Successful Closing of “Al-Dhawahi Real Estate Development Fund”

Swicorp and Nesaj Announce Successful Closing of “Al-Dhawahi Real Estate Development Fund”

Riyadh, Saudi Arabia-12 October 2014 – Swicorp – a leading Saudi investment banking, private equity and asset management firm focused on the MENA region and Turkey – announced today the successful closing of a private placement subscriptions for the Al-Dhawahi Real Estate Development Fund after raising SAR 78.1 M in equity, along with structuring a SAR 68 M facility loan from a local bank.

The Al-Dhawahi Fund was established by Swicorp in partnership with Nesaj Development Company, a subsidiary of the Al-Fozan Group. Nesaj will develop and sell 133 mid-income villas in Dammam city, Eastern Province, Saudi Arabia.  Thus far, the skeleton construction phase has been completed with some villas beginning the finishing work. The fund is expected to return money to investors by the end of 2015 / beginning of 2016.

There was a strong interest from investors during the offering period resulting in the fund being oversubscribed and the equity was raised from institutional and individual investors.

Mr. Kais Mbarek, Head of Asset Management, said: “Swicorp is honored to take the role of Fund Manager for Al-Dhawahi and to contribute to the development of the real estate sector in the eastern region. We are confident that with our experience and expertise, we will be able to generate attractive returns for Fund investors in partnership with Nesaj Development Company and hope that this Fund will be the start of a long term mutually beneficial relationship between the two parties”.

He added “The Al-Dhawahi Fund is another important addition to the range of products and funds that Swicorp carefully selects to satisfy the varied demands of its clients and investors. It is the first in a series of real estate funds which we will be launching in the coming months. At Swicorp we are keen to bring together first class developers and attractive locations and projects, in order to structure and launch attractive and high-performing real estate development funds.”

Dr. Sameer Akbar, CEO of Nesaj Development Company, said: “We in Nesaj are looking forward to develop a high standard residential community to the middle income Saudi family. Al-Dawahi is going to be the project. Its urban pattern, architectural design of villas, and quality of the contacting and materials are all distinguished. Many customers are already contacting us to book what suites them from the variety of villas in Al- Dawahi. We are also exited with the partnership of Swicorp.”

About Swicorp:

Swicorp is a leading investment banking, private equity and asset management firm with a specific regional focus on the Middle East and North Africa (MENA).

From its headquarters in Riyadh and regional offices in Jeddah, Geneva, Tunis and Dubai, Swicorp provides corporations and investors with independent advice and assistance on key strategic financial and investment issues. Founded in 1987 by current chairman Kamel Lazaar, and licensed by the Capital Market Authority of the Kingdom of Saudi Arabia, and the Dubai Financial Services Authority of the United Arab Emirates, Swicorp today has grown to be one of the region’s premier financial services providers.

Swicorp has an extensive track record over more than 25 years of pioneering mergers and acquisitions, advisory and real estate transactions across MENA for regional and international clients. Swicorp has also developed into one of the leading players in the private equity sector in MENA, raising over US$ 1 billion in private equity funds since 2005. Leveraging its extensive investment expertise and network, Swicorp also offers a range of asset management services across various asset classes to allow investors to benefit from the substantial opportunities arising from the attractive fundamentals and strong growth prospects of the MENA economies.

Interview with Daniel Schenker, CEO, Swicorp

Interview with Daniel Schenker, CEO, Swicorp

Brief profile of the company indicating when it was set up, its strengths and its aspirations.

Swicorp is a leading investment banking, private equity and asset management firm with a specific regional focus on the Middle East and North Africa (MENA).

From its headquarters in Riyadh and regional offices in Jeddah, Geneva, Tunis and Dubai, Swicorp provides corporations and investors with independent advice and assistance on key strategic financial and investment issues. Founded in 1987 by current chairman Kamel Lazaar, and licensed by the Capital Market Authority of the Kingdom of Saudi Arabia, and the Dubai Financial Services Authority of the United Arab Emirates, Swicorp today has grown to be one of the region’s premier financial services providers.

Swicorp has an extensive track record over more than 25 years of pioneering mergers and acquisitions, advisory and real estate transactions across MENA for regional and international clients. Swicorp has also developed into one of the leading players in the private equity sector in MENA, raising over US$ 1 billion in private equity funds since 2005. Leveraging its extensive investment expertise and network, Swicorp also offers a range of asset management services across various asset classes to allow investors to benefit from the substantial opportunities arising from the attractive fundamentals and strong growth prospects of the MENA economies.

Major milestones in the company’s history and key projects it has developed to date.

During the 1990’s Swicorp was associated with many innovative transactions across a very-wide spectrum of sectors, including many mergers, acquisitions and joint ventures for leading Saudi companies (the merger of Savola Company with Azizia-Panda, both publicly-listed at the time, is one example), some of the first equity private placement transactions in the Kingdom and project finance raising for several privately-held companies and real estate development projects.  Swicorp also advised on other notable and innovative transactions, such as the leveraged buy-out acquisition of Arabian Company for Detergents (DAC), and subsequent joint-venture with Henkel (Germany), and the merger of Savola and Sime Darby’s edible oil businesses in Egypt, and subsequent Initial Public Offering (IPO) on the Cairo Stock Exchange.

Starting in the year 2000, Swicorp became even more active in regional markets outside of Saudi Arabia with successful acquisitions in Algeria for Henkel and Danone and multiple acquisitions, divestitures, debt and equity raising transactions also in Saudi Arabia, Syria, Egypt and Tunisia.

Still on the advisory front, shortly after the CMA was established for the development of the Saudi capital market, Swicorp applied for the relevant licenses and started developing its capabilities in the equity capital market by successfully assisting several Saudi clients in their rights issues or IPO transactions.

