Bahrain’s Investcorp mulling launch of Saudi investment fund

Bahrain-based Investcorp has its eyes set on new growth opportunities as it looks to more than double its assets under management in the medium-term from the current $11 billion. Saudi Arabia, which accounts for a majority of the company’s investments in the GCC, will continue to be a key market as the kingdom pushes ahead with an ambitious economic reform plan.

Speaking exclusively to Argaam, Mohammed Al Shroogi, the investment firm’s co-CEO, revealed that the company is considering plans to launch a fund that will focus on investments in certain segments of the Saudi market.

Q: What investment opportunities may interest the company related to Saudi Vision 2030?

A: We are keen to take part in the ambitious plans of Saudi Arabia and we saw how the successful IPO of L’azurde came at a perfect time to complement the positive momentum in the market.

We are currently looking very closely at a range of sectors such as healthcare, education, business services and logistics, which are critical to any economy and, typically, the private sector can significantly improve efficiencies.

While I can’t go into the details at this stage, we are also exploring the possibility of launching a thematic fund making investments in Saudi Arabia as a way of capturing the outperformance potential we see in certain segments of the Saudi market.

Q: What types of segments/companies are you targeting within Saudi Arabia's health, education and food sectors?

A: Saudi Arabia is a key market for Investcorp where we are continuously looking for interesting investment opportunities. In Saudi Arabia alone, our portfolio companies collectively employ nearly 25,000 people and generate over $2 billion in revenue. It is true that we are bullish on health, education and food but we are not targeting specific segments. Investcorp is structured in such a way that we add the most value to mid-sized companies, where we can provide strategic and operational support. We are looking for companies that offer exceptional products in the market where we can to help them accelerate growth.

Q: How is L'azurde's IPO and listing expected to contribute to your profit outlook and growth this year?

A: The recent IPO of L’azurde was a huge success for us and is a reflection of our ability to create real value for our portfolio companies. It was also the first majority private equity-owned business to list on the Tadawul in Saudi Arabia. However, it was just one of many exciting developments for Investcorp over the past year, which began with the unveiling of an ambitious growth target of more than doubling assets under management in the medium term.

We have made excellent progress against that target so far, as well as seeing near record levels of deal activity and the addition of Mubadala as a significant shareholder in the firm. We are confident that we have the foundations in place to deliver on our vision and medium-term growth plans, and we have the ambition and capability to execute these in a determined and responsible manner.

Q: What is the objective behind the recent deal to acquire Coresec Systems?

A: Before talking about Coresec, it is important to talk about another of our portfolio companies, SecureLink. When we acquired SecureLink in December 2015, our plan was to help it grow into a pan-European cyber security specialist. By acquiring Coresec, we created a company with combined revenues of €200 million, which we believe allows us to take a significant step forward in implementing our original vision. Beyond that, both companies share the same DNA and ambitions, making them a very good fit.

Q: Are you looking at any other regional or international companies for potential acquisitions or asset sales in the coming years?

A: Investcorp is currently invested in eight companies in the Gulf region, six of which are in Saudi Arabia. We are always looking at deal opportunities, both acquisitions and exits, across all our key markets – the Gulf, Europe and America. In a typical year, we will do 4-6 acquisitions.

Write to Joumana Saad at joumana.saad@argaamplus.com