Thursday, Jan 26, 2012
--Close to three buyout deals
--Sees more industry transactions this year and next
--Stock markets too soft this year to consider IPOs
By Asa Fitch
Of ZAWYA DOW JONES
DUBAI (Zawya Dow Jones)--Abu Dhabi's Gulf Capital is nearing three more buyouts following the private equity firm's acquisition of a temporary power generation company on Sunday, its chief executive said.
Gulf Capital this week bought 82.7% of Sakr Energy Solutions amid a lull in transactions for Arab Gulf private equity players.
But Karim El Solh, Gulf Capital's chief executive officer, told Zawya Dow Jones in an interview, he expects a pick up in activity this year thanks in part to a narrowing gap between sellers' price expectations and buyers' willingness to pay.
This year and next "will be much more productive years where there will be many more transactions than in the past," El Solh said. "And you are seeing it right now. We are in the process of closing three transactions in addition to the one we just closed. Our fund is moving quickly."
Founded in 2006, Gulf Capital has two buyout funds. The most recent was launched in 2008 and raised $533 million. More than half of that amount has been spent, El Solh said, adding that he expected three-quarters of it to be deployed by the end of the year.
The new investments would align with the firm's overall strategy of targeting "defensive" sectors such as power, water, health care and education, he said.
"It doesn't matter what happens to the stock markets or the capital markets, people still need to go see doctors, go to school, drink water and get power," El Solh said, adding that the companies in Gulf Capital's portfolio had seen roughly 30% annual growth in earnings before interest, taxes, depreciation and amortization. "It is not a cyclical business. It's a defensive, predictable business that has paid off very well."
As it eyes new stakes, Gulf Capital is also considering exits from some of its older investments, including Gulf Marine Services, an operator of jack-up barges for offshore oil well maintenance, and Metito, the region's only private water utility.
Gulf Capital owns 79% of Gulf Marine Services and 56% of Metito. It has held stakes in GMS since 2007 and Metito since 2006.
GMS "has grown exponentially, and it's getting to the size where we will be exploring soon potential options," El Solh said. Those options could include selling to a competitor or an initial public offering.
Metito, which has operations in 23 countries, will likely be listed "on a regional or global exchange," he said.
Stock markets, however, were too soft to consider any IPOs this year, he said.
Many of the region's young buyout firms are trying to sell assets to generate returns for investors, but poor market performance and the mismatch in price expectations has put a damper on activity. Only a smattering of private equity buyouts and sales were announced in the region last year.
-By Asa Fitch, Dow Jones Newswires, +971 4 446-1685, asa.fitch@dowjones.com
Copyright (c) 2012 Dow Jones & Co.
(END) Dow Jones Newswires
26-01-12 0649GMT