Gradually, Swicorp also developed a particular advisory expertise in the field of real estate developments, especially in the Holy Cities of Makkah and Madinah, where Swicorp has acted and continues to act as one of the leading financial advisors to the largest developers.

Swicorp initiated its private equity activity in 2005 by launching corporate venture funds for the MENA region, first with the Danone Group of France and then the Savola Company in Saudi Arabia. This activity grew steadily in size and importance and today Swicorp has also developed into one of the leading players in the private equity sector in MENA, raising over US$ 1 billion in private equity funds for Joussour, Intaj I and Intaj II since 2005. More recently, and to serve the interest of certain investors, Swicorp has earmarked some of its own funds to co-invest in club-deal transactions, that it is identifying, structuring and placing equity investments in leading privately-owned companies on a case-by-case basis.

To complement its advisory and private equity offerings, Swicorp established a new Asset Management division with the vision to build on its strong track record in managing proprietary listed equity portfolio, as well as launching Real Estate Funds to capitalize on our edge in Real Estate Advisory.

On the corporate side, a major milestone in Swicorp’s history occurred in 2007 when, following receipt of the CMA’s approval, Swicorp restructured its organization and moved its corporate headquarters to Riyadh. Managed from Riyadh, the group now consists of offices in Riyadh, Jeddah, Tunis, Dubai and Geneva.

What are the major projects currently being developed by the company?

Due to the confidential nature of our assignments, specific project or client names cannot generally be disclosed. However, it can be said that Swicorp remains very much involved in advising the promoters of several large-scale real estate development projects and also expects to announce the completions of several mergers and acquisitions transactions in the next few months .

On the investment side, Swicorp has just completed an important club deal via the acquisition by Sadeed Investment Limited (an investment vehicle created by Swicorp and its investment partners) of a 30% equity participation in BRC Industrial (Saudia) Limited. Founded in 1974, with a top line poised to exceed SAR 1 bn this year, BRC is one of the leading long steel products manufacturing and processing companies in Saudi Arabia and has been growing steadily over the past 30+ years on the back of strong investment in infrastructure in the Kingdom. Through the ongoing commissioning of its new Dammam plant and the establishment of a new facility in Jeddah, the company is expected to double its capacity and is confirming itself as the partner of choice for all concrete reinforcement needs and fencing solutions across the Kingdom.

As mentioned above, Swicorp has been actively developing and broadening the products and services of its asset management division. In addition to managing funds invested in regional stock markets, Swicorp  has been expanding its  asset management offering by entering the real estate fund activity. We are very pleased to have been able to launch the Al Dhawahi fund earlier this year, in partnership with Al Nesaj DevelopmenT. This marks our first real estate fund and, with several others in the pipeline, we are greatly encouraged by the future prospects of this activity.

Which areas are the most vibrant for your projects in Saudi Arabia? Do you intend on expansion towards other areas?

Following on from the successful launch of the Al Dhawahi fund, investor appetite for such investment products is very strong and we are working towards the structuring and launch of several new funds in the near future.  We are confident that this will develop into a very important activity for Swicorp in the coming months and years.

Aside from real estate, we have also launched Tharwa fund, an equity fund investing in the main regional stock markets. This fund was launched by our asset management team following several years managing Swicorp’s own portfolio very successfully with returns consistently exceeding local and regional indexes.

In addition, we have just secured a client portfolio management license, which will allow us to offer tailored asset management services to our clients in addition to our fund offerings.

Do you exclusively focus on the Saudi market, or are you similarly interested in other foreign markets?

The Saudi market has always been and will remain the Swicorp’s most important focus in view of the tremendous attractions and opportunities of the market in the Kingdom. However, Swicorp has historically also been highly active right across the MENA region, with a track record of transactions in North Africa, Egypt, Turkey and the Levant and across the Gulf. These regional capabilities are reflected by the presence of dedicated staff located in strategic areas in offices across the Gulf and North Africa.

Whilst we do not intend to stray too far from our primary geographic focus, we are also assessing opportunities to develop some form of presence in adjacent emerging markets where we may leverage our knowledge, expertise and network for the benefit of our valued clients and investors.

What are the major initiatives to further the company’s growth and drive its vision?

See (G) below

What are your plans and strategy targets for 2015?

Swicorp is driven by the desire to leverage its financial and intellectual capital to help our clients and investors realise their objectives. We know that if we succeed in this aim, Swicorp will also be successful. We believe that Swicorp has built a special, indeed, unique platform in MENA, and over the past two years, all our businesses have grown stronger. The core blocks which will drive future growth are already largely in place and established. In summary these are: as follows

  • Investment banking will look to continue the growth of its corporate finance advisory business, including  in mega real estate and advisory projects, an area where Swicorp has established clear market leadership.
  • Private Equity will look to grow the ‘club deal’ activity was well as sourcing and structuring initiatives to develop new PE funds with a specific geographic or sector focus
  • As explained before, we will look to expand our asset management activities by developing new products and increasing the level of assets under management
  • Elsewhere, we will continue to look for additional opportunities to grow and diversify our activities by leveraging our strong platform in the Middle East and North Africa, and maybe developing partnerships and joint ventures in other markets where our expertise and abilities may add value.

What about issuance of stocks and bonds; any successful transactions in this field? Any special way of dealing with the investment funds and have you actually started Funds that are capable of financing as well as mergers and acquisitions?

