DUBAI: Distressed investment opportunities in the UAE and the Arabian Gulf will rise this year as stock markets and companies in the region buckle under the pressure of oil trading at around $30 a barrel, according to Sancta Capital Group.
“We’re expecting compelling opportunities as equity prices collapse, credit spreads continue to widen, and companies struggle to raise capital from traditional sources,” said Ahmad Al Anani, chief executive officer of the Houston-based firm, which invests in under-performing companies and their debt. “The region offers an uncompetitive investment landscape and assets can often be dramatically mis-priced, both in the equity and credit space.”
Sancta Capital sees UAE-based construction companies and small businesses offering the best distressed situations as projects are put on hold, contractors struggle to get paid and local banks seek to offload loan portfolios, Alanani said in an interview in Dubai where the company has a research office. It also expects blue-chip infrastructure firms in Africa to offer good investment opportunities, he said.
Oil’s more than 70 per cent plunge since June 2014 means that some companies in the UAE and neighbouring countries, among the world’s biggest crude producers, are struggling to make debt repayments.
Most of the region’s stock markets have slumped, while billions of dollars have been drained from the banking system. Distressed securities are the bank debt, trade claims or corporate bonds of companies or government entities that are experiencing financial or operational difficulty, default, or are bankrupt.
