Mezzan buys into KSA’s Al Safi for $25m

28-Jun-2016 - Last updated on 29-Jun-2016 at 15:06 GMT

Related tags United arab emirates Saudi arabia Kuwait

Kuwaiti food conglomerate Mezzan Holding will buy into Saudi Arabia’s Al Safi Food for up to US$25m, while EIP, one of the buyers of Diamond Meat Processing, eyes further purchases.

Mezzan Holding announced it will spend between US$23m and US$25.5m on a 70% stake in Al Safi, with the firm’s current sole owner Al Faisaliah Group retaining 30% of the company. Mezzan Holding and Al Faisaliah would then operate Al Safi as a joint venture.

The purchase would allow the Kuwaiti firm to manufacture and sell its food products in Saudi Arabia, along with Al Faisaliah’s existing range of food products.

Targeting Saudi’s growth

“Saudi Arabia represents a key growth market for our company, and Al Faisaliah Group is a strong, reputable company that we look forward to partner with to grow our Saudi business,” said Mohammed Al Wazzan, vice-chairman of Mezzan Holding.

Mezzan Holding derives more than two-thirds of its revenue from its food businesses, which include manufacturing and distribution of food and beverages, as well as catering and service operations. In its most recent quarterly results, the firm saw revenues rise more than 5% year-on-year to US$184m, but saw net profit fall by just under 5%, to US$17.2m.

Last year the group successfully listed on the Kuwait Stock Exchange, after a long approval process, which saw it become one of the first firms in Kuwait to launch an IPO since the financial crisis of 2008.

Al Faisaliah’s Al Safi Food is one of the group’s food-related businesses – the others include milk producer Al Safi Dairy, and Al Safi Danone, a joint venture with French dairy giant Danone. Al Safi Food is primarily focused on producing baked goods for retail outlets.

More investment to come

Lebanon’s Emerging Investment Partners (EIP) recently revealed it plans to establish a US$100m direct investment fund, to make investments across the Middle East, with 50% earmarked for purchasing companies in Egypt.

While EIP invests across a number of industries, its two first purchases have been in the food sector. EIP bought Diamond Meat Processing in the UAE with Jordan’s Siniora, after taking 51% of Lebanese hospitality venture The Backyard Hazmieh earlier this year.

Speaking about the Diamond Meat Processing, which operates under the Almasa brand, EIP MD Karim Burhani said: “We have made this investment despite the caution prevailing on the markets due to regional economic, security and political circumstances, and the challenges facing the retail sector in the UAE. We have confidence in the Emirati market, and strongly believe that our partnership with Siniora Jordan will take Almasa to a regional scale.”