Gulf Capital Closes Its Second Private Debt Fund Above its $250 Million Target

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Abu Dhabi: Gulf Capital, one of the largest and most active alternative investment firms in the Middle East, today announced the successful final close of its second private debt and mezzanine fund, Gulf Credit Opportunities Fund II, over its target cover of US$250 Million (AED925 million).

Gulf Credit Opportunities Fund II is an actively managed fund that will invest in a diversified portfolio of mezzanine, convertible debt and preferred equity issued by privately-owned mid-market companies across defensive sectors and geographies in the Middle East, Turkey and Africa region. The Fund invests in private credit transactions originated and underwritten by Gulf Capital.  It is the Company’s 10th investment vehicle since its founding in 2006.

Dr. Karim El Solh, Chief Executive Officer of Gulf Capital which is celebrating its 10th anniversary this year, said: “Private debt in the region is becoming an attractive asset class for investors seeking a consistent, high cash yield. Investors recognise the value of our proprietary sourcing and active investment approach to generate absolute, risk-adjusted returns that Gulf Capital’s private debt fund has been able to achieve irrespective of the business cycle. We are particularly pleased with the quality of the institutional investors backing our second Private Debt fund and by the fact that the investors in our first fund decided to increase their allocations and back our second fund. With the launch of our 10th investment vehicle, Gulf Capital today has become one of the largest and most diversified alternative asset managers in the Middle East.”

Gulf Credit Partners, the manager of Gulf Capital’s private debt business, sourced commitments for its second-generation fund from Sovereign Wealth Funds (SWFs), international institutional investors, regional insurance companies, foundations, and family offices. A significant number of investors in the prior fund made new and increased commitments to Fund II, which also attracted many new investors. The International Finance Corporation (IFC), a member of the World Bank Group and the largest global development institution focused exclusively on the private sector in developing countries, raised its commitment to Fund II to US$25 million, up by 25% from its previous commitment to Fund I. Other repeat investors increased their commitment by up to 50%.

Walid Cherif, Senior Managing Director and Head of Gulf Credit Partners at Gulf Capital, said: “We see growing opportunities in this alternative asset class in a region that lacks adequate traditional financing for SMEs, the backbone of our economies. Gulf Capital is filling this gap by supporting the future champions across defensive sectors of the economy. We invest in experienced management teams with a solid track-record of financial performance, robust cash flow generation and good corporate governance, helping them grow to the next level.  The launch of our second Private Debt Fund is timely as we see significant investment opportunities across our target region.”

Fidaa Haddad, Managing Director Gulf Credit Partners at Gulf Capital, said: “The mix of regional insurance companies, sovereign wealth funds, foundations and family offices and the repeat investments in Fund II reflect the confidence our investors have in Gulf Capital’s private debt investment thesis, the fund’s multi-dimensional diversification strategy and the strong returns generated to date. Our first fund invested in eight industries across five asset classes within the sector to offer three types of finance- Growth Capital, Acquisition Finance and Buyouts. Fund I invested in sectors including power, education, oil and gas servicing, business services, industrials, healthcare and telecoms across a number of structures including mezzanine and convertible debt.”

“The successful raising of Fund II in this difficult regional environment is a proof for a demonstrated strong track record by Gulf Capital’s private debt business and its team. We are very grateful for the continued support from our investors who believe in our sustainable growth strategies,” concluded Walid Cherif.  

Fund II will follow similar investment and diversification strategies as its predecessor. It will be investing in mid-market companies that are generating more than US$5 million in EBITDA, have revenues between US$20 million and US$250 million and operate in non-cyclical, growth sectors that are defensive in nature such as healthcare, education, industrials, power and water,  oil and gas servicing amongst others. The fund’s average investment size ranges between US$ 10 million and US$ 30 million, and is expected to finance 10 to 12 SMEs throughout its lifespan.

About Gulf Capital:

Gulf Capital is one of the leading alternative asset management firms in the Middle East, investing across several asset classes including Private Equity, Private Debt and Real Estate. The Firm currently manages over AED 14.7 billion (US$4 billion) of assets across 10 funds and investment vehicles. Gulf Capital’s mission is to grow capital and build value with world-class expertise and best practices to generate sustainable superior performance for all stakeholders. Gulf Capital, which is celebrating its 10th anniversary this year, invests its own capital alongside its fund investors’ capital in all of the funds it launches. Gulf Capital received regional and international recognitions from industry peers and experts. The Firm was awarded the “Best Private Equity Firm in the Middle East” Award by Banker Middle East Magazine in 2011, 2012, 2013, 2014 and 2015 and the “Best Private Equity Firm” in the Middle East and North Africa by Private Equity International, as well as “Best SMEs Credit Fund in the Middle East’ in 2015 and “Best Alternative Asset Management Firm in the Middle East” in 2016. The Firm is actively involved in real estate development through Gulf Related, its joint venture with the Related Companies, the leading private real estate developer in the United States. Gulf Related is focused on pursuing marquee large-scale mixed-use and residential real estate development opportunities in the UAE and Saudi Arabia. Gulf Capital also launched a Private Debt business, Gulf Credit Partners, which offers credit and mezzanine financing to meet the funding needs of fast-growing companies and to provide acquisition finance across the Middle East, North and Sub-Saharan Africa, as well as Turkey. With its private equity, real estate and private debt initiatives, Gulf Capital is today one of the largest and most diversified alternative asset managers in the Middle East.