RIYADH, 30 March 2006 — Investment bank Swicorp is looking to add to the $1 billion in Saudi private equity funds it has raised for Middle Eastern investments and is working on several share issues for local firms this year.
The firm plans to invest its $1 billion portfolio in the Gulf Arab region, Algeria, Iran, and Sudan, executive partner Daniel Schenker told Reuters in an interview.
Swicorp, which is moving its headquarters from Geneva to Riyadh, also expects to inject up to $300 million into existing funds within weeks and to launch new private equity funds. “We plan to launch other private equity funds, but not immediately as we have a lot of things to handle at this stage,” he said.
Schenker said the firm, which received an investment banking license from the Saudi Capital Market Authority on Monday, will seek to meet growing demand for initial public offerings and rights issues from Saudi companies.
Share issues are expected to surge this year as the government encourages firms to list and absorb some the liquidity that drove the speculative rally in the stock market for much of last year.
Launched in 1987, Swicorp initially focused on helping Saudi investors venture into Europe and North America and Western firms invest in emerging markets.
“Now we are getting more demands from Saudi firms and investors either seeking to go public or to invest in long-term projects,” Schenker said. The company has offices in Tunisia and Jeddah. It will soon expand into the Saudi oil city of Dammam and then into Dubai by 2007.
Swicorp has started working on a SR1.5 billion ($400 million) rights issue to be launched in late 2006 by a Saudi firm, Schenker said, declining to name the company.
Swicorp is acting as a financial adviser for the listing of Saudi real estate developer Jbel Omar, which has announced plans to raise SR2.01 billion by floating a 30 percent stake this year.
It has also teamed up with Saudi Hollandi Bank on the second quarter flotation of a 30 percent stake in Saudi firm Red Sea Housing, which belongs to the Dabbagh Group of Companies. Schenker said the IPO could be priced at 15 to 20 earnings.
Swicorp is also handling another IPO for a Saudi firm, smaller than Red Sea Housing, which Schenker declined to identify.
Schenker said the firm had been granted around half a dozen mandates for pre-initial offerings worth billions of riyals.
“They are greenfield projects as well as companies with existing operations looking for immediate listing, but it’s not necessarily short-term, we are looking at 18 months from now.”
Swicorp also expects to add up to $300 million to three funds it manages. The cash will be invested in Saudi Arabia and the region.
He said the firm would soon announce its first investment projects for its $850 million Joussour fund, the firm’s largest, which focuses on petrochemicals and energy-intensive projects in the kingdom and in other Gulf countries.
The firm expects that fund to reach $1 billion within two weeks. The firm has closed some projects in its $100 million Emerginvest fund, which focuses on Algeria, Iran and Sudan, he said, without giving details.
The company is also managing a $60 million fund for Saudi Savola Group. Schenker said that would be invested in non-core activities of the food giant, which is pushing into real estate, petrochemicals and information technology. The firm said it expects the Savola fund to reach $200 million.