Investment Overview

Investment Approach

Highly Respectable Middle East Based Investment Company

Starling, having established itself as a highly respectable Middle East based investment company, possesses a deep and sophisticated level of knowledge in private equity gained through years of experience and study. This expertise makes Starling a valued partner to many of the world’s most successful and experienced funds looking for ‘Qualified’ investment partners based in the Middle East presence, partnership and know-how.

Starling has developed mutually profitable long-term relationships with several global private equity funds. When appropriate, Starling may take advantage of co-investment opportunities in parallel with the limited partnerships in which it invests.

While continuing its strategy of investing in private equity funds focused on buyouts (MBO and LBO) and venture capital funds, Starling actively seeks a sufficiently diversified portfolio to allow for the management of investment risks. Most of the firm’s investments are in select well-managed limited partnerships investing in quality companies and technologies.

Corporate Finance

Diversification

Starling mitigates its investment risk through diversification. This is usually done along four categories (i) investment stages (venture, growth, buyouts); (ii) vintage years; (iii) industry specialization (sector agnostic); and, (iv) geographies (US, Europe, Emerging Economies etc).

Starling also diversifies its portfolio by making select direct investments in investment opportunities that fit the company’s investment strategy in conjunction with the funds or directly.

Regions

Europe

The Eurozone economy is undergoing gradual recovery. The economy is expected to continue growing at a modest pace of 1.5% to 1.9%. Major economies are expected to continue unscathed owing to stable industrial activity, low oil prices, domestic demand and an accommodative monetary policy. Overall however, the Eurozone continues to face challenges of low inflation, high unemployment, fiscal and public debt etc

US

The US economic outlook is healthy. The economy has shown steady progress in the last three years with GDP growth in the 2-3% range, unemployment rate dropping 1% each year, low inflation and improving wage growth. With a solid and steady path towards recovery, the US economic growth appears to be strong. Falling energy prices, threat of a credit crunch will pose a risk to the economy in the near term.

Asia

While Asia’s growth has recently been disappointing, the growth expectation is at 5%-6% percent, remaining the global growth leader. The region’s growth should benefit from relatively strong labor markets and disposable income growth along with the ongoing gradual recovery in major advanced economies. Lower commodity prices should help consumption in most major Asian economies. However, risks to growth dominate, especially the probability of a steeper slowdown in China. Also a stronger US Dollar accompanied by a tightening of global financial conditions, weaker growth in Japan, and weaker regional potential growth could also dim Asia’s growth prospects. Commodity prices will also hurt the commodity dependant sectors. All in all, despite its resilient outlook, Asia is facing a challenging economic environment. This calls for careful selection of general partners in a volatile but opportunistic region.

Direct Investments

Starling’s allocations are not entirely limited to Private Equity Funds. The company has made and will opportunistically continue to make direct investments, through its active co investment program and by investing directly into companies. Starling’s direct investment exposure pans the GCC region and internationally. Going forward, Starling will continue to pursue its growth strategy and identify direct investment opportunities which present:

  • A significant market opportunity
  • Potential for growth in sales, income and value
  • Strong, experienced and committed management
  • A drive to succeed

Starling’s direct investment portfolio includes investments in Emaar Properties PJSC, Al Salaam Bank and RAK Petroleum—in all of which Starling is a founder investor.

Selection Process

Selection Process

  • Starling’s private equity investments are made principally through limited partnerships or co-investment opportunities alongside these partnerships, and direct investments in companies.
  • Starling receives an average of 140 investment proposals a year. The firm performs strict due diligence on 30 to 40 of these and typically invests in just three to five opportunities a year.
  • Due diligence generally takes between three to six weeks, but the process can be expedited if the situation calls for it.
  • Starling may employ third-party specialist firms to help evaluate investment partners and proposals submitted to the company for consideration.

Investment proposals may be submitted to Starling either directly or through this website.

    Investment Size

    Investment Size

    Commitments to private equity funds are typically made in increments of $5 million. Starling aims to commit no less than $5 million to any single fund, and is willing to commit up to $50 million to select individual funds.

    Starling also actively seeks to participate in co-investment deals with its limited partnerships and make self-identified direct investments. Starling’s direct investment commitments have been as little as $1 million, but the company is willing to commit as much as $10 million in quality direct investments.

      What Investments Will Starling Not Make?

      What Investments Will Starling Not Make?

      Starling, in accordance with its investment strategy, does not invest in derivatives, currencies, PIPES or Public Equities, Real Estate, Energy or Infrastructure; no single sector funds, no Secondary funds or Fund-of-Funds, no Distressed or Turnaround, no Hedge Funds, no Credit, Mezzanine or Fixed Income strategies and rarely invests directly in publicly traded companies.

      Starling will not invest in limited partnerships that finance businesses whose activities are not compatible with the Jawa family’s ethical and religious beliefs.

      These include enterprises with significant interests in gaming, weaponry, pornography, pork products, tobacco and alcoholic beverages production and distribution.

      Starling has historically done direct deals a) only through co-investments with fund managers with whom we have existing relationships or b) as foundational investors alongside MENA-based company founders who have longstanding relationships with Starling’s Executive Staff

        Partnership Terms & Conditions

        Partnership Terms & Conditions

        Starling usually invests in limited partnerships whose terms and conditions allow for the following:

        • A two-to-five year commitment period
        • Maximum partnership term of 10 years, with three years thereafter for dissolution
        • Preferred return (Hurdle Rate) of 8-10% annually
        • Carry split 20/80 or better in favour of limited partners
        • Target internal rate of return (IRR) of 25% or higher and a cash on cash multiple of 3x or higher, net to limited partners
        • Investment and advisory board criteria favourable to limited partners
        • Detailed reporting capability
        • Extent of General Partner's commitment and investment participation to be reviewed and agreed
        • Terms of parallel investment funds that will invest alongside the primary fund to be reviewed and agreed
        • Acceptable distribution methodology and clawback provisions
        • Stringent management accountability
        • Favourable diversification and debt restrictions