02/04/2015 04:18 AST
Arcapita is bouncing back from Chapter 11 bankruptcy as the Bahrain-based investment house seeks return to property and private equity deals, says its chief executive.
And its first big deal could be done on Saadiyat Island, where it is closing in on a US$200 million investment in a real estate project.
The Sharia-compliant company emerged in 2013 from Chapter 11 bankruptcy proceedings in the United States, paving the way for an ordered sale of assets to pay off its creditors. It has made about US$2.4 billion from around 14 divestments over the past 18 months, said its chief executive, Atif Abdulmalik.
The investment company became the first Middle Eastern entity to file for bankruptcy protection in the US courts in 2012, after failing to reach agreement with creditors about the restructuring of a $1.1bn loan.
Arcapita invests in property and private equity, and has managed client accounts.
The company plans to raise funds deal-by-deal this year and hopes to have a $800m to $1bn fund for investments next year, with no imminent plans to tap the debt market.
“In the coming six to 12 months, our focus is to do more stabilised income-generating real estate transactions between the GCC and the US, and from nine months onwards we are going to start to introduce private equity,” said Mr Abdulmalik. “We are starting the engine again.”
Arcapita, in which Bahrain’s sovereign wealth fund has a stake, is planning to agree three deals in real estate this year, in the UAE, Saudi Arabia and the United States.
The UAE property deal, which is expected to be announced within weeks, is valued at about $200m and will be an investment in the prime residential development in Abu Dhabi’s Saadiyat Island. The company is shying away from Dubai for the moment, where residential property prices are forecast to drop by about 10 per cent this year, according to the broker JLL.
The residential property investment in Saudi Arabia will be in the capital Riyadh or in the oil-producing Eastern Province. The two GCC investments will have a total value between $300m and $400m, while the US investment will range between $150m and $170m.
“There is a demand from our investors [for US real estate transactions] and there is a good track record from our teams,” said Mr Abdulmalik. “We go to the market we know best, and there is more stability [in the US market] and there is good data for the market so that you can evaluate deals.”
In terms of private equity, the company aims to strike a deal in the US by the end of this year, and is targeting three to four deals next year. The US is the prime focus for private equity and the sectors of most interest are primarily logistics, industrial, consumer, energy and renewables. It is not planning to look at private equity in the GCC.
“Our focus in the Gulf is going to be on real estate, and we also do a number of managed accounts where sovereigns, financial institutions or family offices give us a mandate to manage an asset class that they want to do,” said Mr Abdulmalik.
The National
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