GrowthGate, a growth investment company operating in the GCC markets and the wider MENA region, has realised its investment in Roots Steel International with the signing of a definitive sale agreement. GrowthGate sold its minority stake in RSI to a consortium of majority shareholders realizing a return in excess of 3x.
GrowthGate, a growth investment company operating in the GCC markets and the wider MENA region, today announced the exit of its investment in Roots Steel International (RSI) with the signing of the definitive sale agreement. GrowthGate sold its minority stake in RSI to a consortium of majority shareholders. This was the first exit for GrowthGate amongst its Saudi investments. GrowthGate has realized on this exit a record return in excess of 3x.
GrowthGate, which was established in late 2007, has been focused on the middle-market segment principally in the GCC, and other select markets of the Middle East. Its investment strategy emphasizes injecting growth-equity capital into service-orientated, assets-light, profitable companies with the aim of scaling-up their operations and footprint region-wide. Acquiring non-controlling stakes, setting expansion strategies and staunchly backing bold and visionary founder-managers has been GrowthGate’s modus operandi since inception.
GrowthGate invested in RSI in 2010 having helped carve out this business entity from its parent company in Saudi in an astutely crafted financial engineering deal. GrowthGate has assisted RSI in expanding its operations and markets via non-organic growth initiatives including the acquisition of Ginco Steel LLC and Polyco Limited Co LLC in 2011, which opened the wider UAE market and further diversified RSI’ business. GrowthGate has further supported the strategic alliance between RSI and Zhejiang Jinggong Construction Industry Group, a leader in design, manufacture and installation of building steel structures in China, which was responsible for completing the matching projects for 2008 Beijing Olympic Games as well as Shanghai Global Finance Center, and other projects in Japan and Nigeria. RSI has recorded revenues of SAR153.5m in 2012 and is expected to surpass its past performance in 2013 with a backlog of projects in excess of SAR1.74 billion over the coming three years. RSI presently has plants and operations in Saudi, UAE, Syria and Egypt.
Commenting on the exit, Karim A. Souaid, Managing Partner of GrowthGate, said: “GrowthGate’s partnership with RSI’s core shareholders and management has been most valuable for propelling the company from a local player into a regional challenger. RSI has established a leading position in steel fabrication in record time, using state-of-the art designs, high-end execution and superior delivery of intricate structures for large-scale projects across the region. RSI has a dynamic management team, an excellent market position, and attractive growth prospects. We wish the RSI team much success as they start the next chapter in the company’s history.”
Mr. Mazen Kabbara, Managing Director of RSI, stated: “We are delighted to have partnered with GrowthGate which has supported RSI through a key phase of growth during which our revenues have almost trebled. GrowthGate has supported us in our expansion plans as we have developed the business across the MENA region. Their understanding of our business both from an operational and strategic perspective has been invaluable to the company and fundamental to the growth and success we have enjoyed. We are proud of our past achievements and equally excited about future growth opportunities.”
About GrowthGate Capital Corporation
GrowthGate Capital Corporation is a private equity company targeting mid-sized businesses in the Middle East and North Africa region. The firm adopts a buy-and-build strategy, directly acquiring sizeable equity stakes in established companies. GrowthGate works closely with management bringing financial, operational and strategic expertise to help drive superior performance. GrowthGate possesses a deep understanding of, and a particular focus on, the UAE, Saudi Arabia, Jordan and Morocco. It partners with talented management teams to help scale their organisations, extend regional and global reach, and further develop their businesses. All the portfolio companies are in the top three of their sector and geography.
GrowthGate has invested in a number of sectors including waste management and environmental services, animation, entertainment and digital content, logistics and transport, private aviation, building materials and construction services, food processing and catering services, and iris recognition technology. GrowthGate actively partners with its portfolio companies to help accelerate growth and build strong relationships based on integrity, vision and trust.
Heather Salmond, Partner, Brunswick Group