BMB Group, a Middle East investment group, on Wednesday acquired a US-based private equity house focusing on emerging markets, which was co-founded by a former prime minister of Pakistan.

The merger of BMB and Washington-based EMP Global - a rare example of consolidation in private equity - will turn the Brunei-based group into one of the biggest investors in nascent private equity markets, including in Asia and the Middle East.

The combined group will have about 100 employees and $12bn of assets under management, including private equity funds investing in the Middle East, Asia, Latin America and Central and Eastern Europe.

The deal is expected to be the first of many for BMB, which specialises in investments for the royal families in Brunei, Saudi Arabia and other Gulf countries. It sees the credit crunch as an opportunity to expand via acquisition and hiring from western private equity groups and banks. EMP Global was co-founded by Moeen Qureshi, a former World Bank economist who served as acting prime minister of Pakistan for three months during the country's political crisis of 1993. Mr Qureshi will become vice-chairman of BMB.

The Washington-based group has been on the lookout for a large institutional investor to become its biggest shareholder since AIG, the US insurer, sold its large minority stake to the management in 2005.

EMP has been breaking up in the past few years, with Mid-Europa Partners going solo with its East European funds in 2005 and ECP spinning off its African funds last year.

EMP, established in 1992, is one of the pioneers of emerging markets private equity. However, it was hit by the Asian and Latin American financial crises, which hurt the performance of its regional funds investing in those areas.

BMB will initially acquire a 50 per cent stake in EMP from its management, with options to increase this steadily.

The Brunei-based investment group operates a similar funding model to Investcorp, using its balance sheet to pay for investments and then syndicating them out to a wider group of wealthy investors in the Gulf.

Donald Roth, co-founder of EMP, former treasurer of the World Bank and former head of Merrill Lynch Europe, will become head of principal investments at BMB.

Chris Walker, head of sales and marketing at BMB, said the credit crunch was good news for its expansion plans. He said: "We are on the acquisition trail and we believe it's a fabulous time for Middle Eastern capital."