Global acquires Saudi retail chain

Global Investment House has purchased a controlling stake in Al Sawani and will be injecting another $100m in the company to fund its regional acquisitions.

Global Investment House, the Kuwait-based investment bank, has completed the acquisition of a majority stake in Al Sawani Food and Industrial Supply Company, a Saudi Arabia-based retail company with outlets across the region.

While the founding family of Al Sawani retains a 40 percent stake in the company, other details of the transaction have not been disclosed.

Al Sawani has 550 outlets covering 76,000 square metres of retail space. Its stores carry 36 accessory and apparel brands, some of which include Guess, Benetton, Sfera and Espirit. The company currently enjoys an 11 percent market share in Saudi Arabia.

Shailesh Dash, senior vice president at Global, said in a statement: “Fueled by regional liquidity and a burgeoning young population, retail in the GCC and the wider MENA region is poised for sizeable growth.” He added that Global is “very bullish on retailing”.

Global said it is looking to build a “multi-brand and multi-product model” as the company looks to set up 150 new stores by 2009. This will be done through acquisitions of new brands and by venturing into new markets. Dash said that the firm will be investing $100 million (€68 million) of additional capital into the company to fund its regional acquisitions.

The investment was made from the $615 million Global Buyout Fund, which was closed earlier this year, and makes investments in Middle East, North Africa, Turkey, South Asia and Southeast Asia. 

The private equity group of Global Investment House manages assets of more than $3 billion. It has invested about $1 billion in 47 transactions since the beginning of 2006, and its divestments have realised a net IRR of 56 percent. The firm has invested more than $300 million in Saudi Arabia in six companies.
 
In July this year, Global raised $500 million through an IPO for Global MENA Financial Assets, a private equity fund listed on the London Stock Exchange, to acquire stakes in financial institutions in the Middle East, North Africa and Turkey.

Global, along with Dubai Islamic Bank and its investment banking subsidiary Millennium Capital, is also raising a $500 million Shariah-compliant buyout fund to invest in the MENA region, Turkey, and South and Southeast Asia.