Saudi’s Sipchem, Sahara to seek deals in US and Asia after merger

Saleh M. Bahamdan (R), Chief Executive Officer of Sahara Petrochemicals, shakes hands with Abdullah Al-Saadoon, Chief Executive Officer of Sipchem, at the headquarters of Sipchem in Khobar, Saudi Arabia, May 12, 2019. (File/Reuters)
Updated 14 May 2019

Saudi’s Sipchem, Sahara to seek deals in US and Asia after merger

  • The new entity will have combined assets worth more than $5.9 bn, ranking 2nd after SABIC
  • Growth opportunities will be evaluated and prioritized after the combined entity’s management and board are appointed

KHOBAR, Saudi Arabia: Saudi International Petrochemical Co. (Sipchem) and Sahara Petrochemical plan to target acquisitions and joint ventures in the United States and Asia when their merger is completed in order to expand market reach, top executives said.
The new entity, Sahara International Petrochemical Company, will have combined assets worth more than 22 billion riyals ($5.9 billion), ranking second after the kingdom’s biggest petrochemicals firm, Saudi Basic Industries (SABIC).
“Combining Sipchem and Sahara will create an integrated petrochemical leader with an improved competitive position in Saudi Arabia and globally,” said Sahara CEO Saleh Bahamdan, who will also be CEO of the new entity.
“We are looking at opportunities in Asia and US markets for either acquisition or organic growth, JVs, and locally we are also exploring,” said Sipchem CEO Abdullah Al-Saadoon, who will be the new company’s chief operating officer.
Growth opportunities will be evaluated and prioritized after the combined entity’s management and board are appointed, both executives told Reuters in an interview, without giving further details.
Shareholders of the two firms will hold separate meetings on May 16 to vote on the merger in the last step before completion.
The duo called off a tie-up in 2014, citing an inadequate regulatory framework, but revived it in 2018 as consolidation gained momentum in the Saudi corporate sector as part of the government’s Vision 2030 drive to diversify the economy and boost the private sector to create jobs for a young population.
“The transaction comes in line with Vision 2030 goals to build national companies with strong local and international reach in a sector that has been identified as a priority for the future Saudi economy,” said Bahamdan.
The petrochemical sector, which produces chemicals using oil and natural gas as raw materials, is the backbone of the kingdom’s manufacturing sector. Its flagship is SABIC, the world’s fourth largest petrochemical firm, the majority of which was recently acquired by Saudi oil giant Aramco.
Sahara produces basic petrochemicals while Sipchem focuses on more high-value products. The tie-up will expand their product portfolio, increase purchasing power and reduce raw material costs, boosting competitiveness and sustainability.
“The merger between Sipchem and Sahara is expected to create synergies of 175-225 million riyals in recurrent EBITDA (earnings before interest, tax, depreciation and amortization) annually, coming from increased revenue and also optimising cost,” said Saadoon.
The synergies will start in the first year of completing the deal and will be fully realized in three years, Bahamdan said.
The two companies will have a shared services structure, including human resources, IT, finance, maintenance and technical services.
They will also have increased scale for procurement and boost cross-selling through 24 companies and affiliates offering 30 distinct petrochemical products, Bahamdan added.
Both Sipchem and Sahara have the Zamil Group, one of the kingdom’s most prominent family businesses, as a significant shareholder, along with the Saudi Arabian government.


Natixis opens investment banking office in Saudi Arabia

Updated 31 May 2020

Natixis opens investment banking office in Saudi Arabia

  • Western financial institutions have been seeking opportunities in Saudi Arabia

DUBAI: French investment bank Natixis has opened a corporate and investment banking office in Saudi Arabia’s capital Riyadh and appointed former JPMorgan banker Reema Al-Asmari as its chief executive officer, the bank said on Sunday.
Western financial institutions have been seeking opportunities in Saudi Arabia since the government unveiled plans to privatize state assets and introduced reforms to attract foreign capital under its Vision 2030 program to reduce the economy’s dependence on oil.
“By establishing a local presence, Natixis aims to deepen its relationships with its existing clients, including corporates, sovereign wealth funds and financial institutions, and to serve new clients, including family offices,” Natixis said in a statement.
The bank’s office, located in Al Faisaliah Tower, will offer “tailor-made capital markets products and investment banking services.”
Al-Asmari, who joined Natixis last August as an adviser to the bank’s Dubai branch, will continue to report to Simon Eedle, Natixis Corporate & Investment Banking’s regional head for the Middle East.
Eedle said in a statement that the bank’s commitment to the Middle East dated back more than 20 years and he believed its areas of expertise were closely aligned with the needs of clients in the region. “This is very much the case for the Kingdom of Saudi Arabia, notably in the context of Vision 2030,” he said, adding it was a “pivotal time” for the kingdom.