Sturdy Boots On Un­steady Ground

Po­lit­i­cal tur­moil? Cor­rup­tion? Civil un­rest? Meet the honey badger of global pri­vate eq­uity, Dubai’s Abraaj Group.

Forbes - - Investing - By el­iz­a­beth macbride

Arif Naqvi, chief ex­ec­u­tive of Dubai’s Abraaj Group, hates the way Western­ers speak about his part of the world. His pri­vate eq­uity frm, he says, does not op­er­ate in emerg­ing mar­kets or, worse, fron­tier mar­kets.

“We have taken the risk out of in­vest­ing in what the West mis­tak­enly calls ‘emerg­ing mar­kets,’ ” he says in el­e­gant, Pak­istani-ac­cented English from a Madi­son Av­enue out­post. “They’re growth mar­kets,” he in­sists.

While his re­marks con­tain a healthy dose of mar­ket­ing, Naqvi has a point. His $9 bil­lion pri­vate eq­uity frm—cur­rently the largest in­vestor in emerg­ing mar­kets out­side of Brazil, Rus­sia, In­dia and China—has a track record many de­vel­oped-world money man­agers would kill for. De­spite op­er­at­ing in places where the rule of law of­ten comes into ques­tion, lim­ited part­ners re­port an im­pres­sive 17% an­nual re­turn since in­cep­tion in 2002.

Naqvi, 55, con­sid­ers the no­tion of risky emerg­ing mar­kets a myth—part of what he calls “uni­ver­sally prac­ticed hypocrisies.” He re­minds a vis­i­tor that in 2008 the big­gest risk on the planet came not from the de­vel­op­ing world but from the fnan­cial cap­i­tal of the mod­ern era, New York City. Why, he asks point­edly, “have you not at­tached a risk premium to do­ing busi­ness with Wall Street banks?”

In a clubby world of global deal­mak­ers, Black­stone, KKR and Car­lyle get most of the head­lines, but Abraaj is the undis­puted pri­vate eq­uity king of in­vest­ing in the seem­ingly dan­ger­ous mar­kets of Asia, Africa and Latin Amer­ica. There is no short­age of big in­vestors want­ing to get into its new­est funds. So far in 2015 the frm has sucked in $1.4 bil­lion in fresh cap­i­tal, giv­ing Abraaj the largest pool of in­sti­tu­tional money now pointed at sub-sa­ha­ran Africa in the world.

The frm cur­rently has 300 lim­ited part­ners,

abraaj Group chief ex­ec­u­tive arif Naqvi, proft­ing thanks to “uni­ver­sally prac­ticed hypocrisies.”

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