Bahrain-headquartered First Equity Partners (FEP) and other partners have acquired a 50 per cent stake in Fujairah-based building materials producer Oryx Industries, in a move designed to capitalise on the Gulf regions construction boom.
We believe the sector is going to experience an upswing. There is enough evidence of the value and size of infrastructure projects that GCC countries are embarking on, Qais al-Maskati, managing director of FEP, told MEED on the sidelines of a press conference in Dubai.
There is going to be a big increase in demand for aggregate, he said. Aggregate is the sand, gravel and crushed stone used by the construction industry.
Although accepting that the decline in oil prices may have some impact on the regions spending plans, Al-Maskati says essential infrastructure such as bridges and roads will continue to be built.
The regions governments, such as Saudi Arabia, have budgeted for increased spending in 2015, despite oil price volatility.
FEP, along with consortium partners Saudi Arabias Rawabi Holding, Qatars State Holding and Kuwaits AlWaab Real Estate, raised AED500m ($136m) to acquire a 50 per cent stake in Oryx Industries.
FEP aims to complete a full acquisition of Oryx by the end of the first quarter of 2015, pending new investors.
We are now looking for additional shareholders to come and acquire the remaining 50 per cent. Our criteria is really only to attract those that can add value, Al-Maskati said, explaining how current shareholder Rawabi [Holding] has helped open up the Saudi market.
The company is also on the lookout for new clients. Last December, it signed an offtake agreement with Qatari firm Al-Hodaifi Rocks. Kuwait is the next target market, said Al-Maskati.
Oryx Industries, as a holding company, was only created in the second half of 2014, but the underlying companies have been in operation for several years.
Currently, the firm holds a 50 per cent share of the ready mix concrete market in Fujairah and 20 per cent of the emirates aggregate export market.
To fuel the companys growth, Oryx Industries may turn to the bank market to raise debt this year. It has not borrowed significantly, so there is potential to leverage on the assets of the company, Al-Maskati said.
Beyond the UAE, FEP is eyeing opportunities in Egypt. In 2011, it helped establishing Egyptian Steel Company.
We will look at more industrial acquisitions in Egypt, Al-Maskati said, adding that the real estate and oil and gas sectors both offer attractive opportunities.
Egypt is also on the radar of Rawabi Holding. We are thinking seriously about moving back into Egypt, Osman Ibrahim, group president and CEO of the firm, tells MEED. With a strong government, stability and the economic summit in March, the door is open to start investing again.