businesses to professional corporations that separate the business from family assets, services, and rights.
With deep insight into regional family businesses, conglomerates, and the investment market, our Arabic-speaking team of experienced professionals has served clients across the MENA region and Europe. Our collaborative approach with our clients enables us to develop tailor-made strategies and solutions.
As vehicles for long-term wealth maximization and/or economic development, regional sovereign wealth funds play a fundamental role in the regional and global investment landscape. Decades of budget surpluses have enabled these funds to amass large sums of capital which made them a relevant player on the global scene, a reality that has raised the attention – and often apprehension – of states that receive their investments, due to the potential mixing of financial and political agendas. As a result, regional funds are increasingly adopting global standards on governance and transparency to dispel any concerns. On the regional front, funds are refocusing on the region and are increasingly plugged in to the economic realities of their governing states, leading to a direct role in driving, shaping, or supporting their government in target sectors and flagship projects.
In this context, key trends for these funds include:
A backbone of the economy in the GCC, multisector and/or family-owned conglomerates contribute to a significant portion of economic activity and employment in the region. Today more than ever, such companies are facing a new reality as changes in the macroeconomic landscape are affecting the sectors their businesses operate in. These changes include a negative outlook in consumer spending, slowdown in B2B activity as government spending is curtailed, and greater competition as a result of more-open trade agreements and a tighter funding environment following the financial crises and resultant cautious bank lending.
In this context, key trends for these conglomerates include:
Private equity’s contribution to the investment landscape in the region remains lower than in other emerging and mature markets. Although a more subdued economic environment has lowered valuation expectations, valuations remain full, deal volumes are flat, and exits are decreasing. Moreover, the industry is facing higher competition from sovereign investors who are more active in the regional landscape. Given the challenges of operating in this environment, international players – once interested in the region’s sustained growth – have scaled back their presence. Local players have also adjusted, with tier 2 general partners narrowing their strategy, or shifting to a deal-by-deal approach while tier 1 players remain active in fundraising and investing.
In this context, key trends for PE funds include:
Families today are operating in a very different environment from 10 years ago, particularly with the next generation coming of age and claiming their place in the family concerns. Businesses that were once led by a single principal owner are now facing a dilution of ownership and decision making that is further complicated by a divergence in views among generations. Such a setup is ripe for internal conflicts and deadlock if no clear governance framework has been instituted.
In this context, key trends for family principals include:
Pan-Arab sovereign investment company portfolio turnaround
A Pan-Arab GCC-focused joint-stock company that conducts equity investments and wholesale lending engaged Strategy& to develop a five-year strategic business plan.
Local direct investment strategy for a GCC sovereign wealth fund
A GCC investment company wholly owned by a sovereign wealth fund retained Strategy& to develop its local direct investment strategy and policy.
Multisector portfolio strategy for a new geography
Due to slowing growth in its core business and excessive exposure to the distribution of one brand, a leading MENA-region family conglomerate was searching for diversification opportunities.
Corporate strategy and governance model for family-owned conglomerate
A family-owned business that operates in the distribution business and manages investments wanted to review its corporate strategy and governance model.
Investment portfolio restructuring and operating model review
A leading GCC investment company, asked for Strategy&’s help to design a formalized investment strategy and operating model.
Commercial due diligence for a leading regional private equity player
The private equity arm of a large international bank wanted to acquire a stake in a company dealing in the tissues and diapers markets in the MENA region.
Assessing investment opportunities in the GCC healthcare and education sectors
A UAE investment company conducting private equity investments in the GCC wanted an assessment of the opportunities in the healthcare and education sectors.
Single family office feasibility assessment and business model
A high-net-worth European family engaged Strategy& to define the optimal business and operating models for its single family office (SFO).
Family group constitution and shareholder agreement
A GCC-based family conglomerate welcoming the family’s second generation into the business ranks was experiencing discord and divergent interests among the beneficiaries.
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