Dubai's Levant Capital buys $100m stake in Saudi supermarket

Citigroup's venture capital arm and Dubai-based Levant Capital have bought a $100 million controlling stake in Saudi Arabian supermarket chain Al-Raya For Foodstuff Co Ltd., lured by growth prospects in the kingdom's consumer sector.

Al-Raya, based in Jeddah, operates 25 supermarkets across 14 cities in Saudi Arabia, and had posted sales of 800 million riyals ($213 million) in 2011, a joint statement from Citi Venture Capital International (CVCI) and Levant said.

"The transaction, valued at $100 million, presents an opportunity for Levant Capital and CVCI to capitalize on the growth in consumer-driven demand and the increasingly attractive middle income segment of the gulf region's largest economy," it said, adding that the deal closed on Tuesday.

Interest in Saudi Arabia's consumer sector is growing among international investors as the country's population rises beyond 27 million, most of which are under the age of 30.

"The supermarket segment within the food retail sector is expected to grow faster than the overall market as consumers continue to migrate towards organised retail," Salameh Sweis, Chief Executive Officer of Levant Capital said.

Coca-Cola Co invested $980 million in Saudi Arabia-based beverage firm Aujan Industries in December. The transaction is expected to close in the first half of this year.

U.S. private equity firm Carlyle Group acquired a 42-percent stake in Alamar Foods, the master franchise operator for Domino's Pizza and Wendy's restaurants in the Middle East and North Africa.

CVCI, which manages $7 billion in equity investments and committed capital, is part of Citi Capital Advisors, an alternative asset management platform of the U.S. bank.

Levant, whose chairman is the son of Saudi billionaire Prince Alwaleed bin Talal, is a partner-owned firm with investments of $200 million in several companies.

The company expects to exit more of its investments in 2012 and 2013 through selling to international and regional investors, Sweis said in a in an interview last year.