KSA Economy Offers Highly Attractive Landscape for Private Equity Investors
4 November 2008
JEDDAH - Saudi economy offers a highly attractive economic landscape for private equity investors.
The nominal GDP of the economy has grown at a compound annual growth rate (CAGR) of 15 per cent during the period from 2002 to 2007 while the real GDP increased at a GAGR of 5 per cent for the same period, according to a Global report.
The private equity deal volume as a percentage of GDP is still among the lowest and is estimated to around 0.1 per cent, compared to around 1.5 per cent in the UAE, the Kuwait-based Global Investment House (GIH) states.
Sectors of high potential include sectors subject to privatisation and regulatory reforms such as air travel, telecom, financial services and services such as education, retail, healthcare, food and beverage, consumer goods, and transportation, it said in information made available to Khaleej Times here on Sunday.
“All the above offer a unique opportunity to tap this high potential market. However, a number of obstacles stand in the way of effective access to this attractive market,” it added.
According to a World Bank report, Saudi Arabia is the seventh fastest reformer globally, and second fastest within the Middle East and North Africa (MENA) region.
Also, the kingdom’s surge in ranking to 16th in the world and as the best in the MENA region in regards to ease of doing business is a reflection of the reformatory action taken by the government to de-risk its economy from oil.
With around 50 per cent of the population less than the 20 years age bracket and another 33 per cent in between the 20 to 40 age group, demographics remain attractive and this, coupled with high oil prices have ensured governments thrust on infrastructure and social spending remained high, it added.
“A physical presence with right contacts in the kingdom along with a deep understanding of the social and regulatory setting becomes the key to success for private equity players to benefit from the private equity boom that the kingdom is on the verge of witnessing,” states the report.
It added that with relatively cheap valuations of Saudi listed companies due to the current meltdown, coupled with an increasingly progressive regulatory environment, Global believes long-term institutional money will be attracted to the region.
It noted that the geographic focus of regional funds is changing and becoming more diverse as mandates and operations broaden to include other regions with many regional players opening offices in regions like Saudi Arabia, Turkey, Egypt and North Africa region.
The report states Egypt emerged as the preferred destination for investment in the Middle East and North Africa region, with $2.4 billion being invested in the last decade.
(Habib Shaikh)
25.11.08
6.11.08
Ithmar Capital focusing on healthcare-related acquisitions worth $1.2 billion
Dubai-based private equity firm Ithmar Capital will spend around $1.2 billion on international healthcare acquisitions within the next twelve months, according to its founder.
The acquisitions will take place under the banner of Ithmar’s new healthcare platform, Enaya, and are likely to include firms in the US and Europe.
“Enaya’s pipeline assumes deploying around $1.2 billion for healthcare acquisitions, and this is assumed over a 12 month period,” Faisal Belhoul, founder and managing partner of Ithmar Capital, said in an interview with Arabian Business.
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“These acquisitions will be GCC-related opportunities, but outside the GCC.”
“We are looking to acquire one large international healthcare group, and our shortlist of five options includes companies in both the US and Europe,” he added.
“We are very advanced in launching Enaya, and before year end we will be able to make significant announcements on acquisitions.”
Currently managing proprietary investments in excess of $500 million, Ithmar is also planning to launch its third fund (Ithmar Fund III), targeting $1 billion.
Belhoul is also executive chairman of Belhoul Investment Office, a holding company with a portfolio of investments in hospitals, schools, pharmaceutical and medical equipment, travel and tourism agencies, construction and engineering, catering as well as garment manufacturing.
The acquisitions will take place under the banner of Ithmar’s new healthcare platform, Enaya, and are likely to include firms in the US and Europe.
“Enaya’s pipeline assumes deploying around $1.2 billion for healthcare acquisitions, and this is assumed over a 12 month period,” Faisal Belhoul, founder and managing partner of Ithmar Capital, said in an interview with Arabian Business.
Story continues below ↓
advertisement
“These acquisitions will be GCC-related opportunities, but outside the GCC.”
