Al Ghurair Investment plans Mena food business acquisitions to boost portfolio

Dubai-based group is investing heavily in digitisation, cloud operations and AI capabilities to spur growth, its group chief executive says

Al Ghurair Investment, the holding company controlled by Al Ghurair family, is looking to acquire more food-related businesses in the broader Middle East and North Africa region to expand its portfolio, the group's chief executive has said.

One of the oldest family businesses in Dubai, the group is looking at several buying opportunities but is yet to make a decision, John Iossifidis told The National.

“We are always open to looking at opportunities for investment,” he said. “There is always something on the go … something under review but there's nothing cooking at the moment in terms of a deal.”

Although the group's interests include engineering to mobility and energy sectors through more than 20 operating companies in a diverse portfolio, food and grains crushing businesses are “predominantly the areas of focus in terms of inorganic growth," according to Mr Iossifidis.

“We are looking to grow, particularly in the GCC and Mena region if and when opportunities arise.

“The group is financially sound and we haven’t struggled in terms of finding the capital for opportunities that we have actually identified.”

AGI, along with its consortium partners Al Rajhi Holdings Group and the UAE-based Masafi, completed the acquisition of a flour mill in Saudi Arabia earlier this year.

The deal to fully acquire the Third Milling Company from Saudi Grains Organisation was worth about $200 million, according to reports. In June, AGI also bought Jebel Ali Edible Oil Company, a multi-seed crushing plant, from Dubai Investments Industries for an undisclosed amount.

AGI subsidiary Al Ghurair Foods has an annual capacity of over 1.5 million metric tonnes and operates silos with storage of 230,000 metric tonnes for its wheat milling operations alone. Its associated businesses also own and operates oats mill, rice mill, animal feed plant and one of the UAE’s biggest poultry farms.

Mr Iossifidis, who served as chief executive of the sharia-compliant lender Noor Bank from 2017 to 2020 before joining AGI, is bullish on the growth prospects of the food sector and related businesses with the accelerated pivot towards food security across the broader Mena region.

“We see the region as a whole focusing a lot more on food and food security,” he said. “Investments and continued look at [growth options] in food and food security is [also] consistent with the UAE strategy as well … its future plans and is aligned with the UAE’s Dh300 billion ($82bn) initiative.”

The GCC imports between 80 per cent and 90 per cent of its food requirements, according to British think tank Chatham House. Better food security is among the top priorities for the UAE, the second-biggest Arab economy, which aims to attain the top ranking in the Global Food Security Index by 2051.

The consumption of food is anticipated to grow at a compound annual rate of 2.3 per cent to reach 52.4 million metric tonnes by 2025 in the GCC, with greater emphasis falling on domestic production. The consumption will be driven by Saudi Arabia and the UAE, accounting for more than 76 per cent of the total share by 2025, according to a report by Alpen Capital.

Evolving from a small trading firm in the 1960s, AGI is now an umbrella company across sectors such as energy and refining, engineering, trading, real estate, food, and construction and contracting. Its ventures arm includes group’s printing and publishing, retail, education, automotive services, currency exchanges, travel and mobility businesses.

Over the past few years, AGI has also focused on affordable housing in Deira, Bur Dubai and Al Barsha areas of Dubai. “The number of units have actually doubled over the past few years, to over 5,000 units,” Mr Iossifidis said.

The group is investing heavily into digitising, cloud operations and AI capabilities to take one of the UAE’s oldest family businesses into its next phase of growth, Mr Iossifidis, said.

“What did change as a result of the pandemic was the drive to digitise, the drive to innovate and drive to embrace sustainability. There was a big push for digitisation and automation as well as use of data [for more informed decision-making].”

AGI, which employs more than 28,000 people, plans to generate at least 25 per cent of its revenue and profits from “new business and new initiatives” by 2025, Mr Iossifidis said.

The company is pursuing a “three-horizon” approach for growth. The first stage involves expansion of existing businesses. The second involves fortifying its smaller businesses to better compete with bigger players in the market, while the third deals with expansion through “pure experiments” in areas where it is not present at the moment.

Agriculture technology and vertical farming is “something that we are looking at but it’s not something we have actually invested in at this point in time,” Mr Iossifidis said.

At least three of the group’s subsidiaries are also looking at the 3D printing options to boost its engineering, construction and contracting business, he added.

The company also plans to transform its mobility business and increase the percentage of rides through e-hailing for its Al Ghurair Cars Taxi, one of the largest providers of taxi services in the country.

“Even today, 80 per cent of the business is still street-hailing and 20 per cent is e-hailing. In 2025, we see it closer to 50-50 and in 2030, we see it being the other way around: 20 per cent street-hailing and 80 per cent e-hailing,” Mr Iossifidis said.

“So you got that evolution happening and you got the EV [electric vehicles] and clean energy requirements … our strategy is under formation and review in terms of where we want to take this business.”

Updated: September 23rd 2021, 3:04 PM
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