ADQ-backed Aliph Capital buys UAE's largest pet business

Manager's first deal will inject 'significant' growth capital into The Pet Store to help it expand across the GCC

Petsville founder Amr Hazem will become chief executive of The Pet Shop, which has been acquired by Aliph Capital, a GCC-focused private equity fund manager backed by Abu Dhabi holding company ADQ. Photo: Aliph Capital
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Aliph Capital, a GCC-focused private equity fund manager that recently raised $125 million from Abu Dhabi holding company ADQ, has completed its maiden investment deal with the acquisition of the UAE's largest pet business, The Pet Shop.

The deal is part of Aliph Capital's $250 million debut fund, Aliph Fund I (LP) and includes the acquisition of TPS' and Petsville business lines, Aliph Capital said on Thursday.

“Significant” growth capital will be allocated to help TPS expand across the UAE, as well as enter and address fragmented markets in Saudi Arabia and Qatar.

Terms of the agreement were not disclosed. The founder of Petsville, Amr Hazem, will become the chief executive of TPS.

In October, Huda Al Lawati, founder and chief executive of Aliph Capital told The National it planned to complete its first deal before the end of 2022.

Aliph Capital's investment strategy includes backing midsized GCC companies and boosting their digital transformation plans.

The company aims to make two or three investments per year, Ms Al Lawati told The National.

Aliph Capital’s debut investment is a “perfect example of our strategy of taking active positions in midmarket growth stars”, Farah Al Mazrui, head of investments at Aliph Capital, said.

“The Pet Shop is a proven leader in a market ripe for consolidation, growth and further tech enablement, and we look forward to assisting the company in its ambitious expansion plans.”

Private capital deals in the Middle East and North Africa rose to 214 in the first half of 2022 from 76 in the second half of 2019 before the onset of the coronavirus pandemic, prompted by an increase in technology-enabled and digital platforms, according to the 2022 Mena Data Insight report from the Global Private Capital Association.

Investment surged to about $19.5 billion from $570 million in that period, with the region's largest private equity deal being in the technology space as Blackstone Group acquired UAE-based technology and visa outsourcing services company VFS Global for $1.1 billion in May 2022, the GPCA said.

The UAE pet care market is the largest market in the GCC, valued at $361 million in 2020 and projected to post strong growth at a compound annual rate of 9 per cent to 11 per cent, according to Aliph Capital.

Aliph Capital’s debut investment is a 'perfect example of our strategy of taking active positions in midmarket growth stars'
Farah Al Mazrui, head of investments at Aliph Capital

A young population with a growing expat community and rising pet ownership in the future will underpin the industry's growth, it said.

Shifting behaviour with consumers waiting longer to start families will also fuel growth.

The pet market in the wider GCC remains largely unpenetrated and highly fragmented, presenting opportunities for investment and consolidation, Aliph Capital said.

“I see tremendous growth potential in the business and look forward to working closely with Aliph Capital to achieve it,” Mr Hazem said.

TPS, founded in 2011, was acquired from Kasamar Holdings, a single family office investing in regional private equity, global real estate and public securities.

“We believe the industry has tremendous potential for continued growth and are delighted to pass the baton to Aliph to continue the expansion in the region,” said Mo Bissiso, director at Kasamar Holdings.

Updated: November 17, 2022, 11:27 AM