Middle Eastern private equity firms are going through an exciting period, as more doors are opening up to them around the world. During the weekend, Gulf Capital announced that it is looking to continue its investments by finding four to six acquisitions this year. This despite the slow down of economic growth in the region created due to the declining oil prices in the region.
Finding the Right Investment
The Abu Dhabi-based private equity firm is hoping to find the right acquisitions in sectors, which won’t be struck too badly by the slump in oil prices. This would be most of the consumer-driven sectors, which are currently experiencing impressive growth in the region.
Karim El Solh, the CEO of Gulf Capital, told Reuters, “We’re looking aggressively on anything consumer-related”. He continued saying the firm is thinking about investing in sectors like retail, food, healthcare and education, as “these sectors are growing very nicely and aren’t affected by lower oil prices”.
The slump in oil prices is also opening potential opportunities in Middle East’s energy sector, as company valuations are currently relatively slow. But the lower valuations might be attracting more competition in the sector, as well as be a riskier asset for the future. On top of the above sectors, Mr El Solh also said the firm would be keeping an eye on infrastructure and logistics sectors.
Gulf Capital’s aim is to find four to six acquisitions in the potential growth sectors in 2015. The firm is expecting to use both private equity and credit in these deals.
No Immediate Plans for IPO
During a recent press meeting, the CEO of Gulf Capital announced the firm isn’t looking for an immediate initial public offering (IPO) of its shares. Last summer, speculation in many newspapers was suggesting the firm is looking for an IPO in order to fund its expansion in the region. People familiar with the matter had told reporters the firm was hoping to get its hands on more capital and grow the business across Middle East.
But it appears the firm has now scrapped any immediate plans for an IPO. “We realised with liquidity being plenty, banks lending at very attractive rates, it was much more optimal for us to fund us using the debt markets,” El Solh said. Last month, the firm managed to obtain a $232 million syndicated loan facility to help the firm with its investments.
Analysts believe one reason behind the turnaround is the decrease in oil prices and the regional stock markets shock this decline has created. The firm was expected to list in the Abu Dhabi Securities Exchange, which has seen turbulence in recent months.
Despite the scrapping of an IPO, it looks like the firm might have postponed the listing. El Solh told Reuters the firm could look into the listing option again if the equity market excitement would pick up in the following months.
Third Investment Fund
The private equity firm is managing private equity, credit and real estate assets worth of $3.3 billion. It’s currently investing from its third private equity fund, which was launched last year and is worth $750 million. It remains to be seen which company and sector will catch Gulf Capital’s attention first.