A Winning Model

Private equity investing in the MENA region is quite different from the modus operandi followed in more developed markets. Emerging markets in general, and the MENA markets in particular, remain relatively insular to private equity. State owned enterprises continue to dominate the economic landscape and large domestic groups have weathered the weight of time through successful transitions that have kept their amassed conglomerates intact. Even small and medium size enterprises are reluctant to part with majority ownership or to surrender the helm to outside investors.

 

With such background, private equity investing must be tailored to the prevailing trends and patterns of the regional markets. An investment strategy that focuses on acquiring strategic minority stakes by injecting growth capital to expand the footprint of domestic businesses is a winning model. That approach preserves the founders-managers’ control but also heightens their responsibility to deliver on ambitious plans. Growth capital also avoids excessive leverage and introduces discipline in the allocation of capital, and in the implementation of well-crafted business plans. The result are portfolio companies that can sustain the test of time and of market conditions, and be equally suitable candidates for an IPO or an M&A transaction.

 

Growthgate Capital sees the opportunity to deploy capital into promising and growth-oriented businesses operating in the GCC and other select markets of the MENA region. Throughout the period from 2008 to 2010, and beyond, Growthgate Capital directly invested along with entrepreneurs and family business owners into varied companies. This was made possible because of our ‘buy & build’ strategy. We invest- at all times - in companies that show tangible signs of our ‘3M’ investment criteria: managerial talent, model resilience, and market focus.