Dubai-based private equity company Fajr Capital is evaluating a string of large ticket deals, from health care and data centres to semiconductors industry, as it looks to boost investment in the Gulf and broaden its footprint to other emerging markets, its chief executive has said.
The company, which has significant deals across education, healthcare, retail and infrastructure sectors on its credit, is expanding its investment horizons to new sectors and aspires to more than double its assets under management to about $7 billion by the end of this decade, Iqbal Khan told The National in an interview in Abu Dhabi.
Beyond the six-member economic bloc of the GCC, the company – backed by sovereign investors from Abu Dhabi, Brunei and Malaysia – is looking at multiple investment opportunities in Turkey, including port assets, he said.
The ports infrastructure deal the company is evaluating is about $1 billion in asset value, 35 per cent of which has already been syndicated, and if the deal matures, the company will bring large institutional investors on board to fund it, said Mr Khan, without specifying the target Turkish port.
“We will go to the usual suspects as this is a dollarised investment,” he said. “The reason we want to do this is because supply chain, logistics and the way the geopolitics and the geoeconomics of the world is going, it is going to put Turkey at the centre of the container trade and goods flow.”
Fajr Capital has invested in ports and related infrastructure in the past. It sold its 30.33 per cent stake in Alexandria International Container Terminals, which it had acquired through its $300 million Mena Infrastructure Fund, to Hutchison Port Holdings, in 2016.
The fund, which also invests in energy infrastructure, is also backed by HSBC Middle East and Waha Capital and currently holds stakes in Hajr Electricity Production Company in Saudi Arabia and Sohar Power Company in Oman.
Beyond ports, Fajr Capital is also considering data centre deals in Turkey and in the Gulf region, with the size of potential investment reaching as much as $500 million, as it pushes to broaden its technology infrastructure portfolio.
“Data centres are very important. Today, every country has data centre assets and we're going to look at it,” Mr Khan said.
Gulf investments
The Gulf region – which the World Bank and International Monetary estimate will grow by 4.2 per cent in 2025 – continues to be Fajr Capital's core market, and the company is actively seeking investment opportunities in the economic bloc.
Private equity and venture investments have been on the rise in the broader Middle East region – particularly in Gulf countries – since the pandemic, as investors took advantage of lower asset valuations. The strong economic bounce back of the Gulf economies from the Covid slowdown and their push to continue diversification has also opened new avenues of investments and helped in sustaining the deals flow.
The region attracted $2.28 billion in PE and venture investments in the third quarter of this year alone, slightly more than the $2.16 billion deal value recorded in the second quarter and nearly double the $1.19 billion reported in the first three months of the year, according to S&P Global Market Intelligence data.
Investors have largely targeted businesses outside the oil and gas sector, with the UAE attracting 70 PE-backed transactions and Saudi Arabia 47. Total value of deals this year, however, could be lower than the $11.60 billion of capital attracted in 2023, on the back of increased geopolitical volatility, according to the report.
Established in 2009, Fajr Capital counts the government of Brunei and the Brunei Investment Agency, Saudi Arabia-based family office Masic, Malaysia sovereign investment arm Khazanah Nasional and Mubadala Investment Company as its shareholders.
In 2019, a Fajr Capital-led consortium sold its stake in Dubai-based private school provider Gems Education to CVC Capital Partners. Fajr Capital, Tactical Opportunities funds managed by Blackstone and Bahrain's sovereign wealth fund Mumtalakat Holding Company had acquired the minority stake in Gems Education in 2014.
In April, Fajr Capital also led a group of investors to take a 65 per cent stake in the Middle East operations of Aster DM Healthcare, a Dubai-based operator of hospitals, clinics and a pharmacy chain.
