Dubai-based private equity firm Ithmar Capital plans to raise $1billion through a close-ended private equity fund during the second half of this year, Faisal Bin Juma Belhoul, founder and managing partner of the firm, said.

The new fund, third in the series after raising $250 million in 2003 and 2006, respectively, will be used to fund buyouts in the United Arab Emirates, Kuwait, Qatar, Bahrain, Oman and Saudi Arabia.

"We target internal rate of returns in excess of 25 per cent, which is annually compounded," said Belhoul.

Ithmar, focused on GCC companies, has $500 million invested in industries ranging from construction-related services, oil and gas services, healthcare and education.

The firm has 33 regional investors for its funds, including 3i Group plc, Gulf region sovereign wealth funds, international pension funds and financial institutions.

Ithmar Capital has been approached by international pension funds and financial institutions, Belhoul said, adding ''Our shareholders include some of the most strategic GCC-based institutional and high net-worth investors.''

''Ithmar Capital has key alliances that have a considerable impact in enhancing its regional and global connectivity and provides it with proprietary and unique deal flow,'' he added.