Spring 2013 Issue
Source: GCC Economic Review (October 2011), IFC (September 2012), A.T. Kearney, * Hussein Elasrag, “The developmental role of SMEs in the Arab countries”, Oman Ministry of Commerce and Industry, UAE
few tangible assets available to mortgage but with high margins and limited debt can struggle to receive bank financing despite potentially being a good investment. Similarly, a corporate seeking to invest in earnings-enhancing capex that does not involve making assets available to pledge to banks can find limited appetite from regional lenders. A cash flow investor can look favourably at and analyse the future value of these investments. For PE, an investment mixing debt with equity has the potential to generate a significantly higher IRR than one using only equity. This should matter to their LPs. Gulf Capital’s solution Gulf Capital Credit Partners has established a UAE-based USD 300million regional credit fund focusing on bringing much needed liquidity to faster growing companies in the MENA and Turkey regions. Investments from this innovative fund will be carried out using the
more sophisticated cash flow investing approach described above. Investments will therefore be tailored to the specific needs of borrowers.
strengthen its market position and expand its operating footprint in existing and new strategic markets.
This bespoke approach to direct lending to SMEs provides them with the flexibility they require. The final maturity and amortisation profile of a loan can be structured to take into account a company’s cash flow generation, especially in the first few years of its business plan when preserving cash to grow the business is vital.
Orion Group, a company providing outsourced facility services in Turkey including cleaning, catering and laundry services, also received a US$20 million investment from Gulf Credit Partners. Proceeds of the investment were used to fund a set of acquisitions, which expand Orion’s presence in their core services in Turkey.
Examples of the fund’s investments include a US$25 million investment in a UAE based company, SES FZCO (SES). SES is a leading provider of temporary and medium term energy solutions that caters to the growing need for power across the Middle East, Africa, and South East Asia region. The financing facility from Gulf Credit Partners provides meaningful growth capital to SES, which will be used to help it
We are very pleased with the success we have encountered during fund raising having secured anchor investments from blue chip regional institutions as well as the IFC. Equally importantly, we look forward to adding more investments to our current portfolio of three companies where we have provided growth financing to businesses across a range of sectors. i
about the author Christopher Baines is the Managing Director and Co-Head of Gulf Credit Partners, an innovative USD 300 million credit business initiative for the MENA and Turkey region. This initiative by Gulf Capital invests in debt products across the whole capital structure, from senior debt to mezzanine and quasi equity instruments. Mr Baines has over 25 years’ experience in international banking, structured lending and investment management acquired in various houses in Europe and the region.
fund based in Bahrain which he established in late 2008. Before moving to the region over three years ago, Mr Baines spent over two decades in banking in London and Paris, mostly at Societe Generale where he held a number of senior roles in structured lending (origination and capital markets) covering the entire spread of credit products with a special focus on sub-investment grade transactions such as LBO finance, mezzanine and high yield.
Prior to joining Gulf Capital early in 2011, Mr Baines was the Managing Director and Head of Investcorp’s USD 300 million MENA mezzanine
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Mr Baines holds an economics degree from the London School of Economics. He has also attended executive courses at the Kellogg School of Management at Northwestern University and at the London Business School.
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