Agthia has completed the acquisition of a majority stake in Egypt's snacks and coffee producer, Auf Group, as the Abu Dhabi-based food and beverage company continues to expand its portfolio in the Arab world’s most populous country.
The acquisition strengthens Agthia’s position as one of the leading regional consumer packaged goods companies, building on acquisitions it made previous year, the company said in a statement to the Abu Dhabi Securities Exchange on Thursday.
The deal to acquire a 60 per cent Auf stake for an undisclosed amount was first announced in July.
Auf Group’s founders have retained a combined stake of 30 per cent in the business, while Tanmiya Capital Ventures, an Egyptian private equity firm that invested in Auf Group in 2019, continues to hold the remaining 10 per cent stake, Agthia said.
“The acquisition of Auf Group aligns with our 2025 growth strategy to acquire, integrate and grow attractive businesses in value-add categories,” said Khalifa Al Suwaidi, chairman of Agthia.
“Egypt remains a strategic target for Agthia, as one of the Mena region’s fastest-growing consumer markets.
"We continue to identify opportunities to grow our presence there, while strengthening our F&B leadership in the Middle East and beyond.”
Auf Group, which also has a presence in the Netherlands, produces and sells products such as coffee, nuts, healthy snacks and other confectionery products sold under the Abu Auf master brand across Egypt.
The Egyptian snacking market is forecast to grow to around Dh11.2 billion by the end of 2024 from about Dh8.7 billion ($2.3 billion) in 2020, Agthia said, quoting Euromonitor data.
Auf Group has plans to expand its footprint across the UAE and beyond. It has already invested in four new stores in the country, including a flagship store in the newly opened Dubai Hills Mall.
In 2021, Auf Group generated revenue of Dh236 million and earnings before interest, taxes, depreciation and amortisation of nearly Dh58 million.
“This is an important acquisition for Agthia that further expands our footprint in the snacking and healthy food verticals,” said Alan Smith, chief executive of Agthia.
Agthia, which is owned by Abu Dhabi's state holding company ADQ, has been on a deal-making spree to become the biggest food and beverage company in the region by 2025.
In May, Agthia announced its expansion into Saudi Arabia with a greenfield investment worth Dh90 million that will be used to set up a manufacturing unit in the kingdom.
Last December, the company completed the acquisition of snacks maker BMB Group. In September, it acquired a 75.02 per cent stake in Egypt-based meat processor Ismailia Investments, also known as Atyab.
The company’s third-quarter net profit jumped more than 14 per cent to Dh40.5 million. Its quarterly revenue jumped about 20 per cent to more than Dh953.5 million, while assets grew to Dh6.6 billion.
Company Fact Box
Company name/date started: Abwaab Technologies / September 2019
Founders: Hamdi Tabbaa, co-founder and CEO. Hussein Alsarabi, co-founder and CTO
Based: Amman, Jordan
Sector: Education Technology
Size (employees/revenue): Total team size: 65. Full-time employees: 25. Revenue undisclosed
Stage: early-stage startup
Investors: Adam Tech Ventures, Endure Capital, Equitrust, the World Bank-backed Innovative Startups SMEs Fund, a London investment fund, a number of former and current executives from Uber and Netflix, among others.
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
