Mergermarket - April 30, 2015 - Interview with Managing Partner and Founder of Growthgate Capital

Growthgate Capital, the Gulf based private investment firm, is currently Looking at three potential equity investments, one each in Morocco, Saudi Arabia and the UAE, Managing Partner and Founder Karim Souaid said

Middle market companies in the MENA region are under-served by financial institutions: they are seeking growth capital to expand their footprint and export their growth model beyond local borders."

The target companies operate in the retail, servicing and engineering sectors. Growthgate Capital is looking to close at least two deals in the next six months_ It made no investments in the last nine months as fluctuating oil prices slowed down M&A activities considerably.

Souaid confirmed that Growthgate Capital's shareholder equity grew from USD 200m in 2008 to USD 412m in 2014. Ey end of 2014. the portfolio value was worth USD 1.6bn. The company uses White & Case, HLP and Weil Gotshal & Menges as its legal advisors.

Growthgate Capital is looking to exit two portfolio companies via private placements in 2015-16. The company is in talks with large regional and international barks to assist and advise on the exits but welcomes further approaches. Growthgate's investment cycles are typically five to seven years.

Acquisition Strategy

Growthgate Capital is Looking at acquiring strategic minority stakes in mid-market companies across GCC and select markets of the MENA region. It consistently focuses on enterprises worth USD 100m to USD 200m with average deal sizes of USD 25m to USD 75m. Stake sizes are less than 50% to incentivize existing management to run their firms.

Deloitte is its auditor while Ernst & Young (London) is its transaction team for net asset value (NAV) assessments.

In 4Q14. Growthgate Capital sold its stake in Able Logistics Group to Kerry Freight Services Private Limited earning returns of 2.27x. In 1Q13. Growthgate sold its stake in Saudi-based Roots Steel International earning returns in excess of 4x.

Growthgate Capital is a private investment company established in late 2007 with equity subscribed by a group of shareholders from the Middle East It is incorporated in Bahrein but operates from offices in Dubai (UAE) and Beirut (Lebanon). According to its website, its portfolio companies since inception include Able Logistics Group, Irisguard Inc.. Rubicon Group Holding Averda International. International Food Services, Gama Aviation Group. Roots Steel International and Roots Group Arabia.

by Zainab Mansoor