The days of highly-leveraged private equity megadeals belong in the past and those that are still getting off the ground tend to be fairly modest.

The days of highly-leveraged private equity megadeals belong in the past and those that are still getting off the ground tend to be fairly modest. But private equity managers are nothing if not determined to seek out new opportunities, especially as pressure mounts from their investors to start spending the large amounts of uninvested capital they have built up - or return it.

However, the financial crisis has put a damper on proceedings throughout most of Europe and North America, and even supposedly recession-proof sectors such as health care are now all but closed.

At The Deal's Healthcare Dealmaking Symposium yesterday, Buddy Gumina from Apax Partners said the debt market troubles might have taken longer to seep into health care M&A than into other sectors, but they had definitely now arrived. 'A year ago people were saying that markets were closed except for health care or energy,' he said. 'Now the markets are closed to most everything.'

So what do dealmakers do? Many are looking toward the Middle East. Omar bin Sulaiman, governor of the Dubai International Financial Centre, told a recent private equity conference that the downturn was opening up lucrative opportunities in the region for private equity firms.

'Despite the global financial crisis, there is tremendous demand for infrastructure developments and an enormous level of wealth in private and government hands, which offers an opportunity for private equity firms in the Middle East,' he said.

And as if on cue, private equity giant the Carlyle Group has raised USD 500 million for its first Middle East and North Africa fund. Several large private equity groups have already set up offices in the region, including KKR and Colony Capital.

To be sure, the Middle East is not immune from the crisis either - witness the implosion of Dubai's overheated property market - but with all its petroleum wealth and surging infrastructure development, the region looks a promising new playground for private equity while other markets remain largely closed.