Dubai: Dubai International Capital LLC (DIC), the private equity firm owned by Dubai Holding has completed exits from most of its Middle East private equity investments delivering robust returns, said Maissan Al Maskati, Managing Director — Private Equity of DIC.
Speaking to Gulf News in an interview Al Maskati said the recent sale of its shares in luxury-lifestyle retailer Rivoli Group nearly completes the regional investment cycle.
DIC’s stake in Rivoli was acquired by Swatch Group for an undisclosed sum earlier this month. While DIC did not disclose the selling price, bankers estimate the deal around $110 million (Dh367 million) while the total value of its Middle East exits so far is estimated to be close to $900 million.
“With the sale of our stake in Rivoli, we have exited all our Middle East private equity positions in our portfolio with the exception of a hotel investment in Bahrain. Our regional growth equity portfolio has generated a realised net internal rate of return (IRR) in excess of 15 per cent and nearly 2 times multiple from the money we deployed since our launch in 2005,” Al Maskati.
Rebound
The financial crisis and subsequent asset price crashes saw many in the regional private equity industry taking losses on their portfolios for nearly five years. After a long lull, the industry is on a rebound with many successful exits, according to Deloitte’s recent Mena [Middle East and North Africa] Private Equity Confidence Survey.
DIC views that their exits and IRR have been in line with the typical private equity investment cycles. “It is true that global and regional market conditions have required us to extend our hold period, but our realised returns are robust, considering the vintage, and we have met investors’ global standards,” said Al Maskati.
DIC acquired and actively managed a Middle East growth equity portfolio of over $400 million. Since 2011, the private equity firm executed a number of negotiated exits in the Middle East such as the sale of its stake in the Oil & Gas castings and valves manufacturer KEF to Tyco, the sale of Holiday Inn Express hotel properties in Dubai to the Al Mulla Group, and sale of its stake in Rivoli to Swatch Group in a series of transactions.
The company is keen to outdo its regional track record in exits of its international portfolio. Recently there were reports that DIC is looking for buyers for its stake in German packager Mauser which it bought in 2007.
Debt restructuring
“Our international portfolio is actively managed and we are always working to enhance our exit readiness. As any private equity investor we will be keeping these assets until the time and valuation is appropriate to launch an exit”
The firm restructured its $2.2 billion debt last year and is confident of obtaining enough funds through internal cash generation to meet its debt obligation that is due in 2016. DIC’s international portfolio includes other assets such as UK -based engineering group Doncasters acquired in 2005; and German alumina manufacturer Almatis acquired in 2007.
In the last few years the region’s private equity industry faced several structural and economic challenges. DIC itself went through a restructuring and downsizing from its peak with 150 professional staff to 22 with which it currently operates.
The company does not rule out the possibility of new acquisitions in the future once asset sales are completed and its obligations are met. “Despite the challenges we faced over the past few years, the company has proved that our business model is viable and significant returns could be delivered through private equity investments, particularly in the Middle East where the market is still maturing” said Al Maskati.