Swicorp was very active early on when the markets started opening up for new listings under the CMA’s guidance and a new regulatory framework. We were successfully involved in the rights issues of Savola, Fitaihi, MCDC and the IPOs of Red Sea Housing and Knowledge Economic City. However, being an independent investment bank without the balance sheet size of the large commercial banks, we are inevitably more restricted in terms of the underwriting capacity we can offer if we wish to maintain the required levels of capital adequacy. Hence whilst we are occasionally prepared to participate in underwriting equity securities, we typically choose to be involved in these types of transactions only on a selective basis as part of a wider relationship with key clients.

As we are still in the early stages of developing our asset management activity, we have not yet offered specialized funds, such as mezzanine funds, although these type of funds are likely to be considered in due time. However, the recent changes in CMA’s rules for allocating shares during IPOs, clearly favouring public funds, provides a window of opportunity to launch a new IPO fund that we will offer in the near future.

In your opinion and based on your experience, what do the investment and brokerage companies need most?

The key driver of success for any investment banking firm anywhere in the word is the quality of its people. In a highly-competitive  but still developing investment banking market like Saudi Arabia, the ability to recruit and retain talented professionals is critical and I strongly believe that the quality of Swicorp’s people sets us apart from our competition in the region. Initially, with the Saudi investment banking industry in its infancy, Swicorp and most other investment banking firms in the Kingdom, had to bring in much of the investment banking knowledge and experience required to develop the industry from outside. I am very happy that in recent years Swicorp has been able to hire and develop an increasing number of talented and committed Saudi investment banking professionals who play important roles across all Swicorp’s activities and projects. It is the continued growth and development of local talent that represents the best security for firms like Swicorp to keep on being successful in the years to come

What are the challenges for the investment companies and brokerage in the GCC region?

See (I) above

What are your future plans, specifically in the field of real estate investment Funds?

Swicorp is committed to developing and growing each of our main areas of expertise. For asset management specifically, we intend to capitalize on our strong track record to offer existing and new clients tailor-made solutions that may benefit from our investment philosophy and insights.

In terms of new products, we tend to be every selective and avoid chasing the latest trend or hype. We rigorously assess each opportunity and need to be fully convinced that the product will bring real value to clients and that the timing of such launch is appropriate. In listed equities, for example, we decided to go to the market and meet clients only after testing our approach and philosophy by managing our own capital successfully for over three years and after ensuring we had the right capabilities to manage third party money. This is reflected in the nature of the products we launch: We look to add real value to clients and demonstrate our confidence in and commitment to each product by having ‘skin in the game’.

In the near term, we are working on launching multiple new products. In listed Equities, the recent favorable activity in IPOs and the relative advantage that public funds have in the allocation process offers a window of opportunity to launch a fund that benefits from this trend. Also, we are working on launching an innovative fund that would invest based on internally developed models and takes advantage of ‘short-lived’ anomalies in the market

In real estate, we have a good pipeline of projects and we expect to shortly announce additional new products that capitalise on the attractive real estate markets in various regions of the kingdom

What are your comments on the potential offered by the real estate market now and what are your recommendations to drive further growth in the market?

The Real Estate Fund Management sector is very promising and we believe Swicorp has a competitive edge, as we were involved in many of the major Real Estate Projects in the Kingdom, and have built an unparalleled  Advisory expertise in this sector. Leveraging the knowledge, insights and experience we have gained in the real estate sector over the past decade,  we already secured two funds for 2014, the first of which (Al-Dhawahi) has just closed. The second one is related to a large project in Mecca and we are very confident on the prospects it brings to clients.

The real estate fund pipeline is very strong and of a very high quality. Swicorp has the capability to source attractive projects, combining interesting Real Estate locations and high standard partners and developers. We believe these are the keys to a successful real estate fund.

Saudi Arabia is currently witnessing numerous changes in the projects and work market, how does this impact your projects?

We are monitoring closely what’s happening in the labor market and, more generally, in the economic and regulatory environments we operate in. Overall we see the latest initiatives and changes as beneficial to business participants committed to the long run. We also believe that the short term uncertainties and dislocations created in some areas of the economy are actually opportunities for investors, as they are accompanied with some mispricing in certain assets.

Regarding our ongoing projects, we are always careful to identify, assess and mitigate any risks which could arise during the ‘structuring’ and design phase of each project, so do not have any major concerns in this regard.

How attractive is the Saudi stock market and why? How do you evaluate the performance of the Saudi equity funds?

Compared to the rest of the GCC, KSA has a much deeper and diversified market, driven by a population of just under 30 million. It is by far the largest market in size and in liquidity. The level of corporate governance and investor communication is higher than other countries, making the stock market more investor friendly. These factors make investing in Saudi Arabia a compelling proposition.

Compared to mature markets or other emerging markets, the Saudi economy has shown good resilience in the past and offered prospects for more dynamic growth. The recent positive performance has put the Saudi stock market in the spotlight and attracted more inflows from foreign investors.

Funds in KSA have generally enjoyed a positive performance in 2013 and this has continued into 2014. Markets across the region rebounded strongly on the back of a normalization of risk premiums and better fundamentals, and equity funds have benefitted from this improving environment.

The industry as a whole is becoming more and more professional. After the 2008 crisis and the market downturn of 2006, many Investment Managers strengthened their operations and capabilities in order to offer robust investment services to clients. These efforts have paid off in 2013 and 2014, and hopefully, will prove beneficial in the future, and in less favorable environments. This represents the real challenge for fund managers in KSA: regaining the trust of investors and constitute a credible and reliable alternative to other investment vehicles.

In your opinion, what are the challenges that face the Saudi stock market particularly in the field of regulations and legislations?

