Dubai: The UAE’s merger and acquisition scene has got off to a solid start to the year with First Equity Partners (FEP) acquiring a 50 per cent stake — valued at Dh500 million — in Fujairah-based construction materials firm Oryx Industries. Raising the stake further over the “next few months” would be done by bringing on board potential investors, according to a top official with FEP. (Oryx Industries has been valued at Dh1 billion.)
FEP brought in other investors for the 50 per cent purchase, including Shaikh Abdullah Al Sharqi, who is the Chairman of Oryx Industries, State Holding of Qatar, Saudi-based Rawabi Holding and Kuwait’s Al Waab Real Estate (Kuwait).
The potential in the UAE and other markets for the construction sector made the timing of the deal an opportune one, said Qaif Al Maskati, Member of the Board and Managing Director at First Equity Partners, which was formed in 2011. The firm, incidentally, has owned a small shareholding in Oryx for some time now, before raising it to 50 per cent now. It also had other investment interests in the construction space, though the one with Oryx is the “first of this transaction size”.
“We do believe the huge pipeline of projects supported by the two world-class events in Dubai and Qatar [the World Expo 2020 and the 2022 World Cup respectively] makes an exposure in the construction sector a very attractive proposition,” said Al Maskati. “Also, there are many delayed projects where work is being revived and that too would offer opportunities for suppliers such as Oryx.
“There is no limit whatsoever on the commitments that Gulf states are putting into infrastructure, and that too on a world-class scale.”
According to Majdi Khalaf, Vice-Chairman and Group CEO of ORYX Industries, “This is a management buyout where some of the original shareholders remain while others decided to sell. We are looking to creating a solid track record of five years of operations before we think of an IPO (initial public offering.)
Prime sourcing market
On ready-mix concrete, projects in the UAE represent the biggest end-users. But if the company’s aggregated production was considered, Qatar remains the prime sourcing market. Oryx operates five production sites in Fujairah.
Getting an exposure in Saudi Arabia is not an immediate priority. “We are hesitant to get into the kingdom on our own — it’s better attempted through a local investor/partner.”
On whether new shareholders would come in at a higher entry price into Oryx, Al Maskati said: “That’s not something we plan to reveal now; our focus will be to operate Oryx in an efficient way and thus raise its corporate value.”
On its part, Oryx too had used acquisitions to solidify its growth prospects — “In less than two years, Oryx has become a leading manufacturer of quarried materials at Fujairah — successfully concluding two acquisitions in 2014,” said Khalaf, Vice-Chairman and Group CEO of ORYX Industries. “Following the two acquisitions, Oryx Industrial Group expanded the lands it owns to more than 1.7 million square metres and commenced the upgrade of production lines in these quarries (exceeding 8 million tonnes of quarried products annually).
“Fulfilling the upgrade processes, expected to complete by the end of the third quarter, Oryx will be controlling around 20 per cent of Fujairah’s gross exports of quarried products.”