Al Dhow Holding, Hana Investment, Wafra International Investment and the Emirates Investment Authority – the sovereign wealth fund of the UAE federal government – joined Fajr Capital in the deal that valued Aster GCC at about $1 billion.
chief executive of Fajr Capital
Under the deal, Azad Moopen remains founder chairman and Alisha Moopen continues to serve as managing director and group chief executive of Aster GCC, with the Moopen family retaining a 35 per cent holding along with management and operational rights, Fajr Capital said at the time.
Mr Khan said significant growth is on the cards for Aster’s GCC operations and Fajr Capital has “100 per cent” plans to dual list the company in Saudi Arabia and the UAE in about two years.
“We could list it today if we want to, but it's not about listing [only], it's about creating a world-class role model in the country and the region,” he said.
Deals pipeline
In Saudi Arabia, the Arab world’s largest economy and Opec’s top oil exporter, Fajr Capital is at early stages of exploring semiconductor investments, Mr Khan said.
The difficulty with the chip industry is that it is protected “like a secret sauce”, however, “investments in semiconductors, that's the next level, and we are very, very keen”, he said.
“We're looking at semiconductors in Saudi, because that's going to define the future,” said Mr Khan.
Dubai International Financial Centre-based Fajr Capital also has a healthy pipeline of deals in the digital payment space, in packaging and facilities management industries, as well as the health and education sectors.
“So, for now, we're looking at an education deal of significant size … and we're very, very keen on facilities management sector,” said Mr Khan. “The education [sector deal] will be about $500 million plus [and] facilities management would be around $350 million.”
Fajr Capital is also actively pursuing investment opportunities in the residential real estate in Saudi Arabia, particularly in the holy cities of Makkah and Madinah, as it aims to “internationalise” investments for Muslims from other geographies when these markets open up.
“That's where the opportunity is, as every Muslim who has the means would want to buy a property there,” said Mr Khan, adding that the wider Saudi real estate market, especially the capital Riyadh, also represents a “very unique opportunity indeed”.
Bolt-on acquisitions
Fajr Capital's pipeline of deals includes several good “platform investments” opportunities, whereby it invests in one of top-three, sector-leading companies, provides growth capital and makes further bolt-on acquisitions to help it grow further.
“We invested during our time at Gems, we invested a billion dollars, and we did acquisitions for Gems, and Gems then became more valuable,” Mr Khan said. “We're not here to provide exits to people [who own businesses]. We are here to partner with management and build businesses.”
In the healthcare space, Fajr Capital plans more bolt-on acquisition on Aster GCC platform and has a pipeline of about 13 deals it is evaluating in the Gulf region, particularly in Saudi Arabia.
“We will not do anything separate than Aster” in the healthcare space, Mr Khan said.
Aster is already among the biggest players in Dubai, Oman and Qatar, while in Saudi Arabia the company has a hospital and clinics and it is time to focus on growing its business in the kingdom, he said.
“We are now focusing on Saudi market, which has gone through a major reform as part of the Vision 2030 and it represents very unique opportunity and that's a really the top priority,” added Mr Khan.
Fundraising
In terms of fundraising, Fajr is seeing an increasing interest from China for deals in the Gulf region, as part of the world’s second-largest economy’s Belt and Road initiative. Chinese Institutional and sovereign investors are actively sourcing deals for their estimated $800 billion investment push in the six-member bloc, and that trend was evident when Fajr was raising finances to fund the Aster deal, Mr Khan said.
“The Chinese were the ones who came forward in a big way,” he said. “They were prepared to write big cheques and they were disappointed when we scaled them down.”
“There is always money, even in the worst market circumstances for good companies,” and Fajr Capital’s strategy of investing in good companies and making them better allowed it raise $1 billion for Aster deal in a very short period from investors, Mr Khan said. “From our perspective, this is the best time for fundraising.”
Fajr Capital, he said, does not raise big, blind pools of liquidity. It only raises funds on a deal-to deal basis, through its “fit-for-purpose” investor syndicates that include, sovereign funds, institutional investors, global pension funds and family offices, as well as global banks.
“We invest into what we know, where we know and with whom we know. This is very important,” said Mr Khan.