Local equity markets suffer from some of the same problems we find in other emerging and frontier markets. These are mainly a relative lack of liquidity in parts of the market, some governance issues and financial reporting and communications that are still not optimal. We believe that these obstacles for the development of local markets are diminishing and that they will increasingly resemble and conform to the standards of more developed markets. Actions from regulators, like CMA in KSA, are oriented in that sense and are helping the markets develop. Events like UAE and Qatar’s access to MSCI Emerging Markets Status will accelerate this shift to more dev

Sadeed Investment acquires 30% equity in BRC

Riyadh, Saudi Arabia-07 September 2014 – Swicorp – a leading Saudi investment banking, private equity and asset management firm focused on the MENA region and Turkey – announced today the acquisition by Sadeed Investment Limited of a 30% equity participation in BRC Industrial (Saudia) Limited

Founded in 1974, with revenues poised to exceed SR1 billion this year, BRC is one of the leading long steel products manufacturing and processing companies in Saudi Arabia and has been growing steadily over the past 30 years on the back of strong investment in infrastructure in the Kingdom. Through the ongoing commissioning of its new Dammam plant and the establishment of a new facility in Jeddah, the company is expected to double its capacity and is confirming itself as the partner of choice for all concrete reinforcement needs and fencing solutions across the Kingdom.

Sadeed Investment Limited is a Swicorp and Partners-owned investment vehicle dedicated to making investments in Saudi steel sector.

Commenting on the deal, Sheikh Nasser Al Howaish, BRC’s Chairman and representative of the Al Howaish family, said:  “We are delighted to welcome Sadeed and its shareholders onboard as partners in our business, as we believe this partnership will strengthen our organization and reinforce BRC’s position of leadership in the domestic reinforcement and fencing markets.”  He emphasized their unwavering “commitment to BRC’s vision of providing excellent customer service and best-in-class systems to our customers.”

Swicorp’s Chairman Kamel Lazaar is equally pleased with the agreement. He said: “We are thrilled to be joining forces with the BRC family. Our profound interaction with the company’s management and outstanding shareholders have led us to appreciate the unique quality offering of the company and recognize that it is a fantastic platform for growth, both in its current lines and on the back of quality opportunities that we seek to pursue hand-in-hand in support of the Kingdom’s economy.”

Moreover, he said “we are honored by the trust placed in us by our first class partners for leading this investment. In the months ahead, Swicorp shall seek to make further direct investments with its partners in strongly grounded and high potential companies such as BRC across the Kingdom.”

About Swicorp

Swicorp is a leading investment banking, private equity and asset management firm with a specific regional focus on the Middle East and North Africa (MENA).

From its headquarters in Riyadh and regional offices in Jeddah, Geneva, Tunis and Dubai, Swicorp provides corporations and investors with independent advice and assistance on key strategic financial and investment issues. Founded in 1987 by current chairman Kamel Lazaar, and licensed by the Capital Market Authority of the Kingdom of Saudi Arabia, and the Dubai Financial Services Authority of the United Arab Emirates, Swicorp today has grown to be one of the region’s premier financial services providers.

Swicorp has an extensive track record over more than 25 years of pioneering mergers and acquisitions, advisory and real estate transactions across MENA for regional and international clients. Swicorp has also developed into one of the leading players in the private equity sector in MENA, raising over US$ 1 billion in private equity funds since 2005. Leveraging its extensive investment expertise and network, Swicorp also offers a range of asset management services across various asset classes to allow investors to benefit from the substantial opportunities arising from the attractive fundamentals and strong growth prospects of the MENA economies.

Swicorp: The Real Deal

Mena FM Profile feature – Swicorp

Best known for its investment banking and private equity business, Saudi Arabia’s Swicorp has a growing asset management operation and is in the process of launching its first real estate fund. Mena FM catches up with the firm’s head of asset management Kais Mbarek

By James Brockett

As a leading investment banking player in Saudi Arabia, Swicorp has advised on some of the biggest real estate transactions in the country in recent years, including government-supported mega projects such as King Abdullah Economic City and the Jabal Al-Sharashif project in Mecca. So in some ways it is logical that the firm, which is expanding the asset management capabilities it offers to third party investors, is now launching a real estate fund.

The fund, which is set to close in the coming weeks, is a private placement fund which will buy a swathe of land in the Eastern region of Saudi Arabia, and will oversee the development of 135 villa houses in partnership with a leading regional developer.

Swicorp Head of Asset Management Kais Mbarek tells Mena FM that since the CMA issued regulations for collective investment in real estate last year, investors have increasingly favoured real estate funds because they have more confidence in the process.

“These regulations and these funds have brought something new to investors,” says Mbarek. “The fact that there is a fund manager regulated by the CMA gives more reassurance to real estate projects; in a real estate development fund, for example, you have a developer that has the capability to acquire or build on land and you have a fund manager that raises equity for that project. The roles are segregated, with each focusing on what he does best, and there’s no conflict of interest. So these funds are actually an answer to a very big issue in Saudi Arabia, and increasingly this fund structure is adopted and trusted by investors, and even banks, who are more willing to invest in a fund rather than directly with a land developer.”

He says that the firm considered as many as 40 or 50 possible projects before making its choice for the fund, which has been structured to eliminate many of the risks involved with construction and to ensure that the developer’s interests are aligned with investors. While its status as a private placement fund means that many financial details cannot be disclosed, Mbarek adds that Swicorp’s willingness to co-invest into the fund should give outside investors confidence.

“We don’t launch funds and products if we are not willing to put money in ourselves. In our listed equity fund we have a substantial amount of our capital, and a percentage of the real estate fund will also be Swicorp’s money. As a rule of thumb I wouldn’t launch a fund if I don’t think it’s worth us investing in.”

Listed equity development

Mbarek – who joined Swicorp in 2010 after several years in France working for Societe Generale AM amongst others – has already achieved much when it comes to developing the firm’s listed equity capabilities. Swicorp’s main vehicle in the equity arena is another private placement fund, the Tharwa Fund, which invests across the GCC and North Africa markets. It was first offered to outside investors last year, but this came after three years in which Mbarek’s team had built up a convincing track record managing the firm’s own money, he explains.

