A private equity firm based in the United Arab Emirates is bullish about prospects for investment in Middle East early-stage businesses, claiming that the time has never been better to enter this arena.

The Middle East region is gaining more interest from international investors across the UK and Europe, according to Dr Sabah al-Binali, chief investment officer and principal of Saffar Capital.

“As a result of recent economic events, investors have been closely examining where they can put their money safely and still make solid returns,” he said.

“What is clear though, is that the financial crisis has highlighted the failures of high leverage buyout funds and many companies are now focusing on the new mantra of “back to basics investing” as exemplified by strong cash flow management, operational oversight and long term strategies,” he said.

The combined gross domestic product of the wider Middle East and North Africa region is $2.7 trillion, about the same size as the GDP of India and Brazil put together, with Saudi Arabia alone accounting for almost $500 billion, the firm said.

The MENA region has not escaped the wider financial crisis, however. A report by Deloitte, the accountants, at the start of this year said private equity financiers and investors lowered their returns expectations for 2009. The private equity industry has seen returns hit by the spike in borrowing costs during the financial crisis, and funds have taken longer to raise money than previously, creating significant reserves of spare cash to put to work.

“The longer term view of investing and also the regionalisation of companies in the Middle East is a strategy that Saffar has been focusing on since its inception and one that we believe appeals to the likes of many investors, including family offices that take longer term views and don’t try to time markets or ride momentum,” said Dr al-Binali.

“The region is well placed for the future. The total [assets] of all private equity funds that disclosed their size in the region is $$24,894 billion, further proof of its current and future potential.  The need for infrastructure represents another long-term source of demand, which in turn reinforces the notion of more sustainable opportunities and the corresponding investment model to suit those opportunities,” he added.

Saffar was founded in 2000. In 2008, the firm launched the Saffar Financial Infrastructure Fund, which