Tuesday, Jun 05, 2012
ISTANBUL (Zawya Dow Jones)--Gulf Capital, an Abu Dhabi-based investment and private equity firm, is set to plow 1 billion U.A.E. dirhams ($272 million) into a new residential compound in Riyadh through its real estate arm as it eyes other deals in Saudi Arabia, Egypt and the United Arab Emirates.
"We're investing AED1 billion in Saudi Arabia residential housing," Karim El Solh, Gulf Capital's chief executive, said Tuesday on the sidelines of the World Economic Forum in Istanbul. "We're building one of the largest residential compounds in Riyadh through our real estate arm. The population in Saudi is growing tremendously fast, and there's a shortage of 1.3 million housing units. It will be an income-producing, cash-regenerating residential compound."
The development will be expatriate housing, El Solh said, adding that there was strong demand for this kind of real estate. Expatriates in Saudi Arabia typically live in self-contained residential compounds.
"If you look at the residential compounds in Riyadh, the waiting period at compounds and housing units is one to two years," El Solh said.
Saudi Arabia's economy is growing rapidly thanks to stepped-up government spending and elevated oil prices. The International Monetary Fund expects the country's gross domestic prod1uct to grow by 6% this year and 4.1% next year.
Housing has been a major priority in government spending plans. Amid the Arab Spring uprisings last year, Saudi Arabia's King Abdullah announced 40 billion Saudi riyals ($10.67 billion) in additional spending on housing that February. Last March, the king ordered the construction of 500,000 more houses for Saudis at a cost of 250 billion riyals.
As Gulf Capital makes inroads in Saudi real estate, it is also looking at further acquisitions this year through its $533 million GC Equity Partners II private equity fund.
The company has closed two buyouts so far this year, purchasing 82.7% of the U.A.E.-based temporary energy provider Sakr Energy Solutions in January and 80% of human resources firm Reach Group the following month.
El Solh said the fund is now looking at two more purchases in health care and oil and gas. The fund is more than 50% deployed and should be three-quarters invested by the end of the year, he said. "We're in the process of looking at a health-care deal and an oil and gas deal, which we should announce in the next quarter," he said. "This year we're on track to close not three but maybe four deals."
One of the new deals may be in Egypt, which Gulf Capital sees as a solid long-term play despite the political uncertainty there. Egypt, the U.A.E. and Saudi Arabia were focal points for Gulf Capital investments, El Solh said.
"We're finding now very attractive deals at lower valuations where we are able to acquire control of them, something you wouldn't see in 2007 and 2008," he said. "It's a good opportune time to be hunting for deals in Egypt."
Write to Asa Fitch at asa.fitch@dowjones.com
(END) Dow Jones Newswires
05-06-12 1800GMT