“We are looking to acquire one large international healthcare group, and our shortlist of five options includes companies in both the US and Europe,” he added.
“We are very advanced in launching Enaya, and before year end we will be able to make significant announcements on acquisitions.”
Currently managing proprietary investments in excess of $500 million, Ithmar is also planning to launch its third fund (Ithmar Fund III), targeting $1 billion.
Belhoul is also executive chairman of Belhoul Investment Office, a holding company with a portfolio of investments in hospitals, schools, pharmaceutical and medical equipment, travel and tourism agencies, construction and engineering, catering as well as garment manufacturing.
Unicorn Investment Bank earnings, profits jump in nine months to September
Unicorn Investment Bank (Unicorn) reports earnings rose by 121 per cent, from US$84.6 million in the first nine months of 2007 to US$186.7 million in the first nine months of 2008. Net profit increased from US$31.8 million in the first nine months of 2007 to US$53.4 million during the same period in 2008. Return on average equity increased to 21.2 per cent and earnings per share grew to 28.7 US cents per share.
Unicorn’s strong performance comes on the back of a series of high profile transactions closed during the course of the year. In the third quarter, the bank announced the sale of its shares in United Arabe Emirates-based Orimix Concrete Products LLC (Orimix), an investment held by the bank itself and the Unicorn Global Private Equity Fund I. The fund acquired a controlling stake in Orimix in November 2006, and the disposal of its shares in July 2008 resulted in a return on capital of 160 per cent and an Internal Rate of Return (IRR) of 98 per cent.
Unicorn also recently announced that it had reached agreement to acquire Bahrain Financing Company (BFC), the oldest and one of the leading foreign exchange and remittance houses in the GCC. Founded in 1917, BFC was Bahrain’s first foreign exchange company and the first financial services institution to be established in the GCC region. It is the market leader in foreign exchange and money transfer services in Bahrain. The company has an extensive correspondent network comprising leading institutions in over 60 countries worldwide. Unicorn’s acquisition of BFC includes Bahrain Exchange Company in Kuwait and EzRemit in the United Kingdom.
Commenting on the bank’s results, Majid Al-Sayed Bader Al-Refai, Unicorn’s Managing Director and Chief Executive Officer, said, “We are particularly pleased to have achieved such outstanding results in the first nine months of 2008 given the challenging global economic environment. Unicorn is committed to prudent risk management, sound corporate governance and strict Shari’ah compliance, and it is this commitment, and our adherence to these operating principles, that will allow us to achieve further success in the future inshaAllah.”
Unicorn’s strong performance comes on the back of a series of high profile transactions closed during the course of the year. In the third quarter, the bank announced the sale of its shares in United Arabe Emirates-based Orimix Concrete Products LLC (Orimix), an investment held by the bank itself and the Unicorn Global Private Equity Fund I. The fund acquired a controlling stake in Orimix in November 2006, and the disposal of its shares in July 2008 resulted in a return on capital of 160 per cent and an Internal Rate of Return (IRR) of 98 per cent.
Unicorn also recently announced that it had reached agreement to acquire Bahrain Financing Company (BFC), the oldest and one of the leading foreign exchange and remittance houses in the GCC. Founded in 1917, BFC was Bahrain’s first foreign exchange company and the first financial services institution to be established in the GCC region. It is the market leader in foreign exchange and money transfer services in Bahrain. The company has an extensive correspondent network comprising leading institutions in over 60 countries worldwide. Unicorn’s acquisition of BFC includes Bahrain Exchange Company in Kuwait and EzRemit in the United Kingdom.
Commenting on the bank’s results, Majid Al-Sayed Bader Al-Refai, Unicorn’s Managing Director and Chief Executive Officer, said, “We are particularly pleased to have achieved such outstanding results in the first nine months of 2008 given the challenging global economic environment. Unicorn is committed to prudent risk management, sound corporate governance and strict Shari’ah compliance, and it is this commitment, and our adherence to these operating principles, that will allow us to achieve further success in the future inshaAllah.”
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