JEDDAH, 11 June 2007 — The Savola Group said yesterday that it planned to invest SR18 billion with partners to expand in the Middle East, North Africa and Central Asia through acquisitions.
“The company can raise half the funds itself and the remaining half will come from partners,” Dr. Sami M. Baroum, CEO, the Savola Group, told a press conference at the Jeddah Hilton’s Qasr Al-Sharq.
“The company is committed to raising part of the funds in compliance with Islamic law,” he said, adding that the group’s healthy financial position drives it to embark on a challenging growth strategy in its existing operations and new investment sectors.
“The Savola Group has a strong balance sheet, leading international presence, seasoned management team coupled with supportive shareholders and sound investment skills to become a diversified strategic and financial holding company focusing on value creation for the group and its shareholders. We intend to acquire stakes in businesses, directly or indirectly with strategic partners in a variety of promising sectors. The current balance sheet can generate SR9 billion matched by a further SR9 billion from strategic partners and co-investors,” he said.
The group has proved consistently its ability to manage and operate a diverse portfolio of businesses. In 2005-06, over 50 percent of the group’s net profits came as a result of partial sale of investments in Al-Marai and real estate interests. “The trend continues,” Baroum said.
“The recent sale of our interests in Egyptian Fertilizer Company (EFC) provided a capital gain of more than SR700 million on sale proceeds of SR1.3 billion. We have shown how we can capitalize on the opportunities that the economic growth in the region offers. We will continue to do so,” he added.
The Savola Group took a 30 percent equity stake in EFC for $113.5 million in 2005 alongside other investors in an investment company vehicle, Citadel Capital Group. Abraaj Capita bought EFC in May 2007 at a total valuation of $1.41 billion.
The group’s board has established a special “Growth projects unit” with the responsibility of developing a compelling growth strategy that employs the group’s investment capacity of SR9 billion. Specifically, its role is to maximize the potential from the group’s core businesses and identify investment opportunities through leveraging its core competencies and existing assets in complementary areas and new business sectors.
“Shareholders and the group’s interests lie in managing a more active investment portfolio. Our future focus will be broader operating businesses and encompass a variety of strategic holdings in carefully selected attractive growing business sectors,” he said.
“We will continue to adhere to the principles that guided us as a group to where we stand today. These include a commitment to seek Islamic financing options wherever possible and to always practice ‘Savola’s balanced way’ of being the most ethical and committed in our behavior and actions as well as being the most innovative in the ways we satisfy our customers and shareholders,” Baroum added.
Lately, the operating businesses have been consolidated into two sectors — foods (edible oils and sugar) and retail (Panda, real estate and plastics), which will result in achievement of synergies among these businesses while allowing the group’s corporate resources to focus on new growth opportunities.
“The group is committed to developing international best practices in all areas of its activities from corporate governance, internal systems and processes to corporate and social responsibility and investor relations,” he said.
In 2006, the Savola Group revenues grew 32 percent to SR9.1 billion, resulting in a net profit of SR1.15 billion against SR1.2 billion in 2005. Operating income for 2006 was SR479 million, an increase of 57 percent on 2005.
One of the major achievements in 2006 was the group’s succees in increasing its paid-up capital from SR1.8 billion to SR3.75 billion through free shares and rights issue. Thee group paid dividends of SR356 million during the year with a consistent trend of distribution for 23 years. The group now has over 162,000 shareholders, 9,500 employees with Saudization percentage of 37 percent.