Gateway Partners Ltd., the private equity company led by former Standard Chartered Plc banker Viswanathan Shankar, plans to fully invest its first $757 million fund within the next year and is working on deals in Saudi Arabia, the United Arab Emirates and Egypt.
The fund has deployed about 65 percent of capital in 10 deals in countries such as Indonesia and Nigeria, partners Iyad Malas and Anil Dua said in an interview in Dubai. Its also exited one investment and partially exited two, earning returns of about 25 percent, they said.
The eight-year fund that was started in 2015 can be extended for two years and is seeking gross returns of 2.5 to three times capital, said Malas, former chief executive officer of Dubai-based family conglomerate Majid Al Futtaim Holding LLC.
Shankar, the British-lender’s former CEO for Europe, Middle East, Africa and the Americas, is CEO of Gateway Partners, which is backed by sovereign wealth funds and family offices in Asia, the Middle East and Africa. It usually buys minority stakes in established businesses in East Asia, South Asia, the Middle East and Africa, investing between $50 million and $75 million of its own money in each deal.
“Our investment themes are mainly consumption driven,” said Dua, Standard Chartered’s former CEO for West Africa. “As populations grow and more importantly, as middle classes expand, there will be strong consumption demand, whether in confectionery or in healthcare or housing.”
Gateway Partners invested alongside TPG Capital LP and The Northstar Group in Indonesia’s largest convenience store operator Indomarco Prismatama PT. It also invested in Indian bakery company Mrs. Bectors Food Specialities, Pan-Africa bandwidth provider Liquid Telecom and Gateway Delta Development Holdings, a Mauritius-based real estate developer.
The fund is among a growing number of investors seeking to benefit from emerging markets whose economies are expected to grow at an average of about 4.5 percent this year, compared with global growth of 3.1 percent, according to the World Bank. Still, there are risks such as currency volatility.
“We have actively tried to mitigate the pitfalls of an exchange rate devaluation,” a key problem with investing in emerging markets, Dua said. A third of the company’s investments are “dollar protected” and the rest are in countries where the currency has been stable.