Posted inBanking & FinanceLatest NewsUAE

Abu Dhabi’s Eshraq to focus on private equity as part of new strategy

Will focus on directly-held PE investments in high-growth GCC companies with 5-7 year investment horizons

Eshraq Investments

Abu Dhabi-based Eshraq Investments has launched its new corporate strategy that will see it build directly-held private equity (PE) capabilities and exposure, complemented by cash generation from minority equity positions, fixed-income assets and real estate.

Founded in 2006 and listed on the Abu Dhabi Securities Exchange (ADX) in 2011, the company previously focused on Real Estate and Financial Investments. Over the next five years, Eshraq will transition from legacy portfolio assets and aim to balance the portfolio and support consistency in earnings.

Eshraq’s acquisition strategy will focus on opportunities for direct control by holding 50-70 percent equity stakes, with deal values in the range of $50 million to $100 million and an anticipated holding period of five to seven years.

The Board of Directors has mandated company management to commence execution of the strategy with immediate effect.

Mohamed Al Hashimi, Chief Executive Officer of Eshraq, commented: “Today is a first step in a long-term strategic shift, something which both our Board and Management believe is overdue, where we will maintain a clear focus on directly held, regional private equity assets.

“At the same time, we are actively evaluating the best options for transitioning our legacy assets, including certain properties in our real estate portfolio and the future holdings and management of the Goldilocks Fund.

“We plan to make further announcements on both soon. I am personally looking forward to embarking on this journey as we capitalise on our very robust balance sheet position to select and execute fresh and compelling investment opportunities.”

Eshraq’s strategic pillars

Private Equity: The company will prioritise direct PE investments as its core business. Its geographical focus will remain unchanged, with investments to be focused on the UAE and wider GCC region, a market with strong structural growth drivers. It aims to invest in one or two high-growth businesses annually, seeking attractive cash flows as assets mature and become ready to exit.

Priority will be given to PE investments that generate strong asset-backed cash flows in sectors such as real estate, infrastructure & logistics, energy and energy services, technology, healthcare, consumer, food & agriculture and Islamic finance.

Income-generating assets: Eshraq will continue to selectively invest in income-generating minority equity stakes, fixed income assets and real estate to generate reliable cash flows and balance its investment portfolio.

The focus will be on stable dividend-paying stocks and leveraging the existing real estate portfolio to deliver consistent returns through market cycles. Eshraq will also acquire minority stakes in companies operating in sectors complementary to its core investment areas.

Liquidity management: A prudent treasury strategy will be employed to maximise returns on liquid assets. This includes utilising short-term investments, hedging tools and efficient cash management mechanisms to ensure financial resources are readily available to be deployed to compelling investment opportunities.

Fahad Al Qassim, Chairman of Eshraq, commented: “We are pleased to unveil Eshraq’s long-term strategy for growth and shareholder value creation, through which we intend to become a leading GCC investment company focused on direct private equity exposure, with a portfolio that is complemented by investments in income-generating assets.

“On the successful execution of our strategy, we expect our investment proposition will be characterised by a well-diversified portfolio in growing sectors across the GCC, enabled by a strong balance sheet that offers significant headroom to invest in new and existing assets.”

The company will chart out transition plans for its legacy assets like the existing real estate portfolio and the Goldilocks Fund, which is currently managed by SHUAA GMC.

To execute its new strategy, Eshraq will focus on enhancing its human capital, including the hiring of skilled senior investment professionals. It will establish an Investment Committee; and improve internal systems, including market intelligence and stakeholder relationship management platforms.

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