Private Equity in Middle EastOctober 2005

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Istithmar Overview A major investment holding company based in the UAE

Focuses on Private Equity, Alternative Investments, and Real Estate

Set up in June 2003 with an initial capital pool of USD 2 Billion

Form part of the Group comprising Dubai’s Ports Customs & Free Zone Corporation, Nakheel, DMCC, and Tejari

Key mission: to earn an exceptional return for its investors while maintaining due regard for risk

Investment based on its “I” investment philosophy namely Ideas, Inquiry & Integrity

Investments over USD 850 Million to date

Private Equity in Middle East

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Private Equity in 2005 Private equity continues to be one of the major economic

drivers of the world’s economy

Represents approximately 7.5%* of global asset allocations

Continues to play a major role in restructuring of underperforming assets worldwide

Analysis suggests as much as USD 20 billion allocated to funds focusing in the Middle East Region

* Source: Private Equity: Catalyst for Economic Growth in the Middle East Region

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Investment Focus to Middle East Private equity picking up pace in Middle East, as Arabs prefer to keep their

assets home due to: Lackluster performance of US and European stock markets Out performance by home markets Increased scrutiny by foreign governments post 9/11 Increase in oil prices and liquidity thereon

Region has been a source for PE firms that raises capital in the region and invest in US and Europe

Currently, market is relatively small, with approx. USD 250 M of funds managed by PE firms

Managers view that the market is on the verge of major growth Shuaa Capital and National Investor to add USD 250 M to the pool Abraaj to add USD 500 M to the pool Injazat Fund’s additional fund of approximately USD 100 M Players like Istithmar making large scale investments Other players sprouting in the region

Managers view about USD 600 billion of assets likely to be denationalized in the Arab world in the next 10 years resulting in an opportunity for PE players

Incentive for companies to partner with PE investor enhanced by success of local stock market

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Country GDP 2004USD B

GDP Growth %

Budget Surplus as a

% of GDP

Budget SurplusUSD B

Inflation Rate

Saudi Arabia

249 5.3% 3.6% 9.00 0.7%

UAE 90 7.0% (0.4%) (0.36) 3.2%

Qatar 20 8.3% 15.0% 3.00 4.0%

Oman 24 0.7% 1.5% 0.36 0.2%

Bahrain 10 5.6% 6.6% 0.66 2.2%

Kuwait 42 9.9% 18.2% 7.64 2.3%

Iran 149 6.3% 5.7% 8.49 14.9%

GCC GDP & Surplus GCC countries have benefited from increase in oil prices which

in turn has helped increase in budget surpluses

Source: EIU Report. Data for 2004

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Movement of Capital from foreign based firms to locally managed firms

Closer Management Deploy in local markets and international Estimated that as much as US$ 20 billion raised in dedicated

funds devoted to private equity in next five years

Finding management talent

Fund Managers Corporate Managers

Globalization of Financial Markets Standard for managers will have to emulate that of

international competitors Will have a suite of products (Local vs, International;

Traditional vs, Alternative; Islamic vs traditional)

Future for Regional Managers

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Ideas. Inquiry. Integrity

Istithmar means Investment.