Dubai International Capital (DIC), the international investment arm of Dubai Holding, and HSBC Bank (HSBC) are establishing a US$500mn fund to invest in infrastructure opportunities across the Middle East and North Africa (Mena) region. The fund will be known as the Mena Infrastructure Fund and DIC and HSBC will each invest US$50mn in the fund, demonstrating their confidence in the opportunity and their commitment to the sector. DIC and HSBC will also provide fund management services.
“The Mena region is highly conducive to private sector investment in infrastructure for several reasons,” explains Sameer Al Ansari, CEO of DIC. “We expect to see a strong drive for privatisation and project finance in the region and particularly interesting investment opportunities in the infrastructure sector such as in utilities, energy, transportation and public private partnerships. Given the rapidly growing regional appetite from both individual and institutional investors – recent oversubscribed infrastructure based IPOs stand testimony to this – we are confident that we will receive very strong investor interest in the Mena Infrastructure Fund.”
The fund will target selected investors from across the Mena region as well as from wider international sources. The fund will have a broad mandate to invest in companies and other entities operating within Mena markets in the various infrastructure sub-sectors.
“Infrastructure assets offer a particularly attractive investment opportunity, especially given that infrastructure expenditure over the next 10 years in the Middle East and North Africa region is estimated to be in excess of US$300bn,” says David Hodgkinson, CEO and deputy chairman of HSBC Bank Middle East. “Not only does this sector provide good returns, but it also has a low correlation with other asset classes which allows investors to reduce their portfolio risk and decrease the overall volatility of their returns.”
Hodgkinson also points out that the Mena Infrastructure Fund will provide a unique opportunity for investors to gain exposure to a portfolio of assets that are otherwise difficult to access, concluding that, “underlying asset valuations are generally stable over the short-term while offering potential for strong long-term capital growth”.