Gulf Capital, one of the leading alternative investment firms in the Middle East, announced that it has raised US$175 million (AED 644 million) for the first closing of its second credit and mezzanine fund, Gulf Credit Opportunities Fund II.
The Fund targets a final close of US$250 million (AED 925 million), with a hard cap of US$300 million (AED 1.11 billion).
Dr. Karim El Solh, Chief Executive Officer of Gulf Capital, said: “I am particularly delighted by the size of the first closing of our second credit fund as well as by the quality of the regional and global institutional investors that are coming in this first closing. Our first credit fund has delivered a high cash yield and attractive returns and has positioned Gulf Capital as the leading credit and mezzanine asset manager in the Middle East.”
“With this latest closing, Gulf Capital is entering 2016 particularly well-funded with ten funds and investments vehicles across its credit, private equity and real estate divisions. We are fortunate to be in such a strong financial position as one of the best funded investment companies in the Middle East and look forward to securing more investments across the region,” he added.
Fund II will provide bespoke financing solutions to mid-market companies and private equity sponsors operating in the Middle East, North Africa, Turkey and Sub-Saharan Africa. Gulf Credit Partners, the managers of Gulf Capital’s credit funds, will be investing in companies that generate revenues between $25 million and $250 million and operate in growth sectors that are non-cyclical in nature, have experienced management teams, a good track record of financial performance and robust cash flow generation with strong corporate governance practices.
Walid Cherif, Managing Director and Head of Gulf Credit Partners, the credit and mezzanine division of Gulf Capital which manages the both GC Credit Opportunities Funds, said: “The mid-market is still facing financing challenges in a region where the SME sector plays a critical role in the growth and stability of the economy. Asset-light companies which operate in non-cyclical growth sectors, still find it difficult to obtain financing from the traditional debt markets, even when they have experienced management teams, a good track record of financial performance, a robust cash flow generation and strong corporate governance practices.”
“Our funds are able to fill this market gap and provide growth capital, acquisition finance and buyouts through a variety of debt instruments, including mezzanine finance, preferred equity, convertibles and senior debt for companies operating in the Middle East, Turkey and Sub-Saharan Africa region,” he added.
The new Fund is expected to make 10 to 12 investments of US$ 15 million to US$ 30 million each throughout its ten-year life and to generate significant cash yield and overall returns.
The company’s first credit and mezzanine fund, which was closed in 2013 at around US$ 221 million (AED 815 million ), is currently over 90% invested. Gulf Credit Opportunities Fund I has financed eight companies in the healthcare, education, power, oil and gas, risk management, facilities management and telecoms sectors. Fund I has recently exited one of its investments, realising a 33% Internal Rate of Return (IRR) and is on track to achieve its overall 15% IRR target.
Gulf Capital will be seeding this new credit fund and will become the largest limited partner, to align the interests of its shareholders and fund managers with those of its institutional investors which represent leading regional Sovereign Wealth Funds (SWFs), Insurance companies, Foundations and International Financial Institutions.