Abraaj Group plans to plough US$30 million into the Auvest Menasa Opportunities Fund I, which will target small and medium enterprises in the Middle East, North Africa and South Asia.
The fund, which will be managed by the Auvest Group, intends to raise between US$250 million and $300m, the Dubai-based private equity firm said.
“It has long been acknowledged that the SME sector in growth markets is a formidable engine of employment and economic diversification,” said Arif Naqvi, the chief executive of Abraaj. “The access to long-term capital will enhance the growth of the sector and allow thriving businesses to take advantage of the underlying opportunity and strong fundamentals of the region.”
The fund’s target countries will be the UAE, India, Egypt, Sri Lanka, Oman and Jordan. Target sectors will include retail, restaurants, logistics, packaging, education and health care.
Abraaj said that SMEs accounted for more than 90 per cent of businesses in the regions the fund will cover.
Those businesses “provide 45 per cent of employment but only contribute 25 per cent to GDP, implying a low level of productivity, as these firms often lack the financial resources needed to invest in the growth of the business”, the group added.
Abraaj manages about $9 billion and has stakes in companies such as the Sharjah-based Air Arabia and the Spinneys supermarket chain.
Auvest Group, which is made up mostly of former Abraaj executives, offers investment management services to institutions and family offices.
Follow The National’s Business section on Twitter