HBG Holdings growing from strength to strength

Dubai-based investment company HBG Holdings has announced plans to rapidly expand its portfolio of companies across the region.
The company is focused on growing through strategic acquisitions across the Middle East and South Asia region (MESA), and is looking for companies operating in the fields of consumer products, logistics and retailing, the latter which continues to be one of the company’s core strengths.
This new strategy has been given significant impetus following the announcement of a US$100 million equity financing, through HBG Capital, a Group company that issues long term notes and capital financing.
This major announcement follows a US$25 million investment in its Jordan subsidiary - HBG Marketing Jordan (formerly Spinneys Jordan) in the summer of 2006. This investment underpins what is an aggressive three part expansion programme for its Jordan operations.
The first part involves rapidly expanding the business by strongly supporting key agencies, acquiring new brands to complement the current portfolio and entering new segments, in particular frozen foods. Cold storage facilities are currently being upgraded to 8000 square feet, on four levels and 900 pallet positions, with a total storage capacity of 1200 tonnes.
Part two will extend the current ERP system by introducing handheld computers in order to optimize the distribution network and create better visibility of the sales force, improve execution of marketing programmes and effectively measure key performance indicators.
Part three will focus on expanding the distribution network into Iraq with the construction of a dedicated distribution centre in Northern Iraq.
Zulfi Hydari, Co-Founder and Managing Director, HBG Holdings said, “Over the last two years an immense amount of hard work has gone into rebuilding what is one of the region’s longest established and leading FMCG distribution companies and preparing it for regional expansion.
“This has included initiatives, among others, optimizing the business portfolio, extinguishing debt, investing in the distribution centre and refining processes to enhance logistics efficiency and improve customer service. Now we are ready to take the operation to a new level with this investment programme,” he said.
HBG Marketing Jordan’s portfolio consists of some of the region’s best known names including Kraft Foods; Nabisco; Kellogg's; Wrigley; Heinz; Chupa Chups; Hero; California Garden; Diamond; Sanita, Al Alali and Najjar Coffee.
Meanwhile Hydari stated that the recent expansion of the capital base was made possible in two ways.
“We were able to release significant cash by exiting non core investments in the UAE, Pakistan, Oman and the UK. It made sense to exit because in all of these investments HBG was either unable to exercise management control or the returns were not adequate. The cash raised is being redeployed to support business growth across all our divisions and this will increase returns for our shareholders” he said.
“More recently we raised new capital through a private placement of Series A preferred stock and received additional commitments from co-investors including private equity groups, who make ideal partners for an acquisitive operating group like ours. The investor response has been so positive and the number of value enhancing acquisition opportunities so great that we are now looking at the possibility of another round of fundraising several times the size of the last.” 
HBG’s vision is to spearhead industry consolidation via acquisition of regional manufacturing, distribution and retail companies. “Funds will therefore be invested in companies that demonstrate regional expansion capability and have one or more of the following: manufacturing capacity, warehousing and logistics networks and ownership of FMCG brands,” adds Hydari. “The key words in this programme are scale and consolidation.”
Looking to the future, Hydari says, “We have a great team and have built up a considerable war chest which we will leverage to expand our businesses and geographic footprint in the region.