“When we started running this strategy, we identified our investment philosophy, how to construct the portfolio, and the things we were looking for in an investment, all from the perspective of an investor: it was our money that we were managing. The Tharwa Fund was a continuation of what we had been doing before: we didn’t change anything from the way we manage our own money. The goal is to convince other clients to invest with us if they believe in our approach. It’s very transparent: we say what we do, and we do what we say, and we follow best practice in terms of operations. Our goal is to offer Tharwa to a few sophisticated investors, and we are also working on a version that would be more suitable for international investors.”

He says that Swicorp’s equity investment philosophy is based on three pillars: value, catalysts (i.e. change) and focus. That a stock is undervalued compared to its peers or the market is necessary but not sufficient: the company must have a story, or change catalyst, attached to it that the managers believe will lead to a re-rating or change in market sentiment. Finally, the portfolio must be focused, concentrated on the most compelling stories and stocks: the Tharwa Fund looks to invest in a maximum of 20 stocks at any one time.

The strategy has paid off thus far, with the team making double-digit returns even during the market difficulties that surrounded the 2011 Arab Spring, and achieving reduced volatility compared to its peers.

Another interesting element of Swicorp’s equity investment team is that rather than drawing a distinction between portfolio managers and analysts, Swicorp has a team of four who each perform both functions, and are considered portfolio managers in their own right.

Creating Alpha

Swicorp’s investor base is largely high-net worth and ultra high-net worth individuals in Saudi, although it has more institutional clients on the private equity side, where it is an established player and has raised $1.3 billion since 2004. Mbarek says that international investors are waking up to the attractions of investing in the region.

“This region offers some emerging markets-type investment opportunities, but because the GCC currencies are pegged to the dollar, you don’t have the currency risks that have really become a problem for EM investors in the last year,” he says. “So that’s why a lot of people are now looking at this region, in addition to the buzz around the UAE and Qatar moving to emerging markets.

“But we think it’s something that can be sustained. You need to be careful in the way you approach things you definitely need professional help to invest in these markets, but we strongly believe in the investment opportunities in this region, and it’s a region where you can create a lot of alpha. Having exposure through passive indexing is fine, and you can play some cycles, but I really believe the alpha you can create in this region is something more interesting than the beta performance, and this is what we’ve proved with the Tharwa fund for the last 4 years.”

Swicorp: Factfile

  • Founded in 1987, Swicorp is a corporate finance advisory, private equity and asset management firm with a specific regional focus on MENA. It is a closed joint stock company with paid up capital of SAR 500m
  • It has offices in Riyadh, Jeddah, Dubai, Tunis and Geneva, and is licensed by both the Saudi CMA and the DFSA in Dubai.
  • Swicorp has raised over $1.3 billion in private equity funds from investors since 2004. Its listed equity division, including the Tharwa Fund, was first offered to 3rd party investors in 2013
  • Its top leadership team consists of Kamel Lazaar (Chairman and Founder) and Daniel Schenker. Kais Mbarek is Head of Asset Management and has been at the company since 2010.

 

MENA asset management sector promising

JEDDAH – The asset management sector in the Middle East and North Africa (MENA) region, though at present is relatively unexplored, will “ultimately occupy a much larger position than today,”  Swicorp Managing Director and Head of Asset Management Kais Mbarek said in an interview.

Asked about the size of the asset management market in the MENA at present, he said “while some markets like Saudi Arabia has a relatively large and deep market, the size of assets under third party management is small when compared to other countries and regions.

There are many reasons for this under-penetration and we think many of these obstacles are fading if not disappearing. The process will take time and will experience some hiccups but we are confident that ultimately the Asset Management sector in MENA will occupy a much larger position than today.”

He added that “asset management market size in a given country or region depends on too many criteria and it is very difficult to extrapolate what happened in one country to our region.  However, we are convinced that the market as it is today is far from its potential and that there are opportunities that are simply untapped. The penetration of funds or third party money management is low.”

Excerpts from the interview follows:

Where do you see growth for your firm in MENA?

We consider that Third Party Fund Management is still in early stages in MENA region and offers substantial growth opportunities. Strong economy, demographical trends and better governance make the asset management industry in MENA a growth industry. KSA is by far the largest and most promising market, but opportunities in GCC and North Africa are also substantial.

Regarding asset classes, we still see potential in all three: Stock Markets, Real Estate and Private Equity. Swicorp will launch other products in other asset classes when we see the timing is right and that it would add value to our clients to be exposed to them.

What are your firm’s asset management services?

Swicorp assists its clients in growing and managing their money. We developed our expertise in three main areas: Stock Markets, Real Estate and Private Equity. Swicorp offers investors exposure to a range of asset classes, depending on their goals and profile. Our expertise is regional with the main focus on KSA.

Investors can benefit from our know how in multiple ways: via investment in existing funds, on a ‘deal by deal’ basis or through a ‘tailor made’ product if needed.

Swicorp has been present in the Kingdom for more than 25 years and we believe we have built unique capabilities that can serve local investor needs and offer superior performance.

How has the Tharwa Fund grown? Kindly describe its performance.

Firstly let me explain Tharwa Fund. It is a private placement fund invested in MENA stock markets and is offered to a very limited number of clients as per CMA regulation. Swicorp launched this fund after managing successfully our own capital and we wished to open up these capabilities to qualifying third party investors that have the appropriate risk profile. Some of our clients were early subscribers to the fund and subscriptions are still open to interested investors. In parallel, we will be launching shortly a version of the Tharwa Strategy that will be tailored to public investors.

