DUBAI: Private equity firm Gulf Capital plans to sell some of its investments towards the end of 2017 and early 2018 as market sentiment and the regional economy improve, its chief executive told Reuters. Karim El Solh declined to say which stakes the Abu Dhabi-based company, one of the biggest private equity firms in the region, was considering offloading but said that they would be appealing to global strategic buyers.
Sources familiar with the situation said Gulf Capital’s stake in Egyptian medical firm TechnoScan and its remaining stake in utility business Metito Holdings were both for sale. “Regionally, over the next two years, as the market comes back and economies recover, we will consider some regional exits,” El Solh said in an interview. “I can see the exits coming more towards the end of 2017 and early 2018 as the regional markets recover and investor sentiment comes back,” he said.
Economies in the Gulf have been hurt by the slide in oil prices since the middle of 2014, which has hit spending by governments dependent on energy revenues and sapped consumer confidence. Economists think regional growth could rebound slightly in 2017, on the assumption oil prices pick up. Despite the slowdown in growth, merger and acquisition activity in the Gulf has been relatively brisk in 2016 as the low oil prices have pushed family-owned businesses to spin-off assets and state-linked companies to consolidate.
Notable deals include Gulf-based Adeptio’s acquisition of a 67 percent stake in Kuwait Food Co (Americana) from a wealthy Kuwaiti family for about $2.35 billion, and the merger of Abu Dhabi’s two largest banks, National Bank of Abu Dhabi and First Gulf Bank, in a deal due to be completed early next year. Gulf Capital said this month it had acquired a controlling stake in Sporter.com, an online retailer of sports and nutrition supplements in the Gulf region, while it bought Saudi Arabian food and drinks distributor Multibrands in May.
Once Gulf Capital’s investments reach the five-year mark, the firm starts to actively plan for a sale, El Solh said. “We are hopeful that we will be able to close some interesting global exits in the near future despite the soft regional economic environment,” he said. “Some of our companies with a global geographic footprint, a fast growth rate and a large diversified customer base will be appealing to global strategic buyers.”
Gulf Capital acquired its stake in Dubai-based Metito in 2006 and the company has established itself as the largest privately owned water group in the Middle East, with a focus on developing markets. In July 2014, it sold 32 per cent of the company to Japan’s Mitsubishi Corporation and Mitsubishi Heavy Industries, leaving it with a 23.8 per cent stake. In November 2009 it purchased a 75 percent holding in TechnoScan, the largest chain of medical diagnostic imaging centres in the Middle East.
