Deloitte, the financial consultancy, expects private equity deal-making in the Middle East to pick up by about a quarter in the current financial year.
The company anticipates increased demand for its role as an adviser on private equity deals, especially within the oil and gas services sector, Omar Fahoum, the Middle East chairman and chief executive of Deloitte & Touche, said in Dubai yesterday.
"I expect private equity will come back to substantially higher levels than during the financial crisis in this region," Mr Fahoum said.
"Private equity will be the generator of many of the deal flows and deal activity in corporate finance."
He said activity within private equity would expand by between 20 and 25 per cent in this financial year ending next April, compared with the same period last year.
The combination of a resumption of confidence, higher liquidity in the market and attractive valuations were the main reasons activity would return, Mr Fahoum added.
Before the financial crisis, the region experienced a private equity boom as companies took stakes in companies operating across industries from property to petrochemicals. But the downturn has resulted in the sector contracting sharply in the past year.
A resurgence would benefit the UAE, with many private equity houses based in the country. They suffered after big investment deals dried up because of a shortage of available capital and lack of confidence in the business outlook.
Private equity funds raise money from investors that is then used to purchase stakes or take over private companies. Looking to generate large returns, they exit their investments through share listings or sales to other companies and private equity funds.
Deloitte's business would benefit from an increase in activity because of its expertise within transaction and valuation support services, said Mr Fahoum.
The firm has hired more than 1,000 staff in less than two years across the region. It now has 2,200 employees.
Within corporate finance, an upward surge in private equity may help to pick up some of the slack from the mergers and acquisition (M&A) sector, which is growing at lower levels.
"M&A has picked up a little but it's nowhere close to its peak prior to the pre-crisis levels," said Mr Fahoum.
Islamic finance represents another big area of growth the company is targeting.
Of the US$960 billion (Dh3.52 trillion) assets Islamic banks hold globally, 60 per cent are in the region, he said. In addition, 80 per cent of the Islamic banks are in the GCC.
"Islamic finance activities have been growing at 20 per cent for the past five years," said Joseph el Fadiof Deloitte's financial services industry division.
"Still, the market is growing, not as much as before but banks have started to create windows for Islamic finance rather than switching all their products to Islamic finance."