INTERVIEW: Bahrain's Investcorp eyes expansion in Saudi Arabia in 2017

Bahrain-based Investcorp sees increased potential in Saudi Arabia following the announcement of the Vision 2030 economic plan.

  
Mohammed Al Shroogi, Invescrop

Mohammed Al Shroogi, Invescrop

13 December 2016

By Yasmine Saleh

(Corrected to state Mohammed Al Ardhi is executive chairman of Investcorp)

Bahrain-based Investcorp is planning to expand its operations in Saudi Arabia next year as the alternative investment firm seeks to tap into opportunities presented by the kingdom’s economic reform plan, according to one of the company’s two CEOs.

Saudi Arabia, the world’s largest oil exporter and the Arab world’s biggest economy, earlier this year announced plans to diversify its economy away from reliance on hydrocarbons and carry out legislative and economic reforms to attract more direct investment.

“Saudi Arabia is a market we are particularly bullish about, especially post the announcement of Vision 2030 earlier this year,” Mohammed Al Shroogi, co-CEO of Investcorp, told Zawya in an email interview this month.

“We see this as a huge window to new opportunities as the economy looks to increase its diversification. We are already investing in seven companies in Saudi, which, collectively, employ nearly 22,000 people and generate over $2 billion in revenues.”

He said the firm is exploring the possibility of launching a “thematic fund” in Saudi Arabia to capture the “outperformance potential” it sees in certain segments of the market, but did not provide further details.

Investcorp expects to reach its target of $25 billion for assets under management (AUM) next year, executive chairman Mohammed Al Ardhi was quoted as saying last month in a Reuters report. The firm had said in November 2015 that it aimed to more than double its AUM over a period of seven years from $11 billion.

Investcorp’s portfolio includes investments in Europe, the United States and the Gulf region across a variety of sectors including retail and consumer products, technology, business services and the industrial sector, according to the company.

In November, Investcorp said it had bought a portfolio of residential and commercial property worth around $250 million in the U.S. cities of Boston and Denver. The firm also carried out six new deals this year that include buying stakes in several European properties and companies, including a stake in Spanish agricultural technology group Agromillora.

Investcorp is also looking at opportunities in the wider Gulf Cooperation Council (GCC) region.

“We are currently keeping a close watch on the healthcare, education, business services and logistics sectors in the GCC,” Al Shroogi said.

He praised a decision by the six-nation GCC bloc to introduce a new 5 percent value added tax (VAT) by 2018.

“This is all part of the GCC maturing as a market. The region’s governments are taking prudent steps to diversify their income so that they can continue growing their economies in a sustainable way,” Al Shroogi said.

To read more on the VAT coming to the GCC, click here.

For updates on the Saudi Vision 2030 plan, click here.

© Zawya 2016

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