By Dinesh Nair / Reuters
DUBAI: Saudi private equity firm Amwal Alkhaleej will exit at least one investment in the kingdom this year through an initial public offering, and is in advanced talks for a minority stake in an Egyptian firm, the firm’s chief executive said on Wednesday.
The Riyadh-based firm will offload a portion of its stake in the Saudi company through the IPO, Fadi Arbid said in an interview. He did not disclose the name of the company but said it would offer a 30-percent stake worth between $320 million and $400 million in the IPO.
“Our main focus now is to exit some of the investments we made and generate decent returns to our shareholders,” said Arbid.
“People talk about investments a lot but 2012 and 2013 are going to be periods of exits for us.”
Private equity investments saw a sharp drop in the last couple of years with investors backing out of capital calls, sellers demanding higher prices than buyers were willing to pay and increasing competition from family groups hampering growth.
Amwal AlKhaleej and Abu Dhabi-based PE firm Gulf Capital sold their stakes in Maritime Industrial Services to London-listed Lamprell Plc in a $336 million deal last July in one of the rare private equity exits from the region.
But there are signs that the region’s private equity sector, which has seen minimal activity since the global financial crisis erupted in 2008, is in for a revival.
Some 218 investments were made by regional private equity funds between 2004 and 2009, of which the funds have only exited 14, according to a 2011 report by the Wharton School of the University of Pennsylvania and Amwal AlKhaleej. This is a sign of the large volume of investments in search of exit routes.
Carlyle Group last month acquired a 42 percent stake in Saudi Arabia’s Alamar Foods, the master franchise operator for Domino’s Pizza and Wendy’s restaurants in the Middle East and North Africa.
Arbid said the IPO route in Saudi Arabia is opening up now and eight to ten IPOs are expected on the tadawul this year.
“Saudi Arabia is the largest and most sophisticated market in the region and is on everyone’s radar these days but it helps in our case to be on the ground there. We see the market as it is and we understand the regulators and companies better,” said Arbid.
About 80 percent of the company’s investment is in Saudi and Egypt, said Arbid. It is now in talks for acquiring an Egyptian firm.
“We are in advanced stages of acquiring a minority stake in an Egyptian petrochemicals firm and we could easily sell the rationale for it to our shareholders,” said Arbid.
“When you have a good asset at an attractive price, it doesn’t matter if the Arab Spring is on top of you.”