MENA pair celebrates exit

The sale of Dubai-based oil and gas services company Maritime Industrial Services by Gulf Capital and Amwal AlKhaleej shows that private equity can work profitably in the Middle East.

Abu Dhabi-based Gulf Capital and Riyadh-headquartered partner Amwal AlKhaleej have more than doubled their money following the sale of Maritime Industrial Services (MIS) to trade buyer Lamprell in a $336 million deal.

The two private equity firms agreed to sell the business after almost five years of ownership. As part of the deal, UK-listed oil rig refurbishment group Lamprell has de-listed the portion of MIS’ equity floated on the Oslo stock exchange in 2007, as well as acquiring all shares owned by Gulf Capital and Amwal AlKhaleej.

Amwal AlKhaleej invested $15 million in the business in 2006 for a 9.4 percent stake, according to its website, while Gulf Capital acquired a 21 percent for an undisclosed sum.

Karim El Solh, co-founder and chief executive of Gulf Capital, said the deal was a “textbook case study of how private equity could add value to their portfolio companies”.

“Private equity in the Middle East is maturing. For many years, there have been questions about the industry’s ability to both back and then fully exit investments. With this deal, we have completed the cycle, from acquisition all the way through to divestment. The region is new in private equity terms, but we’ve shown that from beginning to end, private equity can really add value,” El Solh told Private Equity International.

Ammar Al Khudairy, managing partner of Amwal AlKhaleej, said in a statement: “The successful sale and our ability to generate such a level of returns despite the difficult economic environment and the unfavourable vintage year for the investment highlight the resilience and appeal of certain industries to private equity in our region. This transaction is a good example of how two private equity firms, supported by strong management teams and an active board, can harmoniously co-invest, grow and successfully structure an exit aligning the interest of all stakeholders.”

During their period of ownership, the pair oversaw a number of bolt-on acquisitions to the company, an influx of new management and expansion into neighbouring markets including Abu Dhabi and Iraq, as well as an enlargement of the company’s presence in Saudi Arabia, according to El Solh. In that time, revenues grew by 203 percent, with profits rising 184 percent, according to the firms.

Gulf Capital is investing its $533 million GC Equity Partners II fund, which it raised last year. El Sohl said his firm had built a strong pipeline of deals in defensive sectors.