As mentioned earlier, our performance and track record position us in the top league. But more importantly, we believe that our investment philosophy, the investment approach we developed and the disciplined investment process that we put in place are capable of delivering solid and consistent results over an entire economic cycle whilst maintaining a disciplined approach to risk management. The fact that Swicorp is committing a substantial portion of its capital to the strategy ensures the alignment of interest of all parties.

What is the breakdown on types of investors, individual and institutional?

Most of Swicorp’s clients are institutional and Ultra High Net Worth Individuals. But we are launching new products, mainly invested in stock markets but also in real estate, that will be offered to individuals and to the public

What percentage of investors are foreigners? What is their national make-up?

Swicorp has a geographically diversified client base. It is however important to note that our international clients are mainly present in Private Equity products. We feel that this is changing as more and more clients outside MENA enquire about the stock market and sometimes about real estate market. More investors are discovering the virtues of GCC economies compared to other emerging markets: solid fundamentals backed by strong oil reserves, favorable demographics and dollar peg. Some of these markets are difficult to access directly for a foreigner. Funds and other products are an attractive way to gain exposure to them.

How attractive is the fund for overseas investors?

The region offers a unique combination of favorable demographics, solid financial position and scale. Foreign investors are also attracted by the fact that currency risk is virtually inexistent with the peg to US dollar. The fund allows the investors to benefit directly from these factors.

Foreign investors can rely on Swicorp’s local knowledge and expertise to weather the volatility of the market and to distinguish between fundamentals versus hype. The team has extensive experience in managing funds, is based in Riyadh and relies on research intensive investment process that places a major emphasis on risk management.

How attractive is the Saudi market for stocks and why?

Compared to the rest of the GCC, KSA has a much deeper and diversified market, driven by a population of just under 30 million. It is by far the largest market in size and in liquidity. The level of corporate governance and investor communication is higher than other countries, making the stock market more investor friendly. These factors make investing in Saudi Arabia a compelling proposition.

Compared to mature markets or other emerging markets, Saudi economy has shown resilience in the past and offered prospects for more dynamic growth. The recent positive performance put the stock market in the spotlight and attracted more inflows from foreign investors.

What more can be done by the CMA to secure greater foreign ownership with the capital markets in KSA?

KSA occupies an increasingly important position in world economy, and there exists a strong interest from international investors to have exposure to KSA stock market. For the regulator and the exchange, direct access to the market should broaden the investor base with an objective to become more “institutionalized” and less volatile.

Saudi Arabia already made positive steps in order to enable foreign investors to access the Stock Market. Indirect access via Swap agreement was established in 2009 and ETFs were introduced in 2010. Tadawul and CMA have initiated other steps towards ultimately opening up the market for direct foreign investments. We believe KSA authorities are keen to encourage increasing foreign participation within reasonable limits and whilst ensuring Saudi/GCC investors will not be disadvantaged.

 

Swicorp lists Sotipapier on the Tunis Stock Exchange

Swicorp, a leading investment banking and asset management firm focused on the MENA region, announced the successful listing of Sotipapier on the Tunis Stock Exchange. Swicorp acquired a strategic stake in Sotipapier in May 2012 through Intaj Capital II (Intaj II), a private equity investment vehicle managed by Swicorp. Sotipapier is among the leading producers of paper for industrial use in North Africa.

Discussions between Swicorp and the Hamrouni Group, founders of Sotipapier, began in 2011 amidst a challenging political, social and economic environment in Tunisia, and concluded in May 2012 with the closing of the transaction. Since then, the management team implemented an ambitious plan aimed at growing and further institutionalizing the company, thus preparing the company for a successful listing on the Tunis Stock Exchange in less than 24 months. The listing, which covered 9.5 million shares representing 40% of the company’s shares, was oversubscribed nearly 10 times, with demand for the shares exceeding TND 400 million (US$ 250 million) for a total expected market capitalization of TND 120 million (US$ 76 million). With Intaj II and the Hamrouni Group jointly owning a controlling stake in the company post-IPO, Sotipapier is poised to drive further growth in the coming years, by investing in expanding its production capacity and geographic footprint, while continuously improving the quality and performance of the products it manufactures.

Nabil Triki, Managing Director in charge of Swicorp’s private equity activities and Chairman of the Board of Directors of Sotipapier, stated “the success of this investment confirms our view that despite the challenging environment, the MENA region in general and countries such as Tunisia and Egypt specifically, provide compelling investment opportunities for private equity investors with in-depth insights into the region. The actions undertaken since the investment within the company and the improvements realized in terms of governance, operations and investments, have translated into higher profitability and enhanced growth potential. This demonstrates the positive impact that Private Equity can have on companies in the region, to ensure both the development and the sustainability of such companies, and to positively contribute to local economies capital markets”.

About Swicorp:

Swicorp is a leading investment banking and asset management firm with a specific regional focus on the Middle East and North Africa (MENA) region.Founded in 1987 and licensed by the Capital Market Authority of the Kingdom of Saudi Arabia, and the Dubai Financial Service Authority of the United Arab Emirates, Swicorp has an extensive track record of pioneering investment banking transactions across the MENA region over the last 25 years. Swicorp has also developed into one of the leading players in the Private Equity sector in the MENA region,raising over US$ 1 billion in private equity funds since 2004.

From offices in Riyadh, Jeddah, Geneva, Tunis, and Dubai, Swicorp provides a wide range of corporations and investors with independent advice and assistance on key strategic and financial issues.

