Face Time with Atif Abdulmalik

(CNN) -- Gulf investors steered clear of the deal to rescue the fifth largest U.S. Investment bank this week, over fears that U.S. investments could sink even lower.

But Atif Abdulmalik, CEO of global investment firm Arcapita, believes there are plenty of opportunities to be had.

Mr Abdulmalik, who presides over a company that has $3.8 billion in total assets, is not shying away from the US.

He talked to MME's John Defterios (JD) about investing in the current global economic climate.

(JD): What sort of opportunities does this create for somebody like Arcapita, to see value in the market and to see nearly the end of a recession on the horizon?

(AA): Well, John, it really depends on the sectors. In the real estate sector there are good values now. You have heard about some of the transactions being done lately. Things are being bought at 40c to the dollar, 30c to the dollar so there are opportunities there. The only issue you have now is that the banks are reluctant to lend. We see this in private equity for example, valuations have shrunk, however, even with the availability of reasonable pricing the banks are still shying away from lending aggressively as they used to do before the sub-prime issues started.

(JD): It's fair to say that this regional economy decoupled from the United States quite substantially growth wise? Is it time to decouple the currency as a result of the disparity between the slowdown and the explosive growth we are seeing here?

(AA): Yes, you know from a self-interested point of view, the bank is really a dollar-based bank. So we would rather see the dollar being pegged. But from an economic point of view [our currency] should have been de-pegged a long time ago. It's really more a political issue of when to do it. You saw we were in a conference today and you mentioned that growth is about eight percent in our area, however inflation is eating aggressively into all of this. That's because we are importing inflation by having all of our exports in dollars and most of our imports are in dollar denominated currencies.

(JD): What is the time frame then for this to take place? When political realities back off and economic realities take hold?

(AA): Yes, again it's really a timing issue within the political regimes in the area. From an economic point of view it should have been done a long time ago.

(JD): We've had two major governments or governmental regimes in the last two weeks put forward rules on sovereign wealth funds, asking for voluntary transparency measures. The latest being the European Union. Is this the compromise by the European saying it should be voluntary but we still welcome the capital?

(AA): No, this sovereign wealth issue has been overplayed. It started in the U.S. and the protectionism -- especially since it is election time now -- that's a call that strikes very well with an uninformed kind of people. I think more and more people are realizing that these sovereign wealth funds are as transparent as any other institutions and they truly are passive investors.

None of these people want to be on the board, they want to invest their excess wealth for the future generation of their countries in blue chip type investments. And these investments they make are not a small hidden investment, they are very obvious, large substantial amounts and percentage ownership in large entities. And all of this information is public information. So this transparency word used for the sovereign fund I think is a little bit aggressive.

(JD): It's interesting though to get specific about the European Union proposal. They're saying they want it voluntary not mandatory, it's not going to be legislated. Is this the compromise?

(AA): You know, I don't represent sovereign wealth funds. We know them. We deal with them. We invest their money sometimes. So, whether being voluntary is a good thing or not, I think it's for the best interests of any economy to invite this money. You don't want to put too much restrictions to fend them off. You should encourage them. Take DP World, for example, that was not a good thing that took place. If you want to attract money you can't put too many restrictions on it.

(JD): Arcapita owns a Northern Ireland utility, you recently sold a British utility then invested in US utilities. Are you a big proponent of the future investment now being in infrastructure or related to infrastructure as a growth opportunity?

(AA): Absolutely, you see this trend evident in everything, even in the big banks. Infrastructure funds that have been raised lately are substantial. They are all above $5 billion worth of funds and they are all targeted in this sector. It's the same way you saw conversions between hedge funds and private equity. You'll see a lot of conversions now between private equity and infrastructure investment.

(JD): Inflationary pressures are leading to some of the unrest we see in society today. You sit on the Bahraini Economic Development Board. How vital is it to get a hold or ahead of inflation before it becomes a real social issue?

(AA): It's very important, I think, not only you saw it with the locals you saw it with the expatriates as well, especially with the laborers brought from other countries to do the building -- whether it's in Dubai, whether it's in Bahrain --because inflation has eaten too much into their money. They used to spend some and send close to half of it back home, now they can barely use all of it just to live, which is a sign that inflation is serious. And the latest figures I have seen for Saudi and other countries here are a bit alarming. So things have to be done to curtail inflation. E-mail to a friend