PIF-owned Saudi Egyptian Investment Company acquires 34% stake in Egypt’s BTech

The Saudi Egyptian Investment Company, a wholly owned subsidiary of the kingdom’s Public Investment Fund, acquired a 34 per cent stake in Egypt’s BTech as it looks to expand in the Arab world's most populous country.

SEIC purchased the minority stake in the 25-year-old consumer electronics retailer for an undisclosed sum from Development Partners International, an Africa-focused investment company based in the UK.

It is one of SEIC’s first investments after acquiring minority stakes in August in four companies listed on the Egyptian Stock Exchange for about $1.3 billion.

SEIC will appoint two members to the company's board, BTech founder and chief executive Mahmoud Khattab told The National.

The acquisition will help BTech accelerate its growth strategy and digitisation efforts, while scaling new business verticals and existing core operations, the retailer said in a statement on Monday.

"In recent years, we have achieved significant milestones, rapidly expanded our e-commerce business and grew our store footprint, distribution and service centres, while also enhancing our digital capabilities,” Mr Khattab said.

“With SEIC as an investor, we aim to continue to progress our ambitions.”

BTech has grown into “one of Egypt’s largest and fastest-growing e-commerce players and the country’s leading omnichannel retailing platform, making it a promising strategic partner for the Saudi Egyptian Investment Company”, SEIC said in a LinkedIn post.

Revenue in Egypt’s e-commerce market is projected to reach $7.74bn this year and increase at a compound annual growth rate of about 19 per cent between 2022 and 2025, according to market and consumer data platform Statista.

DPI’s fund African Development Partners II had acquired the stake in BTech in July 2016 for about $35 million at the time.

The remaining 66 per cent of BTech is owned by the Khattab family’s BT Holding.

Founded in 1997, BTech has 143 stores across Egypt, selling consumer electronics and home appliances. About 20 per cent of BTech’s revenue comes from online sales.

The company also provides consumer financing solutions through its MiniCash service and in August launched its business-to-business marketplace deel. The app offers small and medium businesses product listing, inventory management, delivery, marketing solutions, analytical tools and training courses.

BTech has expanded both online and offline, doubling the number of stores since the DPI investment in 2016. The home-grown chain grew its revenue fivefold and net income tenfold during that period, it said.

It has invested more than 400m Egyptian pounds ($20.3m) in digital transformation over the past three years and plans to invest an additional 1bn pounds in the coming three to four years, Mr Khattab said. BTech is working with management consulting company McKinsey as it embarks on this new journey.

Along with digital expansion, BTech plans to open 10 more stores by the end of this year.

“We believe that e-commerce will never replace the traditional retailer. Both are growing and both are helping each other in a very good way," Mr Khattab said.

The PIF is one of the world’s largest sovereign wealth funds, with around $620bn in assets under management. It is diversifying its investment portfolio as it seeks to grow its asset base to about $1 trillion by 2025.

SEIC said it would invest in several vital sectors in Egypt, including infrastructure, property development, health care, financial services, food and agriculture, manufacturing and pharmaceuticals.

The four publicly listed companies in Egypt that SEIC bought minority stakes in are Abu Qir Fertilisers and Chemical Industries, Alexandria Container and Cargo Handling, E-Finance for Financial and Digital Investments, and Misr Fertilisers Production Company.