New investment firm to start in Levant

19 April 1996

Middle East Capital Group (MECG), launched last month with a capital of $30 million, aims to launch itself into the region from its Beirut base by promoting itself as an investment bank with both influential regional shareholders and international links.

'This is the first investment and merchant bank to be specialised in the Middle East.

Many people believe the time has come for such an institution,' MECG chief executive Nabil Sawabini told MEED in an interview.

MECG's founding shareholders are BZW, the International Finance Corporation, the Saudi Bin Mahfouz family and three Lebanese investors including Sawabini. It has attracted leading regional businessmen onto its board including ABC International Bank's Saudi chairman Khalid al-Turki and Bank al-Jazira chairman Abdul-Aziz Abdulkader. All 15 board members are shareholders or representatives of shareholders who bought into a private placement of 49.6 per cent of MECG's capital (MEED 29:3:96).

MECG already employs 15 staff. It will focus on the Levant for the first year to 18 months of existence before looking at other areas, with the exception of its asset management operations which will also look at North Africa. 'We'll start in a region we know and regard as more promising,' Sawabini said.

MECG will focus on several main areas:

project and corporate finance, consolidating banks and companies through capital increases and mergers, privatisations and restructuring, private equity investment and asset management.

Sawabini said MECG would be distinctive in the way it used personnel who had a Middle Eastern background and international experience. 'What we're trying to build is a professional firm based on talent with the least amount of bureaucracy.' 'What you don't have in the Middle East is more dynamic institutions where managements play a more active role rather than just executing the wishes of the owners. In a more open marketplace, you need these kinds of institutions.' The group is likely to take two-three months to analyse projects and secure ma dates before it starts operations. 'We don't want to rush into situations where we may be taking on more than we can chew,' Sawabini said.

Many observers regard the region as overbanked. Sawabini said that as markets become more open, smaller banks may feel the pressure to merge. 'The less than efficient environment in the Middle East has allowed for the existence of many small banks. But as markets open, small banks that lack a niche will have difficulty continuing to be profitable.' MECG will also look at buying equity in private companies with a view to taking them public later. 'It could be for our own account or for a client's account,' Sawabini said.

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