Investcorp looks to raise $500m for Saudi Arabia's pre-IPO stage companies

Bahrain-based alternative asset manager has already made seven investments in the kingdom and listed four of its portfolio companies

Riyadh. Investcorp says its new fund will give investors an opportunity to gain exposure to underserved sub-sectors. AFP

Investcorp, the alternative asset manager that counts Mubadala Investment Company as its biggest shareholder, is launching a $500 million fund to invest in Saudi Arabia high-growth companies.

Named the Pre-IPO Growth Vehicle, the fund is dedicated to investing in companies that are at the pre-initial public offering stage of development, Investcorp said.

The fund will give investors an opportunity to gain exposure to “underserved sub-sectors” such as health care, consumer and business services, as well as transport and logistics.

“Saudi Arabia’s economy continues to evolve and remains a key market for Investcorp,” said Yasser Bajsair, chief executive of Investcorp Saudi Arabia.

“The Kingdom’s Vision 2030 and its strong macroeconomic fundamentals, combined with its favourable regulatory environment and strategic privatisation mandate, make it an attractive investment hub for creating new business opportunities that contribute to its economic growth.”

Investcorp operates across six business lines: private equity, property, credit, hedge funds, strategic capital and infrastructure.

It plans a rapid expansion across its GCC and Asian investment portfolio and expects its assets under management to more than double to $100 billion in the medium term from about $40bn, executive chairman Mohammed Alardhi said in September.

“We believe, in about seven years, we can get there,” he said. “Acquisitions, organic growth, joint ventures are things we have done and we will continue to do.”

The asset manager had made 11 private equity investments in Asia and was bullish about the enormous growth potential in the broader Asia region, he said at the time.

Investcorp, which has been present in Saudi Arabia since 2008, has so far made seven investments in the kingdom, across sectors such as health care, consumer services, manufacturing, transport and logistics, as well as industrial services.

The asset manager has already listed four Saudi businesses on the Tadawul exchange, generating more than $40bn in potential demands from their respective pre-listing marketing exercise.

These include BinDawood Holdings, one of the top grocers in the GCC, as well as Theeb Rent A Car, jewellery chain L’azurde and Leejam Sports Company, the largest fitness club chain in the Mena region.

“At Investcorp, we have established a track record of partnering with leading family owned businesses and taking them public on the Saudi Exchange [the Tadawul],” said Walid Majdalani, head of Investcorp’s private equity business in the Mena region and South-East Asia.

“Through this vehicle … we will focus on assisting the companies that we invest in to grow and develop, to become potential candidates for an IPO or some other form of value realisation event.”