Saudi Ministry of Education to showcase innovations at 2025 Geneva International Exhibition    7,523 violators of residency, labor, and border security laws deported in a week    Video contradicts Israeli army account of deadly March 23 strike on Gaza paramedics    Saudi Arabia spends over $241 million to implement de-mining projects in 3 countries    Italy's Meloni government approves controversial security decree expanding police protections and penalties    Egypt submits new Gaza ceasefire and prisoner exchange proposal: Report    'Everything is possible' — Ronaldo focused on titles, not 1,000-goal milestone after Riyadh Derby win    Saudi, US military leaders discuss enhanced defense cooperation in Riyadh    King Salman Global Academy for Arabic Language launches program with Indiana University    Ronaldo brace powers Al Nassr past Al Hilal in Riyadh derby thriller    Ed Sheeran weaves Persian music into new song, Azizam    Al-Jadaan: Crown Prince's directives confirm government's ability to bring back balance to real estate market    Veteran Bollywood actor Manoj Kumar dies at 87    Foreign investors are allowed to engage in real estate business outside Makkah and Madinah Commercial speculation should not be the purpose of real estate transaction    Aubameyang fires Al Qadsiah into King's Cup final with stoppage-time winner over Al Raed    Musk's X is suing India, as Tesla and Starlink plan entry    Tesla sales plunge after backlash against Elon Musk    Danilo Pereira fires Al Ittihad into King's Cup final with dramatic stoppage-time double    Screen time in bed linked to insomnia, study finds    Mexico bans junk food in schools to fight childhood obesity epidemic    Sweet sales surge ahead of Eid as Saudi chocolate imports top 123 million kg in 2024    Bollywood actress vindicated over boyfriend's death after media hounding    Grand Mufti rules against posting prayers and preaching in mosques on social media    King Salman prays for peace and stability for Palestinians in Ramadan message King reaffirms Saudi Arabia's commitment to serving the Two Holy Mosques and pilgrims    Exotic Taif Roses Simulation Performed at Taif Rose Festival    Asian shares mixed Tuesday    Weather Forecast for Tuesday    Saudi Tourism Authority Participates in Arabian Travel Market Exhibition in Dubai    Minister of Industry Announces 50 Investment Opportunities Worth over SAR 96 Billion in Machinery, Equipment Sector    HRH Crown Prince Offers Condolences to Crown Prince of Kuwait on Death of Sheikh Fawaz Salman Abdullah Al-Ali Al-Malek Al-Sabah    HRH Crown Prince Congratulates Santiago Peña on Winning Presidential Election in Paraguay    SDAIA Launches 1st Phase of 'Elevate Program' to Train 1,000 Women on Data, AI    41 Saudi Citizens and 171 Others from Brotherly and Friendly Countries Arrive in Saudi Arabia from Sudan    Saudi Arabia Hosts 1st Meeting of Arab Authorities Controlling Medicines    General Directorate of Narcotics Control Foils Attempt to Smuggle over 5 Million Amphetamine Pills    NAVI Javelins Crowned as Champions of Women's Counter-Strike: Global Offensive (CS:GO) Competitions    Saudi Karate Team Wins Four Medals in World Youth League Championship    Third Edition of FIFA Forward Program Kicks off in Riyadh    Evacuated from Sudan, 187 Nationals from Several Countries Arrive in Jeddah    SPA Documents Thajjud Prayer at Prophet's Mosque in Madinah    SFDA Recommends to Test Blood Sugar at Home Two or Three Hours after Meals    SFDA Offers Various Recommendations for Safe Food Frying    SFDA Provides Five Tips for Using Home Blood Pressure Monitor    SFDA: Instant Soup Contains Large Amounts of Salt    Mawani: New shipping service to connect Jubail Commercial Port to 11 global ports    Custodian of the Two Holy Mosques Delivers Speech to Pilgrims, Citizens, Residents and Muslims around the World    Sheikh Al-Issa in Arafah's Sermon: Allaah Blessed You by Making It Easy for You to Carry out This Obligation. Thus, Ensure Following the Guidance of Your Prophet    Custodian of the Two Holy Mosques addresses citizens and all Muslims on the occasion of the Holy month of Ramadan    







Thank you for reporting!
This image will be automatically disabled when it gets reported by several people.



Gulf private equity facing family company challenge
Published in The Saudi Gazette on 13 - 05 - 2009

Private equity houses are eyeing acquisitions in the Gulf Arab region, but deal-making is challenging in a region dominated by family owned conglomerates, bankers said.
The Gulf Arab region has been a hunting ground for private equity firms raising oil money from rich individuals and institutions to finance deals elsewhere.
But private equity firms are now looking to snap up companies in the region starved of capital by the global financial crisis. US-based Kohlberg Kravis Roberts & on Monday said it has set up shop in Dubai to do deals in the Middle East and North Africa.
Businesses in the region are mostly owned by state-affiliated institutions or sprawling families, in which large numbers of grandsons, cousins and nephews can have a say in what happens to the company. “To be able to mediate through and wade through those different voices, it's not straight forward and does require certain skills and understanding of cultural sensitivities and understanding of the dynamics of each family,” said Azmat Taufique, co-head of private equity in the Gulf Arab region at investment house Investcorp.
He said it was key to identify the influential family members who could make decisions. Taufique was on the team for the Investcorp-led acquisition of a 70 percent stake in Saudi gold and jewelry maker L'azurde in March. The company was controlled by the Al Othaim family.
Dealmakers said they have largely given up seeking majority control, as founding entrepreneurs often remain emotionally attached to the company which they see as means to preserve wealth for following generations.
Even without majority control, buyers can bring in governance requirements, can limit dividend payments to owners and can veto decisions to raise capital or debt through their seats on the board.
“Family run businesses aren't used to having somebody from the outside dictating those,” said Squires.
To overcome the trust issue, investment houses such as Arcapita and Investcorp are seeking buyout opportunities among their regional investor base, where they have long-established relationships.
To survive and grow, family firms must tame the “restless entrepreneur” syndrome and develop and enact a long-term strategy to manage both the family and the business,.
“Dissent is very hard in our region for family members, but if you bring in a trusted external partner you can begin to have a debate around the family in the context of the business that can be more constructive and less emotional,” said Taufique.
Besides acting as a catalyst to overcome inter-generational conflicts, private equity firms hope the pioneers who built businesses from scratch will now recognize the need to hire in their capital markets and mergers and acquisitions skills.
A harder argument to win is convincing a founder to let go of his cherished company, or parts of it, when he doesn't know who will replace the private equity company when it cashes in its investment after a few years. “A listing is in most cases the preferred option because then shares will be held over a wide array of investors and the first owners can retain significant control.
But from the private equity point of view, a sale to strategic buyer is more lucrative, as they could realize a premium for the control right, bankers said.


Clic here to read the story from its source.