Gulf Capital set to raise $750m through new fund as it aims to double assets to $5bn

Exclusive: Abu Dhabi-based asset manager remains bullish on Asian markets and plans to announce several exits and new investments this year, chief executive says

Karim El Solh, chief executive of Gulf Capital, aims to have a $3 billion portfolio by the end of 2023. Khushnum Bhandari / The National

Gulf Capital is raising more than $750 million through a new investment fund as the Abu Dhabi-based asset manager aims to double its portfolio of assets to $5 billion in the next five years, its chief executive has said.

The company, which currently has $2.4 billion in assets under management, expects to reach the first closing of the GC Equity Fund IV over the summer and the final funding target in early 2024, Karim El Solh, chief executive of Gulf Capital, told The National in an interview in Abu Dhabi.

“It usually takes a year to fundraise, so final close will be early next year,” he said.

“Hopefully, by the end of 2023, we will close our portfolio at the $3 billion [mark]. And I will say my goal, over the next five years, is to cross the $5 billion [mark].”

The company has managed to expand the size of its assets with the launch of every new fund since it began operations 16 years ago.

“We're raising bigger and bigger funds … the first one was $190 million, our second was $533 million, the third fund was $750 million and, hopefully, we will exceed that in the fourth fund,” Mr El Solh said.

“Launching more funds is basically increasing our portfolio.”

For the latest fund, the company has received strong interest from its existing investors, backed by sovereign wealth funds, family offices and pension funds.

Investor interest from Asia, in particular, has been strong, said Mr El Solh, who recently held roadshows in countries and territories including China, Hong Kong, South Korea, Singapore and Malaysia.

This month, the company received a licence from regulators in Abu Dhabi Global Market and Singapore that will help it expand operations, raise funds and tap a wider pool of investors.

“We've done a very good job at building a global following. A third of our LPs [limited partners] are from the Gulf, a third from Europe, about 25 per cent in Asia and the balance in the US,” he said.

“Now we raise more money outside the Gulf than in the Gulf, and this is something we're very proud of to attract capital to the region. People think the Gulf is an exporter of capital … but we are attracting global money to the region.”

The launch timing of the company’s latest investment vehicle is “great” as the Gulf region is further solidifying its status as an attractive destination for investments.

The region’s economic resilience after global headwinds has also boosted investor confidence, Mr El Solh said.

“We're entering our golden age and we are getting a lot of good feedback from global investors saying, 'we are keen to invest in the Gulf',” he said.

“We almost have like a negative correlation to the rest of the world. When Europe and US are entering recessions, we are having our best years.”

Gulf Capital, which sources deals across markets in the Middle East and South-East Asia, has so far made 37 investments in growth markets through its seven funds and investment vehicles.

Its $750 million growth equity fund launched in 2016, which was the largest fund raising in the region at the time, is currently 90 per cent invested. The company plans to fully invest it and will likely announce deals during the second quarter of this year.

Gulf Capital has exited from all investments in its first fund and 10 out of 12 companies it invested through its second fund.

The companies it invested in through its third growth fund are now maturing and most of them have posted record profitability during 2022 as economies recovered.

Karim El Solh, chief executive of Gulf Capital, says the company remains bullish on investments in Asia. Khushnum Bhandari / The National

“They are getting [to] the size of profitability where we can explore exits. We are working now on at least three exits, simultaneously,” Mr El Solh said.

“We will be announcing one very shortly, but we're finishing the exit on two [more].”

In October last year, Gulf Capital exited its investment in Tunisian olive oil producer CHO Group. In May, the Abu Dhabi company and NBK Capital Partners exited their investments in Jordan’s Classic Fashion Apparel Industry.

In March 2021, the alternative investment manager exited its investment in Middle East and Africa energy services contractor Egyptian Chinese Drilling Company, seven years after making its initial investment.

The company is now gearing up for its fourth fund and if it manages to do the initial close over the summer months, it will start investing those funds in the fourth quarter of this year.

“We're preparing the pipeline and it is looking very healthy,” Mr El Solh said.

The ticket size of Gulf Capital’s investment deals usually ranges between $50 million to $100 million. However, it is open to partner with other investors to make much bigger deals for controlling stakes in companies.

The company’s existing investors are backed by large sovereign wealth funds and pension funds, allowing Gulf Capital to “write much bigger tickets with our existing investors” or with other private equity companies.

“We're looking now at an opportunity, a bolt-on acquisition, at over $250 million,” he said. “We can flex up and lean on our big backers.”

The deal in the business services sector will likely close during the next quarter, he added.

Although the company remains bullish on prospects of investing in Asia through its new Singapore hub, it remains open to acquisitions in other markets, including the US and Eastern Europe.

“The corridor for us is clear from the near to the Far East. But we are also always looking for opportunities elsewhere and [one of Gulf Capital portfolio companies] is looking at some bolt-on opportunities in the US,” Mr El Solh said.

“It’s an example of you go where the opportunities are.”

Gulf Capital, which runs private equity, growth capital and real estate businesses, invests in five core areas of technology and FinTech, healthcare, business services, consumer and sustainability.

It is exploring other sectors of the future economy and plans to launch a dedicated fund to invest in sustainability-linked themes.

“We look for innovative firms and we might look at other strategies that we can launch. It could be interesting to look at climate change and sustainability as a dedicated fund,” Mr El Solh said.

Food security is another investment area Gulf Capital is actively evaluating for deals, considering the Gulf region relies heavily on food imports.

“We are looking actively at sectors like vertical farming, food security — that's something very interesting,” he said.