Deals – January 2009

Healthcare play * Intel invests in three Chinese companies * Blackstone partners with Korean pension fund * Saudi firm sells contracting company * Malaysian oil and gas gets $70m boost

Healthcare play
Ithmar Capital, which intends to launch a $1 billion private equity fund in the first quarter of 2009, is presently focused on Enaya, a platform company that will provide healthcare services across the UAE.

The plan is to make newly-established Enaya a “network healthcare company” through mergers and acquisitions of other healthcare providers in the country, Faisal Belhoul, founder and managing partner of Ithmar, told PEI Asia.

Enaya’s funding is led by Ithmar Capital and several strategic co-investors, which according to Ithmar include government organisations, financial institutions and family business groups. The initial investment for Enaya has been made out of the $250 million Ithmar Capital Fund II. Additional capital contributions are being made by hospital owners that are merging with Enaya.

Belhoul said that to be a successful business, Enaya will need to grow significantly in order to achieve economies of scale and to draw top medical practitioners.

Healthcare has always been a strategic focus sector for Ithmar, said Belhoul: “The area we saw needed most attention is healthcare services – mainly the delivery of healthcare services. We see that theGCC has been spending a lot ofmoney on treating its patients abroad as there are deficiencies in the services being offered in the region,” he added.

Enaya has already put together partnerships with leading healthcare groups in the country, and is in the process of finalising details with other key partners.

Belhoul said that the amount of capital that Ithmar will put into the initiative would ultimately be determined by the scale of the business. The firm expects the cost of follow-on acquisitions to run to about $1.2 billion, of which $800 million will be funded in equity commitments and $400 million through debt. At present, a first tranche of $400 million is being funded by the Ithmar-led syndicate. The second tranche will likely be funded either by existing investors or through an IPO of the company.

“We want to be a GCC leader,” said Belhoul, adding that Enaya would expand country by country. “We are very confident given the appetite that exists among our investor base. We believe that current market conditions represent the best investment opportunities given the scarcity of credit and the need for creative solutions to be led by equity investors.”

Ithmar focuses on investments in healthcare, oil and gas, construction and education.

Intel invests in three Chinese companies
Semiconductor giant Intel’s venture capital wing has invested $20 million in thin film solar company Trony Solar Holdings. Intel also agreed to invest an undisclosed sum into technology company NP Holdings, which produces electricity systems.

NP and Trony are both cleantech companies, which will decrease dependency on carbon-based energy generation, according to Intel.

Intel has made a third investment of an undisclosed amount in healthcare-focused software companyViewhigh.

InApril, the group closed its second China technology fund on $500 million. The fund targets investments in media, technology, telecommunications, wireless broadband and clean technology. Its $200 million predecessor fund was set up in 2005. Founded in 1991, Intel has invested more than $7.5 billion across 45 countries. It also manages other region-specific funds targeting the Middle East, Turkey, India and Brazil.

Blackstone partners with Korean pension fund
The Blackstone Group has agreed to invest up to $2 billion in undervalued stocks, bonds and real estate in the Korean financial market, alongside Seoul-based National Pension Service.

The pension fund will invest at least the same amount, although the timeframe has not yet been discussed, said the pension fund’s head of global investments Daehhwan Kwag in an interview.

Last month, the pension fund agreed to two similar deals with private equity firm MBK Partners and distressed specialist Oaktree Capital Management. In its partnership with MBK to explore investment opportunities in Korea, MBK will invest up to $2 billion in the partnership on a deal-by-deal basis.

Presently, the National Pension Service allocates 2.9 percent of total assets to alternatives. Its maximum allocation to the asset class is 10 percent and it intends to increase its allocation to private equity funds in the next five years, Kwag said in March.

Saudi firm sells contracting company
Riyadh-based Amwal Al Khaleej has sold a 49 percent stake in Dubai Contracting to private holding company Bright Start. No financial details were disclosed.

Amwal Al Khaleej bought the 49 percent stake in the company in November 2007 for an undisclosed sum. The investment was made out ofAmwal II, a SAR1 billion ($267 million) fund, which closed in June 2007. Dubai Contracting has completed mixed use projects in the UAE such as theWorld Trade Center Residences and Capricorn Tower.

The Middle East-focused Amwal II acquires sizeable minority stakes in family enterprises to assist in their growth. Amwal Al Khaleej was founded in 2005 and has offices across Riyadh, Dubai and Cairo. It manages about SAR2.5 billion in assets.

Malaysian oil and gas gets $70m boost
Malaysian financial services provider CIMB Group’s private equity arm is forming a $70 million joint venture with a subsidiary of Alam Maritim Resources, an owner and operator of offshore vessels, to invest in the oil and gas industry.

CIMB Private Equity and Venture Capital will hold a 51 percent stake in Alam-PE Holdings, which intends to acquire five vessels to support moderate and deepwater exploration activities offMalaysia in the near term. The group’s Islamic banking and finance franchise is providing a $63 million Sharia-compliant loan to the joint venture to help fund the purchases. The deal will help Alam Maritim expand in the offshore support vessels industry as well as improve its credit rating.