Saudi Arabia's Sidra targets Asia, teams up with BlackRock

The Sidra-BlackRock Asia-Pacific Private Equity Strategy has achieved a first close of unspecified size, according to a statement. The plan is to leverage BlackRock's network of GP relationships to provide diversified deal flow across the region.

The statement noted that Asia Pacific private equity has consistently outperformed public markets over the past five, 10, and 20-year periods, yet private markets in the region are underpenetrated. It added that investments bring exposure to an expanding middle class that is spending more on consumer goods, utilities, technology, media, and telecom, healthcare, and education.

Established in 2009, Sidra specialises in global shariah investments with operations across real estate, private finance, private equity, and investment banking. It had assets under management of SAR 13.1bn (USD 3.5bn) as of year-end 2021, with 41% in income-generating real estate, 22% in value-added real estate, 7% in private finance, 3% in private equity, and 27% in liquid investments.

"This new mandate takes a strategic approach to a region that is rich with investment opportunities," said Hani Baothman, Sidra's chairman. "Partnering BlackRock's strong fiduciary heritage and expertise in the region with Sidra's successful track record in shariah-compliant investments worldwide, will offer investors a truly unique investment opportunity in the Asia Pacific region."

Global Islamic finance assets are estimated to be around USD 2.5trn, but hardly any of this is in mainstream private equity. There are two routes: side letters alongside commitments to conventional funds that permit exclusion from deals involving assets like alcohol, tobacco, pork processing, and interest-based finance; and dedicated vehicles like separately managed accounts that have more far-reaching compliance provisions.

Industry participants describe shariah compliance as a spectrum rather than a set of absolutes. Beyond certain baselines, interpretations vary as to what is acceptable from an investment perspective, which lends itself to the customisation of private equity investment products.

Evidence of growing appetite for the asset class – consistent with institutional investors globally – was demonstrated within Asia last year when Malaysia's Employees Provident Fund (EPF) awarded USD 600m across three co-investment mandates to BlackRock, HarbourVest Partners, and Partners Group.

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• Topics
• MENA
• Fundraising
• LPs
• Asia
• Sidra Capital
• BlackRock
• Separate accounts