Global’s Private Equity Team Acquires Controlling Stake in Al Sawani, Saudi Arabia

Original Article



global investment houseThe Private Equity Group of Global Investment House (Global), announced today the completion of the acquisition of a controlling stake in Al Sawani Food and Industrial Supply Company ("Al Sawani" or "the Company"). The announcement came as the Buyout Fund and its associates concluded the legal and regulatory requirements of the acquisition of Al Sawani, a Saudi based retailing giant with over 550 outlets spread across 12 regional countries.

Mr. Omar El Quqa, Executive Vice President at Global commented “We are very proud to announce the completion of this transaction. Our investment today clearly demonstrates our faith in the Company’s management and our strong conviction in the Company’s future.”

Established in 1976, Al Sawani is a forerunner in regional retail, and is among the first GCC businesses which adopted the franchising model. The Company was established by members of the Hafiz Family, who will continue to hold almost 40% of the Company's share capital. Al Sawani currently has 76,000 square meters of retail space through which it retails its portfolio of 36 international apparel and accessories brands including Guess, Benetton, Sfera and Esprit.

"We are very bullish on retailing" Mr. Shailesh Dash, Senior Vice President at Global Investment House said. "Fueled by regional liquidity, and a burgeoning young population, retail in the GCC and the wider MENA region is poised for sizeable growth." On the Private Equity Group’s strategy in retailing, Mr. Dash commented "we realize that success in retailing entails more than opening shops and acquiring brands. Mall developers need unique concepts and an integrated multi brand and multi product model, and this is what we aspire to build. Our acquisition of Al Sawani is a step towards realizing this strategy."

Saudi Arabia intends to be among the top 10 competitive nations in the world by 2010 and is expecting multi billion investments into the Kingdom. The population of Saudi Arabia grew at a CAGR of 2.48% during the period 2002 - 2006 which is one of the highest growth rates in the world. Saudi Arabia has been encouraging both the private and the foreign players to invest and become party to the country’s growth with the most recent initiative been the signing of the WTO agreement.

Retail spending in Saudi Arabia is forecasted to increase by an estimated 15% by 2008 with Jeddah poised to offer over 750,000 square meters and Riyadh over 600,000 square meters of shopping space by 2009. In the retail sector, Al Hokair accounts for 33%, Sawani’s market share stands at 11%, Al Shaya – 9% and other small franchises accounts for 34%.

And on the Saudi market, Mr. Dash commented “Today, Global Investment House’s Private Equity Group is the largest non-Saudi player, with more than USD 300 million invested across 6 companies.” He added “Saudi families know us, they trust us, and they now understand the value we add to their business.”

During the year 2007 alone, Al Sawani rolled out 101 new stores across 6 countries and plans to roll out another 150 stores between 2008 and 2009. The Company plans to expand through acquisition of more brands and entering new markets.

Mr. Mohammed Abdulqader Hafiz, who has propelled Sawani’s growth so far and who will continue as the CEO of the company, commented "the main driver behind selecting Global Investment House as our partner is having a strong and supportive shareholding base, represented by the Global Buyout Fund and its associates, and having directors representing Global Investment House on our Board, which will give us the necessary support in sustaining our growth." And on the Company's strategy going forward, Mr. Hafiz commented "we plan on opening an average of 2.5 stores per day in the coming fiscal year 2008/2009 and we are, as we speak, exploring several acquisition opportunities in the region to expand our presence and diversify our product offering."

Mr. Dash said that the Global Buyout Fund is currently in the process of increasing the capital of the company by another USD 100 million to fund the Company’s acquisitions in the retail space in the region.

It is worth noting that Global private equity funds Group (Global Capital Management Ltd. is a 100% subsidiary of Global), currently manages assets of more than USD 3 billion of assets under management (AUM). The PE Group is one of the largest teams in the MENA with over 40 well qualified professionals comprising of 11 nationalities; providing a ‘local’ perspective for deals in all target markets. The team has a cumulative work experience of over 300 years ranging from private equity, investment banking, advisory, venture capital, financial research, credit rating and audit across varied sectors. The team has invested near $1 billion in 47 transactions across 14 sectors during past 2.5 years with realized net IRR of 56%.