GIB Capital sees increasing M&A activity in Saudi Arabia

The Saudi market is set to witness increasing M&A activity supported by increasing corporate enthusiasm to maximize shareholder wealth through business alliances and strategic partnerships.

Commenting on this Mr. Khalid S. AlGhamdi, the Acting CEO of GIB Capital said "we are seeing a fundamental maturity in the attitude of the Saudi corporate community towards business combinations and partnerships which is very promising for our market".

"To achieve success in the M&A spectrum, advisors must endeavor to ensure that sellers and buyers are mentally prepared to undertake M&A discussions, which ultimately can be very challenging in nature; execution goes beyond technical, legal, and fundamental analysis. Indeed, it is the skill-set, experience and dedication of our team that allows us to create win-win situations for buyers and sellers, even in the most challenging of circumstances" Mr. Al Ghamdi added when describing the GIB Capital's M&A practice in the local market.

GIB Capital has recently advised on an M&A transaction between the shareholders of General Lighting Company and Royal Philips.  As a result of this transaction, Royal Philips will take up 51% of General Lighting Company for USD 235 million.  The parties signed the definitive sale agreements in March 2014 and are currently working towards closing the transaction.

Mr. AlGhamdi stated, "We believe that this strategic partnership will add immense value to the lighting industry in the Kingdom, and bring new competitive advantages to this segment of our economy".

In another recent M&A deal, GIB Capital advised Al Tala'a International Transportation Company LLC ("Hanco") on its USD 103 million acquisition of 75% stake in Byrne Investments Limited ("Byrne"), a British Virgin Island Company that owns subsidiaries in the United Arab Emirates, Saudi Arabia, Oman and Qatar.

On this acquisition by Hanco, Mr. AlGhamdi, said "This was a challenging transaction as it involved multiple legal jurisdictions with varying ownership regulations.  However, GIB Capital's long standing presence and our deep knowledge of business dynamics across the region enabled us to smoothly facilitate the closing of the transaction".

The Hanco transaction marked GIB Capital's second successful M&A advisory transaction in the first quarter of 2014 after the recently announced acquisition of a 51% stake in General Lighting Company by Royal Philips.

Mr. AlGhamdi further added, "Although IPOs remain the first choice of exit for many private equity and investment vehicles, we believe M&A activity will begin to add further momentum to the equity capital markets.  Indeed, M&A activity has been rising at an encouraging rate, particularly through private sales, but so too have IPOs and other ECM activities.  The market is expecting a large number of IPOs to materialize soon, and GIB Capital's pipeline of such transactions is at unprecedented levels, both in terms of number and size".

"For over a decade, GIB Capital has been at the forefront of IPO activity in the Kingdom. Even prior to the promulgation of the CMA's Listing Rules, we assisted family businesses in transforming their enterprises into listed entities.  We have so far advised on over USD 5 billion worth of public offerings in the Kingdom of Saudi Arabia alone and we are working on many quality public issuances which we expect to list during the next 2 years. The expectations in the market are very high and we believe GIB Capital will maintain and fortify its leading position as we go forward" AlGhamdi concluded.