The investment firm, owned by Abu Dhabi Investment Council, said it was looking for companies with solid cash flows in sectors that are likely to be least affected by the economic downturn such as healthcare, education and telecommunications.

The group expects deals to emerge in the United Arab Emirates, Saudi Arabia, Turkey and Egypt, ADIC Chief Executive Nazem al-Kudsi said, adding that opportunities would arise for small and medium-sized deals of up to US$250 million.

Abu Dhabi, which is part of the UAE, has been using part of its oil income to diversify its economy and invest abroad. The UAE ranks as the world's fifth largest oil exporter.

ADIC has hired Samir Samaan, who was previously at NBK Capital, to head up its private equity arm.

"With the global economic crisis hampering corporate financing, our private equity fund should continue to thrive as a valuable capital source for growing companies," ADIC's Kudsi said.

Stock markets in the Middle East and North Africa have been hard hit by global turmoil and valuations have dropped across the board.

Private equity funds in the region have US$11 billion to invest after raising a record US$6.4 billion in 2008, Gulf Venture Capital Association said in its annual report on Monday.

ADIC and UBS Global Asset Management said in November it planned to set up new funds of up to US$1 billion and would invest over US$200 million in two infrastructure projects in the Gulf Arab region.