GrowthGate, the GCC-based specialist buyout firm, has announced it had reached a final agreement to acquire 20 per cent of Arabian Roots Group, a Saudi-based building materials conglomerate, and will separately acquire additional equity interests in its retail division.
The value of the transaction was not disclosed.
Arabian Roots is a privately-held Saudi corporation with sales of SAR700 million (Dh699m) and expect profits of SAR37m for the fiscal year in 2008.
The firm is a leading wholesaler, manufacturer, retailer and special service provider in the Saudi market, focusing on building materials. Arabian Roots has a well-developed regional distribution and marketing network and outlets that cover the UAE and Qatar. It also has a presence in Egypt, Syria, Lebanon and Malaysia.
"GrowthGate and Arabian Roots are committed, in the near future, to expand the footprint of Arabian Roots throughout the Mena region with an emphasis on the GCC and other key markets. We also plan to broaden the business holdings and the products mix via acquisitions of enterprises that are engaged in the building materials sector, provided they add strategic depth and economic benefits to Arabian Roots," said Ousam Fansa, Arabian Roots CEO.
"The construction boom witnessed in the GCC markets, which is fuelled by the need for renewed infrastructure, expanding urban centres and newly-planned industrial and economic zones, will create a sustainable level of demand for building materials for years to come and Arabian Roots is at the heart of such activity with a pole position, that is only shared by few other players," added Fansa.
GrowthGate follows a "buy and build" model that focuses on acquiring medium-sized, successful companies with strong management teams and turning them into regional champions through a series of carefully selected and well-priced acquisitions.
Investments are held for three to five years prior to being monetised via an exit sale.