Start-ups across the Middle East, Africa, Pakistan and Turkey raised $7.2 billion through 1,473 deals last year, despite macroeconomic and geopolitical uncertainty, according to a report by data platform Magnitt.
The funding value reduced by 2 per cent annually and was driven by a decrease in the value of late-stage mega deals, researchers said.
The number of deals recorded a faster decline of 4.4 per cent.
FinTech led both funding and number of deals in the MEAPT region, Magnitt data found. The sector's funding reached $2.25 billion across 351 deals in 2022.
The FinTech sector closed four out of the 13 mega deals in the region last year, which included Bahrain’s $110 million Rain deal and Saudi Arabia’s $100 million Tamara deal, the report said.
Funding for Mena start-ups crossed the $3 billion mark last year, an annual increase of 8.3 per cent, the researchers found.
“Our report reflected a strong first quarter for venture capital in the Middle East, Africa, Pakistan and Turkey. However, this was driven by the hangover of post-pandemic positivity, which distorted the delayed impact of global macroeconomic challenges and was not grounded in real-world sentiment,” said Philip Bahoshy, founder and chief executive of Magnitt.
“Funding and deal levels in emerging venture capital markets were quickly tempered by the slowdown that the global venture capital industry experienced as a whole, amidst a backdrop of economic uncertainty and geopolitical tension.”
Fears of a looming recession and spiralling inflation that drove the equities market rout globally have affected asset valuations in private markets, opening up new investment opportunities for venture capital investors, alternative assets industry data and analytics specialist Preqin said in a December report.
Entry valuations have reduced significantly and competition for deals has softened amid the global economic headwinds, it said.
Venture capital financing for start-ups in Mena rose 20 per cent annually to more than $2.3 billion in the first three quarters of 2022, putting it on track to potentially surpass the total investments attracted in 2021, Magnitt said in a separate report.
Turkey was the leading country in the MEAPT region in terms of start-up funding and deals, the report showed. It recorded 295 deals, followed by Nigeria with 198 deals and Egypt stood third with 160 deals.
Turkey captured 23 per cent of total funding, driven by three mega deals. The UAE was second, accounting for 16 per cent of funding, and Saudi Arabia followed with a share of 14 per cent, according to Magnitt.
The MEAPT region recorded 13 mega deals (worth more than $100 million), which accounted for 37 per cent of total start-up funding. Round sizes of more than $1 million shared around 25 per cent of the proportion.
While the number of mega deals was one less than in 2021, the value of these late-stage investments fell by 19 per cent, the report found.
“The tighter liquidity imposed by rising interest rates has made funding harder to secure for larger investments, leaving the $1 million to $5 million round size as the most attractive,” it said.
“Late-stage investment will be hard to come by in 2023 due to lack of liquidity in the market. We expect an increase in deal flow towards start-ups raising seed rounds or early series A as the sweet spot for potential investment.”
Start-up exits in the MEAPT region recorded a 36 per cent increase from 2021, with 144 exits closed in 2022. The Mena region accounted for 50 per cent of these exits.
“Valuations will return to pre-pandemic norms in 2023. The reduced availability of capital to fund an ever-increasing number of start-ups, combined with broader macroeconomic conditions, has and will continue to lead to the normalisation of start-up valuations,” Magnitt said.
“Countries with strong government support and policies like the UAE and Saudi Arabia will continue to see further funds and funds of funds deployed to support start-ups within their borders, while start-ups in geographies that do not have a focus on innovation in the current economic environment are likely to struggle.”
The Birkin bag is made by Hermès.
It is named after actress and singer Jane Birkin
Noone from Hermès will go on record to say how much a new Birkin costs, how long one would have to wait to get one, and how many bags are actually made each year.
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Gertrude Bell's life in focus
A feature film
At one point, two feature films were in the works, but only German director Werner Herzog’s project starring Nicole Kidman would be made. While there were high hopes he would do a worthy job of directing the biopic, when Queen of the Desert arrived in 2015 it was a disappointment. Critics panned the film, in which Herzog largely glossed over Bell’s political work in favour of her ill-fated romances.
A documentary
A project that did do justice to Bell arrived the next year: Sabine Krayenbuhl and Zeva Oelbaum’s Letters from Baghdad: The Extraordinary Life and Times of Gertrude Bell. Drawing on more than 1,000 pieces of archival footage, 1,700 documents and 1,600 letters, the filmmakers painstakingly pieced together a compelling narrative that managed to convey both the depth of Bell’s experience and her tortured love life.
Books, letters and archives
Two biographies have been written about Bell, and both are worth reading: Georgina Howell’s 2006 book Queen of the Desert and Janet Wallach’s 1996 effort Desert Queen. Bell published several books documenting her travels and there are also several volumes of her letters, although they are hard to find in print. Original documents are housed at the Gertrude Bell Archive at the University of Newcastle, which has an online catalogue.
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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Prop idols
Girls full-contact rugby may be in its infancy in the Middle East, but there are already a number of role models for players to look up to.
Sophie Shams (Dubai Exiles mini, England sevens international)
An Emirati student who is blazing a trail in rugby. She first learnt the game at Dubai Exiles and captained her JESS Primary school team. After going to study geophysics at university in the UK, she scored a sensational try in a cup final at Twickenham. She has played for England sevens, and is now contracted to top Premiership club Saracens.
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Seren Gough-Walters (Sharjah Wanderers mini, Wales rugby league international)
Few players anywhere will have taken a more circuitous route to playing rugby on Sky Sports. Gough-Walters was born in Al Wasl Hospital in Dubai, raised in Sharjah, did not take up rugby seriously till she was 15, has a master’s in global governance and ethics, and once worked as an immigration officer at the British Embassy in Abu Dhabi. In the summer of 2021 she played for Wales against England in rugby league, in a match that was broadcast live on TV.
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Erin King (Dubai Hurricanes mini, Ireland sevens international)
Aged five, Australia-born King went to Dubai Hurricanes training at The Sevens with her brothers. She immediately struck up a deep affection for rugby. She returned to the city at the end of last year to play at the Dubai Rugby Sevens in the colours of Ireland in the Women’s World Series tournament on Pitch 1.
Results
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