Intaj II invests in Fitness One Vega

Intaj Capital II (“Intaj”) is pleased to announce its investment in the health and fitness sector through its equity participation in Fitness House Company (“Fitness One”). Intaj II is a private equity investment vehicle raised by Swicorp, a leading investment banking, private equity and asset management firm focused on the MENA region and Turkey. Fitness One is a leading health and fitness club management company. The Company owns and operates fitness centers in Jordan, including six traditional women-dedicated fitness centers and a flagship “Vega” center launched in 2012 as a 10,000 sqm family-oriented facility with a wide fitness offering including dedicated men, women, and kid’s fitness areas, a PADI-accredited diving center, and a wall climbing facility. In 2013, the Company launched The Source MMA Vega, the leading Mixed Martial Arts (“MMA”) center in Jordan with capacity for 500 students. Over the next 3 years, the Company plans to focus on the development of Fitness One Vega into a regional fitness platform with presence in the Middle East and Africa under three distinctive concepts: family-oriented destination centers, women-dedicated community centers and MMA centers.

Kazem Abu Ghazaleh, Fitness One’s founder and CEO said, “We are delighted to welcome Swicorp onboard as a partner in our business, as we believe this partnership will strengthen our organization and position Fitness One Vega to be a leader in the domestic and regional market. We remain committed to the Fitness One Vega vision of providing excellent customer service and best-in-class fitness experience to our customers.”

Andre Wagner, Investment Director at Swicorp who led the transaction added, “We are excited to be joining the Fitness One Vega team today and believe that the Company, with its distinctive fitness offering, provides a compelling platform to capitalize on the growth opportunities in the industry today. We will support Management in developing abroad in selective regional markets where we believe there is strong demand for the Company’s unique fitness concepts”

Nabil Triki, Managing Director and co-Head of Private Equity at Swicorp stated, “the investment strategy of Intaj II is to diversify its portfolio with promising growth companies operating in defensive sectors in key markets in the MENA region and Turkey. Fitness One is the third investment by Swicorp through Intaj II since 2012, underlining our support for local entrepreneurs with regional growth ambitions in sectors with strong long-term fundamentals.”

 

Bawabat Makkah Company signs agreement with Swicorp

Bawabat Makkah Company signs agreement with Swicorp to jointly launch “Bawabat Makkah 1st Real Estate Development Fund”

Makkah, Saudi Arabia- 3 December 2013- His Excellency Dr. Osama Albar the Mayor of Holy Makkah and Chairman of Board of Directors of Bawabat Makkah Company, a wholly owned subsidiary of Al Balad Al Ameen (which is the real estate development and investment arm of the Makkah Municipality), has signed an agreement with Swicorp, a CMA licensed investment bank, to jointly launch the Bawabat Makkah 1st Real Estate Development Fund.

Eng. Essam Kalthoum, Managing Director of Bawabat Makkah Company, revealed that Bawabat Makkah 1st Real Estate Development Fund involves the development of a 1.5 Million sqm site which is located inside the Bawabat Makkah area between Makkah-Jeddah highway and Al Lith Highway. Expected to be launched by the second quarter of 2014, this SAR 1.0 Billion Fund will be aimed principally, after securing required CMA approval, at the retail investors to allow the public to participate in an attractive real estate development opportunity.

Mr. Kamel Lazaar, Founder and Chairman of Swicorp, added: “Swicorp is honored to take the role of Fund Management for Bawabat Makkah 1st Real Estate Development Fund and contribute to the development process for city of Makkah. We are confident that with our experience and expertise in asset management and real estate financing, we will be able to successfully launch and execute this Fund together with Bawabat Makkah Company. We hope that this Fund will be the start of a long term mutually beneficial relationship between both parties. We firmly believe that this fund will be a great addition to the range of products and funds that Swicorp carefully select to provide to its clients in order to help them achieving their objectives”.

About Swicorp

Swicorp is a leading corporate asset management, financial advisory, private equity and principal investment firm with a specific regional focus on the Middle East and North Africa (MENA) region.

Founded in 1986 and licensed by the Capital Market Authority of the Kingdom of Saudi Arabia, and the Dubai Financial Service Authority of the United Arab Emirates, Swicorp has an extensive track record of pioneering M&A and Advisory transactions across the MENA region over the last 26 years. Swicorp has also developed into one of the leading players in the Private Equity sector in the MENA region, raising nearly US$ 1.3 billion in funds from investors since 2004.

From its headquarters in Riyadh and regional offices in Jeddah, Geneva, Tunis, Dubai and Algiers, Swicorp provides a wide range of corporations and investors with independent advice and assistance on key strategic and financial issues.

Intaj II takes a strategic equity stake in Orchidia

Dr Ossama Fouad Abbas and Intaj Capital II (“Intaj”) are pleased to announce the launch of their partnership in the ophthalmologic sector materialized by the equity participation acquired by Intaj in Orchidia Pharmaceutical Industries (“Orchidia”). Orchidia is the sole branded pharmaceutical player specialized in the defensive ophthalmic segment in Egypt. Initially a service provider to multinational companies, Orchidia transformed itself into a full-fledged ophthalmologic player, successfully and advantageously competing with multinational companies such as Novartis and commanding the second market share. Intaj is an investment fund managed by Swicorp, with a specific regional focus on the Middle East, North Africa and Turkey. Combining their respective forces, the partners will seek to further accelerate the company’s growth and enhance its profitability. Immediate moves include the aggressive launch of selected new products within the company’s pipeline as well as the launch of international expansion through the development of export markets, the opening of new ones and growth acquisitions, Saudi Arabia being an immediate priority. Dr Ossama Fouad Abbas, Orchidia’s founder, largest shareholder and chairman, said: “At Orchidia, we see the difficult times we are currently going through in Egypt as a good opportunity to grow. We are happy with the partnership with Swicorp which we believe will add value to Orchidia taking it to its planned position as ‘the key ophthalmic player in the MENA area by 2015’ as per our vision statement.”

