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Global Buyout Fund takes majority stake in Omani steel firm

Kuwait-based Global Investment House has announced that its Global Buyout Fund has concluded its first investment in Al Jazeera Steel Products, a company listed on the securities market in

Kuwait-based Global Investment House has announced that its Global Buyout Fund has concluded its first investment in Al Jazeera Steel Products, a company listed on the securities market in Muscat, Oman.

Al Jazeera was established in 1997 and is a market leader in the manufacturing and distribution of mild steel black and galvanised round and square tubes and pipes.

Global Buyout Fund, a recently launched buyout fund focused on investing in the Gulf Co-operation Council states and other countries in the Middle East and North Africa region, has taken a 51 per cent stake in Al Jazeera by subscribing to some 63.7 million shares at a price of OMR0.325, a 43 per cent discount to the market price of OMR0.465.

According to Omar El-Quqa, an executive vice-president at Global Investment House, steel producers will have to boost production to meet rising demand in the region. Several Arab companies located have reported record figures of crude steel production this year and the trend is likely to continue, he says.

Shailesh Dash, senior vice-president and head of private equity at Global, says: ‘Al Jazeera is one of the largest producers of steel pipes in the GCC, catering to local markets while also exporting to Europe and the US. The company will benefit from an expected more than USD1trn in construction and infrastructure spending in the GCC.’

Al Jazeera Steel is currently in the final stages of implementing a new merchant bar mill to offer a broader range of products for the construction sector. ‘The merchant bar mill is expected to drive the growth of sales in 2008 and beyond which is considered one of the attractive features of this investment,’ Dash says

‘Al Jazeera is expecting to receive its API licence, which will enable the company to supply tubes to the oil and gas industry, further improving the bottom line of the company.’
 
Dash says the fund has already taken steps to augment the existing management by finding the high calibre personnel in the steel sector that will complement the company’s management and focus on cost management and better profitability.

Mohamed Moosa, chairman of Al Jazeera Steel Products, says that while the company received offers from various interested parties in the region and internationally, that of the Global Buyout Fund was preferred from a value addition perspective as it will support Al Jazeera in implementing its future growth strategy.

Global’s private equity team currently manages more than USD1.5bn in assets and has invested in more than 40 portfolio companies in the Middle East and North Africa. Some of these investments are in real estate and building materials companies, and Al Jazeera expects to derive synergies from these relationships

The Global Buyout Fund, a Cayman Islands exempted limited partnership with Global Capital Partner, a Cayman company, as its general partner, invests in listed and private equity opportunities across the Middle East and North Africa, including Turkey. It is managed by Global Capital Management, a wholly-owned subsidiary of Global investment House.

Global Investment House is an investment group set up in 1998 with branches and affiliates in Bahrain, Dubai and Abu Dhabi, Jordan, Qatar and Sudan. Its assets under management totalled KWD2.35bn (USD8.4bn) at the end of September.

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