Growthgate Completes a $100 Million Capitial Increase
Growthgate, the GCC-based specialist buyout firm, has announced the completion of a $100 million private placement of shares as part of its capital raising program for the current year. The funds were contributed in full by the existing shareholders of Growthgate and will be allocated to a series of earmarked investments in portfolio companies that are principally located in the GCC as well as other select markets of the wider MENA region. Growthgate was established in 2007, with an authorized capital of $500 million. The results of fiscal year 2007 and this more recent capital injection will bring the total shareholders’ equity of Growthgate in excess of $250 million by current year-end.
Growthgate is a private investment firm that follows a ‘buy and build’ model by partnering with management to build emerging growth businesses into enduring organizations. As Growthgate is structured as a holding company and not a fund, it has the flexibility to take a long-term approach and decide on follow-up investments and on exits without the pressure of ‘fund pre-determined’ deadlines. To date Growthgate’s portfolio companies that are located in the GCC include: Able Logistics Group (logistics & transport), Gama Aviation Holding (private jet business) and Roots Group (wholesaling and manufacturing of building materials). Growthgate is managed by Keystone Equity Partners WLL.
May 11 2008, Dubai, United Arab Emirates – Growthgate acquires part of Roots Group (Saudi): Growthgate, the GCC-based specialist buyout firm, has announced that it has reached a final agreement to acquire 20% of Arabian Roots Group, a Saudi based building materials conglomerate, and will separately acquire additional equity interests in this conglomerate’s Retail Division. Arabian Roots is a privately held Saudi corporation with sales of circa SAR 700 million and expected profits of SAR 37 million for the fiscal year 2008. The value of the transaction was not disclosed.
Arabian Roots is a leading wholesaler, manufacturer, retailer and special service provider in the Saudi market, focusing on building materials including, among other things, metal works, fences, doors, railings, grids, false ceiling supports, adhesives, paints, coatings, waterproofing membranes, power tools, electric generators, and mobile cranes. Arabian Roots has a well-developed regional distribution and marketing network and outlets that cover the GCC (Saudi, UAE and more recently Qatar), the MENA region (with Egypt, Syria and Lebanon), and a presence in Malaysia.
Arabian Roots was founded in 1981 and restructured around the wholesale, manufacturing, contracting and retail divisions by the new management starting in 2004 under the leadership of Mr. Ousama Fansa its CEO. The shareholders’ base comprises prominent Saudi businessmen with deep-rooted experience and extensive holdings in the construction sector throughout the Middle East.
“Growthgate and Arabian Roots are committed, in the near future, to expand the footprint of Arabian Roots throughout the MENA region with an emphasis on the GCC and other key markets and to broaden the business holdings and the products mix essentially via acquisitions of enterprises that are engaged in the building materials sector, provided that they add strategic depth and economic benefits to Arabian Roots”, said Ousam Fansa, the company’s CEO. “The construction boom witnessed in the GCC markets and which is fuelled by the needs for renewed infrastructure, expanding urban centres and newly planned industrial and economic zones will create a sustainable level of demand for building materials for years to come and Arabian Roots is at the heart of such activity with a pole position that is only shared by few other players” added Mr. Fansa.
Growthgate follows a ‘buy and build’ model that focuses on acquiring medium-sized, successful companies with strong management and turning them into regional champions through a series of carefully selected and well-priced acquisitions. Investments are held for 3 to 5 years prior to being monetized via an exit sale. This deal is the third direct equity investment of Growthgate since its capitalization in mid 2007, coming after Able Logistics (logistics & transport) and Gama Aviation (private jet business) and marks the first private equity transaction for Growthgate in the prized Saudi market.
As per Saudi regulations that govern foreign direct investments in the Kingdom, this transaction is subject to the approval of the Saudi Arabia General Investment Authority.