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Global’s private equity funds buy significant stake in Saudi textile manufacturer

Global Investment House has acquired a significant equity stake in Ajlan Bin Abdulaziz Al Ajlan & Brothers, a major Saudi textile manufacturer, through its private equity funds.

Global Investment House has acquired a significant equity stake in Ajlan Bin Abdulaziz Al Ajlan & Brothers, a major Saudi textile manufacturer, through its private equity funds. The transaction was concluded by the private equity funds team for its funds focused on investing in the GCC/MENA region.

Ajlan was established in 1979 focused on selling traditional garments in the Saudi Arabia and GCC. The Company has an authorized, issued and fully paid up share capital of SAR 300 million divided into 30 million shares and for the financial year ended December 2006, it had revenues in excess of SAR 450 million.

The company has been aggressively growing with revenues growing at CAGR of over 35 per cent the last three years and is consolidating its market position as the leading supplier of ‘shmaghs’ (red/white male head gear), ‘ghutras’ (plain white male head gear), undergarments, and ‘thobes’ (white male dress) in the region.

Omar M. El-Quqa, Executive Vice President at Global, said, ‘The purchase of a significant stake is an important step to strengthen our relations with our clients in the Kingdom of Saudi Arabia and to cement our presence in the lucrative Saudi market.’ He added that acquiring a significant stake in the market leader in Saudi Arabia, where the per capita consumption of traditional clothes is growing, supported by the increasing population will augur well for the company.

He also added that the management team and promoters of Ajlan have spent more than 25 years in the industry, have extensive experience in Saudi Arbian and GCC markets which is critical, while operating in a competitive market.

Shailesh Dash, Senior Vice President at Global considers this investment in Ajlan & Bros. as unique as Ajlan, the leader in the region is truly an international company that has capitalized on manufacturing efficiencies by establishing manufacturing facilities in China. He stated that prior to 2002, the Company had no manufacturing facilities and instead imported products bearing its brands from UK, Switzerland, Japan, Korea and the PRC.

He stated that the establishment of these facilities in the PRC will result in several benefits, including a relatively low cost manufacturing environment, consistency of quality and continuity of supply of the products. He also added that with these manufacturing efficiencies, augmented by over 6,000 wholesalers and retailers in the region to market its products, the company is able to provide its customers with high quality products at an affordable price supporting the company’s aggressive growth plans.

Mr. Dash stressed on the importance of this deal for Global in investing in a truly regional company operating in Saudi Arabia, which is the largest economy in the GCC region. He also added that the highlight of this deal is that it gives us a good opportunity to increase our investment portfolio in the Saudi economy through a reputable and well-known name as we gear up to solidify our presence in this exciting market.’

Mr. Ajlan, Founder & Chairman of Ajlan indicated that with Global’s presence in over 15 countries and especially in the MENA region would be able to support the aggressive growth plans of not only in becoming a regional textile major but also to diversify in other related areas.

He added that Ajlan & Bros is one of the largest and credible company specializing in traditional clothing products like Shmagh(s) and Ghutra(s) (men’s traditional headscarf), and Thobe(s) (men’s traditional dress) in Saudi and other GCC countries. He added that in addition to expanding its product range, the Company has expanded its distribution network, in Saudi Arabia, enabling it to reach a wider customer base.

The Company’s products are marketed under well established brands such as "Ajlan", "Projeh", "Drosh" and are perceived to be of high quality. With the establishment of the manufacturing facilities, the company is ideally poised for meeting its requirements and also to act as suppliers to other wholesalers in the region. It is expected that Ajlan will further consolidate the regional market and also increase its market share significantly in the coming years.

Mr Dash also stated that the private equity funds already has existing exposures in the retail sector such as Al Sawani and Modern Marifiq (the mall operator) in Saudi Arabia, which is likely to offer synergies for this investment as well. Global would also assist the company in exploring these synergies and also assist in evaluating inorganic growth opportunities in order to increase Ajlan’s growth and also expand beyond the region.

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