* Abraaj says no debt raised to fund deal
* Deal slated to close this quarter - Abraaj CEO
* No financial details given for deal
* Abraaj says combined firm to manage $7.5 bln in assets (Adds additional comments)
DUBAI, Feb 20 (Reuters) - Abraaj Capital, the Middle East's largest private equity firm, sharpened its emerging market focus on Monday with a deal to buy UK-based specialist fund manager Aureos Capital, creating an entity with $7.5 billion in assets.
Abraaj, based in Dubai, declined to give financial terms for the deal to buy Aureos, which manages assets of $1.3 billion and provides expansion and buyout funding to small and medium-sized businesses in Asia, Africa and Latin America.
"We are putting together two complementary platforms. Both firms are on the ground," Mustafa Abdel-Wadood, Abraaj's chief executive officer, told a news conference.
"In the case of Aureos, they have been investing in (small and medium enterprises) for over 10 years."
Abdel-Wadood said he expected the deal to close this quarter. The combined company will operate in 30 emerging countries.
"We're using Abraaj's balance sheet for this deal," he said. Abraaj, which sold its stake in Turkish hospital group Acibadem in December for what it said then was a "significant profit", will not be raising fresh debt for the acquisition.
Abraaj, founded in 2002 by Group Chief Executive Arif Naqvi, has raised $7 billion since its inception. It owns stakes in Orascom Construction, budget carrier Air Arabia , supermarket chain Spinneys and education group GEMS. Funds managed by the group have stakes in 35 companies across the region.
ACQUISITION DRIVE
Naqvi, a 51-year old Pakistani, is one of the most influential financiers in the region and is spearheading an effort to make the firm an emerging market powerhouse.
"If you look at emerging markets today, 1.2 billion people are going to be middle class over the next seven to eight years -- that's larger than the entire population of the OECD," Naqvi said in an interview with Reuters in London.
That would provide investment options in infrastructure, consumer markets, healthcare and education, he said.
Last year, Abraaj bought the North African private equity operations of French asset manager Amundi, and came close to buying Egyptian rival Citadel Capital, a deal which fell through.
Naqvi noted that there were no other private equity groups focusing on small and mid-sized deals in emerging markets with the scale of Aureos, which has more than 90 investment professionals in 27 offices around the world.
The group was spun out of British government-backed emerging markets investor CDC Group in 2001, and it runs 17 regional private equity funds, including a South Asia Fund and an Africa Health (Euronext: IXSHL.NX - news) fund.
Aureos's management team, led by CEO Sev Vettivetpillai, will take an undisclosed vested interest in the merged group, following the deal.
The Middle East and North Africa regions are important investment areas for private equity firms, which have raised $22.7 billion to invest into the area in the past five years, according to figures from London-based research firm Preqin.
Deal activity in the region is showing signs of rebound after a period of slowdown following the global financial crisis.
Abraaj plans to sell up to four of its investments in the next 18 months. It sold its stake in Turkey's Acibadem to Integrated Healthcare Holdings (IHH), a healthcare unit of Malaysia's Khazanah Nasional. The deal valued Acibadem at around $1.68 billion. [ID: nL6E7NN1D0] (Additional reporting by Simon Meads in London, Editing by Amran Abocar and Sitaraman Shankar)
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