Mehdi Charfi, the director at Swicorp who led the transaction said: “The pharmaceutical sector has always been of interest to Intaj, and we have been approaching and following a number of pharmaceutical companies in the region for quite some time. We believe we have now identified and invested in a unique player and sealed a partnership with a unique entrepreneur and chief executive. We are very excited about the prospects of this investment and the growth story we are willing to build over the coming years.”

David Rey, co-head of private equity at Swicorp added: “Our investment in Egypt in these challenging times is a testimony of our relentless effort to fulfill the mandate given by our investors to invest regionally in outstanding companies with sound foundations and compelling strategic focus. The specifics and relative uniqueness of Orchidia makes me confident that the partnership will deliver on its promises, irrespective of indeed a challenging environment.”

Intaj Capital II invests in Sotipapier

Swicorp, a leading financial advisory and private equity firm focusing on the Middle East, North Africa and Turkey, announced today a strategic partnership between Intaj Capital II (« Intaj II »), a private equity focused on Consumer-driven industries, and the Hamrouni Group, a family group with diversified industrial holdings in Tunisia, in Sotipapier, a leading player in the production of Kraft paper for large sacks, test liner as well as fluting paper in Tunisia. Through this partnership, Intaj II and the Hamrouni Group will aim to drive the growth and the institutionalization of Sotipapier, and to invest in order to strengthen its competitive positioning in Tunisia and beyond, with the objective of preparing the company for a potential listing on the Tunisian stock exchange.

In the coming years, Sotipapier will continue to focus on continued profitable growth, modernization, technological development and job creation.

Nabil Triki, Managing Director and head of private equity at Swicorp, stated: “This significant investment is a testament to Swicorp’s intent to further its activities in Tunisia, which counts among the core markets we target for private equity investment. We are looking forward to working hand-in-hand with the Hamrouni Group to support the management of Sotipapier in achieving the company’s ambitious growth plans”.

Abdelkader Hamrouni, CEO of Sotipapier stated: “Swicorp’s contribution will help us further develop and institutionalize the company in terms of production capabilities, operational excellence, as well as governance, with the dual objective of ensuring the continued development and the sustainability of the company, and contributing positively to the Tunisian economy”.

Joussour Holding Company announces exit from Uch Power Limited

Swicorp, a leading private equity firm focusing on the MENA region and Turkey, today announced the signature of a sale and purchase agreement for the sale of the entire stake in Uch Power Limited (UPL), a 585MW combined cycle thermal power plant located in Pakistan, held by  Joussour Holding Company (“JHC”). JHC is a private equity investment vehicle that invests in energy and energy intensive industries. The stake is being acquired by International Power Uch Holdings BV, a wholly-owned subsidiary of International Power GDF Suez, a leading independent power generation company. The gross assets value of UPL as at December 31 2011 was US$ 474 million (€357 million).

JHC holds a strategic equity stake with joint control in UPL through one of its majority-owned subsidiaries Creative Energy Resources.

The asset was acquired in 2008; it is one of the lowest cost sources of thermal power in Pakistan, with a long-term fuel supply and power purchase contract in place. Over the 4 year holding period, the investment delivered solid returns for its investors.

Shahid Khan, Investment Director, Swicorp and Board member of UPL commented: “This has been a successful investment for us in one of the most challenging and difficult periods in history”. He added, “We are very grateful to the Government of Pakistan for all their support and would also like to thank all the board members, management and other stakeholders of UPL for all their hard work and dedication”.

Nabil Triki, Swicorp head of Private Equity and CER Board member added: “I am pleased
that as market conditions improve, Swicorp is beginning to unlock the considerable value stored within its investment portfolio. This is our third successful exit so far this year and we are very satisfied with the outcome”.

This transaction is subject to certain regulatory consents and other approvals, which are expected to be completed by May 2012.

 

Joussour Holding Company announces exit from Ghani Glass Ltd.

Joussour Holding Company announces the successful sale of its stake in Ghani Glass Limited

Swicorp, a leading private equity firm focusing on the MENA region and Turkey, today announced the successful sale of a 20% stake in Ghani Glass Limited of Pakistan (“Ghani Glass”), held by Joussour Holding Company (“JHC”). JHC is a private equity investment vehicle that invests in energy and energy intensive industries.

Established in 1993, Ghani Glass is the largest and most diversified glass manufacturer in Pakistan. Since JHC’s initial investment in 2007, Ghani Glass has witnessed strong growth, more than doubling its top and bottom line on the back of capacity expansions, including the commissioning of the first pharmaceutical glass manufacturing project in the MENA region, based on state-of-the-art European technology.

JHC’s original investment in Ghani Glass was predicated on strong underlying demand fundamentals in Pakistan, where demand expanded at double digits rates over the last several years. Following the global financial crisis and amid deteriorating economic and political conditions in Pakistan, coupled with a severe energy crisis in Pakistan, JHC worked closely with Ghani Glass to maintain and defend its leading position in Pakistan, while at the same time scaling down its regional expansion plans.

Salman Malik, Director at Swicorp commented: “During the life of the investment, we worked with our counterparts at Ghani Glass to ensure the company maintains and extends its leadership in the glass market in Pakistan while continuing to establish a broader regional footprint; this through a period during which we had to endure extremely challenging conditions in the local and international markets.”

Nabil Triki, Swicorp head of Private Equity added: “When we invested in Ghani Glass five years ago, our ambition was to significantly grow its top and bottom line and allow the company to establish a footprint beyond the borders of Pakistan. Although faced with challenging local and international markets, the company was able to navigate through consecutive crises and we are satisfied we were able to contribute directly to profitability growth through several initiatives championed by our teams.”