Abu Dhabi's Gulf Capital says 2025 will be the 'exit year'

Abu Dhabi-based private equity company Gulf Capital plans to sell as many as 11 of its investments within the next 18 months ahead of a new cycle of acquisitions, its chief executive has said.

The company, backed by sovereign investors in the Gulf and Asia, has already sold one company this year and is in discussions to sell five more assets – primarily from its private equity and real estate portfolio – by the first half of next year, Karim El Solh told The National in an interview in Abu Dhabi.

“We are actually in monetisation mode, and we are preparing the sale of these assets”, he said on the sidelines of the Abu Dhabi Finance Week on Monday.

“Next year is going to be what we call the exit year for us, where we'll have the most exits and the highest distribution in our corporate history to our investor base.”

Gulf Capital's second buyout fund of $533 million is fully monetised, where it has sold all portfolio companies. It is now in the process of evaluating sale options for assets in its third private equity investment vehicle.

In January, the company sold AmCan, the first of its 12 assets in the $750 million third buyout fund. It is now lining up the remaining 11 for sale and is going through multi-round bidding processes for five of them.

“In Q1, we will be announcing these exits coming one after the other … we're going to be selling one or two companies [every quarter],” he said.

The push to monetisation reflects the sustained economic momentum in the region as well as the growth of Gulf Capital’s portfolio companies that on average recorded 32 per cent year on year rise in profit during the first half of this year.

“What's interesting is that the exit environment is also very exciting for private equity, because now you can sell to [other] private equity firms, sell to sovereign wealth funds, to strategic investors and [the IPO] market is also very buoyant and liquid,” Mr El Solh said.

“It's a good time to be invested in private equity because exits are going to come much more frequently in the next few years.”

The company has a large FinTech business which it may float in the equity market rather than sell directly to a strategic investor, he said.

“It is getting to the size and maturity and scale that we could consider an IPO in the future,” he said without naming the company. “We look at what is the best exit venue and [where] do we get a higher price, selling to strategic buyers who pay us control premium or private equity or an IPO.”

While the company's focus remains on closing sale deals, Gulf Capital is also looking to raise $800 million through its fourth buyout fund to begin the new cycle of investments. It expects some of its existing institutional as well as sovereign investors to recycle proceeds of sales into the new fund, which will be likely to reach final close next year, he said.

Gulf Capital, which invests in four core areas of technology, healthcare, business services as well as sustainability, is also considering launching smaller specialised funds to seek investment opportunities in other fast-growing sectors.

“A lot of investors are asking for exposure to specific themes, to specific sectors … not everybody wants the sectors we're investing in, so we may do side vehicles or special theme funds,” he said.

A smaller FinTech fund or an investment vehicle targeting earlier stage companies is among the options, which will be “interesting for a different universe of investors”, he added.

The company, which currently has $2.4 billion in assets under management, is on track to double its asset base by 2028. It has managed to expand the size of its assets with every new fund, and Mr El Solh expects the fourth buyout fund as well as the planned smaller investment vehicles to keep it on track to achieve its AUM targets.

The company which takes controlling stakes in mature, small to mid-size businesses, is looking for deals in markets including the Gulf, the wider Middle East as well in Asia where it has made 15 investments since its inception in 2006.

The ticket size of Gulf Capital’s investment deals usually ranges between $50 million to $100 million, but it has the ability to write much larger cheques in joint investments with some of its sovereign backers, especially from Asia, he said.