Saudi Arabia's Savola Group is reviewing investment priorities, especially new projects, because the global financial turmoil has brought new acquisition opportunities, the firm's top executive said. The company, active mainly in sugar, edible oils and retail, earmarked 18 billion riyals ($4.8 billion) last year to expand in North Africa and Central Asia.
"We are reviewing the priorities amid the current climate," Chief Executive Sami Baroum told Reuters in an interview late on Sunday. "The current conditions are presenting us with opportunities which can never be replaced ... The global turmoil has lowered significantly the value of companies which a year ago were too expensive," he added.
The Jeddah-based company is looking at acquisitions mainly in its core business. "This is what we are thinking about," Baroum said, declining to elaborate. Savola, which owns the Azizia Panda chain of supermarkets in the kingdom, has said it will spend about 60 percent of the 18 billion riyals investment on expanding existing activities such as edible oils, sugar refining and supermarket retailing in countries such as Pakistan and Turkey.
The Saudi firm, the world's largest producer of branded edible oil, bought Turkey's Yudum for $53 million in 2007 and announced plans in July to buy 80 percent of Pakistani edible oil firm, Agro Processors. Yudum controls about 25 percent of the cooking oil market in Turkey and Agro Processors is Pakistan's third largest maker of the commodity. The remaining 40 percent of the planned investment will go into new businesses such as petrochemicals and oil refining.
Savola also has a 13 percent stake in Joussour, a $1 billion petrochemical company it is helping set up with planned investments of $5 billion. Baroum declined to say how the reprioritisation of investments could affect the firm's previous plans. He does not however expect to face any difficulties in financing the company's expansion amid the global financial turmoil.
"We have adequate capacity to raise debt which we have not tapped so far and we can get enough credit facilities to cover all our needs," he said. Savola, whose third-quarter profit fell short of analysts forecasts after rising 4.6 percent, was affected by what Baroum termed as the "collapse" in global prices of palm and colza oils.