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Wed 23 Jun 2010 11:44 AM

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Gulf Capital targets Saudi in $373m spending plan

The UAE-based private equity firm is 'sitting on a lot of liquidity', its CEO says.

Gulf Capital targets Saudi in $373m spending plan
SPENDING SPREE: Gulf Capital plans to invest $373m over the next three years. (Getty Images)

Gulf Capital, the UAE-based private equity firm, plans to invest SR1.4 billion ($373 million) over the next three years as it seeks opportunities in Saudi Arabia.

“We are sitting on a lot of liquidity,” Karim El Solh, the Abu Dhabi-based company’s chief executive officer, said in an interview in Riyadh. “We hope that the bulk of that will end up in Saudi Arabia.”

Saudi Arabia, the world’s largest oil supplier, is attracting international investors as its economy expands due to higher oil prices. The Carlyle Group and Deutsche Bank AG announced Saudi investments this year, while Qatar First Investment Bank, founded in 2008 with $1 billion of capital, plans to open an office in the country by the end of the year.

Gulf Capital, which was established in 2006 with 300 shareholders, plans to buy a Saudi food company this year, El Solh said. TechnoGroup, a company in Gulf Capital’s portfolio, acquired a stake in Consultant Radiology Centers in Saudi Arabia, the company said in a statement on June 15.

Gulf Capital received commitments of about SR2 billion for its GC Equity Partners II Fund, the company said in an e- mailed statement in February. “We are 30 percent deployed,” El Solh said.

“We are seeing good investment opportunities at reasonable valuations. Our typical investment is 100 million riyals to 250 million riyals.”

Carlyle Group, the world’s second-largest private-equity firm, bought a 30 percent stake in Saudi Arabia’s General Lighting Co. Deutsche Bank formed a $110 million Shariah- compliant mortgage venture this year with a group of Saudi-based investors led by Fahad Abdullah Abdulaziz Al Rajhi.

“There is a broader acceptance of the role of private equity and how we add value,” El Solh. “You will see many more deals happening. Out of necessity, they need the liquidity. We have the funds raised.”

Banks in the Arab world’s largest economy have curbed lending since the Saad Group, a business owned by Saudi billionaire Maan al-Sanea, and Ahmad Hamad Algosaibi & Brothers Co defaulted on loans last year. Saudi banks have been reluctant to resume lending even after the central bank cut interest rates.

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Taha 10 years ago

It is pleasant that SAudi Arabia shall be seeing more of foreign investment. Being a huge country with strong buying power, it also requires investment in the area of higher education. Saudi Arabia has universities and institutes but are limited and it is noted that large sums of money is flushed out in education to Europe & U.S. It would indeed be great if the same universities are invited to open up in Saudi Arabia like in Dubai, Qatar & Bahrain which sees many Saudi & Saudi Expatriates children specially girls studying in those colleges. Therefore, I urge the investors to invest in these areas as it will be a win-win situation for the community & the investors.