Standard Chartered PE arm scouting deals in Saudi

DUBAI: Standard Chartered's private equity arm is scouting for more deals in Saudi Arabia after buying a minority stake in a Saudi Binladin Group unit for $75 million, its regional private equity head said on Monday.

The investment in Construction Products Holding Co (CPC), the lender's first private equity deal in the Saudi market, will give it a board seat on CPC, the kingdom's largest manufacturer and provider of building materials.

OPEC member Saudi Arabia is seen as an attractive market by large international private equity firms. Carlyle said in April it expects to complete a deal in the kingdom by the end of the year. Another US firm KKR received a license from the regulator to conduct business in Saudi Arabia in June.

"We are very bullish on Saudi Arabia. If you look at government spending and a whole lot of other macro-economic factors, it's the most interesting market post the Arab Spring," Taimoor Labib, Stanchart's private equity head for the Middle East and North Africa told Reuters on Monday.

The London-based bank said it was looking for more deals in the real estate sector in the kingdom, where billions of dollars of spending is planned to boost infrastructure and provide housing for the Gulf state's growing population.

Labib said future deals could also be in in sectors such as the retail, consumer and food and beverage industries as the emerging markets-focused lender bids to benefit from existing banking relationships in the region.

Standard Chartered completed a $75 million mezzanine investment in Bahrain-based Jawad Group, in its first Gulf private equity transaction, earlier this year.

Labib said he expects to see more private equity deals in the fourth quarter of the year. Deal activity in the Middle East has plunged in the last two years, with investors backing out from capital calls and sellers demanding higher prices.

"Q4 is going to be a big quarter for everyone. There are companies to be sold and some good investments to be made, all of which have been put on hold due to the political situation earlier in the year."

The Middle East and North Africa have been roiled by political unrest that saw regimes toppled in Tunisia and Egypt, civil war in Libya and violence in Syria. The turmoil also rattled the Gulf Arab region.

CPC expects to use the proceeds of the investment for its expansion purposes, a statement from Standard Chartered said.

Saudi Binladin Group last week received a contract from Saudi billionaire Prince Alwaleed bin Talal to build the world's largest tower in Jeddah.

Standard Chartered's private equity arm has invested about $3.5 billion in over 65 companies throughout Asia, Africa and the Middle East since 2002.

Copyright Reuters, 2010