The Saudi Arabian General Investment Authority (SAGIA) and Swicorp, a premier Swiss-based private equity and investment banking firm in the Middle East and North Africa (MENA) region have announced a consortium to invest in energy-related projects with total funding of $5 billion. The consortium will be known as the Swicorp Joussour Company (Joussour).
The $5 billion funding for the new company is structured into debt and equity. $500 million have already been committed by partners who include The Savola Group, Dallah AlBaraka Holding Group, Asseer Company, AbdulKader AlMuhaidib & Sons Co., Hayel Saeed Group, Abdullatif Saoud Al Babutain & Bro. Co., Abu Dhabi Holding, Saudi Bin Laden Group, Gulf Power Company, and Swicorp Capital.
SAGIA aims to leverage Saudi Arabia’s competitive advantages in energy, transportation, information and communication technology as well as knowledge-based industries. SAGIA has been setting up a number of sector-focused investment vehicles. The last such exercise took place on 15 November 2005 when a $100 million venture capital fund with Intel Capital was announced in Riyadh.
SAGIA was instrumental in the establishment of the Swicorp Joussour Company, which further compliments SAGIA’s investment goals to create focused, yet sectored private equity offerings. Subsequently, SAGIA will liaise with the concerned Saudi government bodies to facilitate investments Joussour is bound to attract.
Leveraging Swicorp’s in-depth regional knowledge, extensive network and regional contacts, Joussour will seek to invest in Saudi Arabia, primarily in midstream and downstream petrochemicals, energy-intensive industries, power generation and ancillary businesses to the oil & gas and petrochemicals sectors. Joussour is already considering 15 investment opportunities in the local market.
The Boston Consulting Group (BCG), a leading international strategy consulting firm, has been advising Swicorp in establishing Joussour’s investment strategy. Going forward, as the strategic advisor to Joussour, BCG will be screening and structuring specific investment opportunities, providing access to its worldwide network of leading corporations and multinationals.
The global petrochemicals sector is going through a substantial transformation. In recent years, there has been a significant surge in the international trade of petrochemical products with forecasts pointing to continued strong global demand, particularly in the Asia Pacific region led by China. In addition, the availability of abundant competitive-cost feedstock in the Middle East, its proximity to the growing markets of Asia, and the widening gap of feedstock prices between the Middle East and higher cost regions which use feedstock linked to oil prices, will enhance the comparative advantages inherent to the region.
The Swicorp Joussour Company will seek to benefit from these dynamics by structuring attractive deals with local players as well as joint ventures with major international players looking for reliable partners in the region. In addition, strong appetite for acquisitions combined with the booming equity markets in the region will offer opportunities for attractive exits for Joussour.
“This winning formula offers a unique combination of expertise in the region and in Saudi Arabia, particularly in the petrochemicals sector, imperative for the success of the Swicorp Joussour Company, which is one of a number of investment companies SAGIA plans to launch targeting strategic sectors. Joussour’s establishment coincides with the dynamics of the global petrochemicals industry favoring Saudi Arabia as the center-of-gravity for the sector,” commented HE Amr Al Dabbagh, Governor of SAGIA.
“Saudi Arabia’s favorable economic indicators, cost-competitive feedstock and proximity to the growing markets in Asia enhance the country’s competitiveness in the petrochemicals industry,” added the Governor.
In addition to SAGIA’s pro-active support, Joussour will leverage Swicorp and BCG’s combined international networks, in-depth knowledge of the petrochemicals and energy-intensive sectors, as well as financial expertise to create value and achieve superior returns by enhancing the operational and financial performance of portfolio companies as well as by performing timely and well executed exits.
“The launch of the Swicorp Joussour Company is in line with our strategy to strengthen our position as a leading player in private equity in the region,” Kamel Lazaar, Swicorp’s President and Managing Partner said. He added: “The Swicorp Joussour Company is part of our commitment to provide investors with longstanding expertise for their distinctive investment needs in a region where we boast a strong and extensive network. We are delighted to have engaged in this venture with the support of SAGIA and BCG with whom we have shared an established relationship.”
Earlier this year, Swicorp had launched the Swicorp Intaj Capital (target capitalization of $200 million), a diversified private equity fund targeting the growing consumer sector in the MENA region, and the Swicorp Emerge Invest Fund, an open-ended private equity fund focusing on Iran, Algeria and Sudan (over $100 million already committed).
