KUWAIT, 28 October 2007 — Global Investment House announced yesterday that its Global Buyout Fund concluded its first investment in Al-Jazeera Steel Product Company, a listed company on Muscat Securities Market.
The company was established in 1997 and is a market leader engaged in the manufacturing and distribution of mild steel black and galvanized round, square tubes and pipes.
Global Buyout Fund, the recently launched buyout fund focused on investing in the GCC and MENA region, subscribed to 63,697,960 equity shares in Al-Jazeera at 0.325 Omani rials which is at 43 percent discount to the market value, resulting in the fund taking a majority stake of 51 percent.
Omar El-Quqa, executive vice president at Global said a meeting held on Oct. 21, 2007 approved the investment by the fund, subject to approval from the Oman Capital Market Authority
He indicated that at the Arab Steel Summit 2007 stressed on the growing role of the steel industry in the MENA countries which will have to increase production to meet the demand arising from the projects in the region.
Several Arab companies located in MENA has reported record figures of crude steel production in 2007 and this trend is likely to continue, he pointed. El-Quqa also added that with over 87 new projects expected to be completed by the year 2010, demand for steel would continue to increase.
Shailesh Dash, senior vice president and head of Private Equity at Global said the company is one of the largest producers of steel pipes in the GCC catering to the local markets while also exporting to Europe and the US. He also added that the company would benefit from the construction and infrastructure spending in GCC expected at over $1 trillion that would support the growth of the company.
Al-Jazeera Steel is currently in the final stages of implementing a new merchant bar mill to offer a broader range of products that would cater to the construction sector.
Dash said “the merchant bar mill is expected to drive the growth of sales in 2008 and beyond which is considered one of the attractive features of this investment”.
Al-Jazeera net profit in the first nine months of this year hit 1.155 million Omani rials as compared to 1.266 million Omani rials in the previous period , representing a decrease of 9 percent. However, the company has witnessed a 6 percent growth in sales from 29.8 million Omani rials to 31.6 million Omani rials and 14 percent in gross profit from 3.8 million Omani rials to 4.4 million Omani rials in the period under review.