Qatar First Bank L.L.C. (Public) “QFB”, a leading Shari’ah compliant bank based in Qatar and listed on the Qatar Stock Exchange (QSE), has sold a partial stake in one of the most successful leading healthcare platforms in Abu Dhabi, Dubai, Sharjah and Kuwait.
Commenting on the transaction, QFB’s CEO, Ziad Makkawi, said:
“QFB’s successful realization of its investment shows the Bank’s capability in private equity and its ability to manage profitably exit investments in a difficult economic environment”.
Ihab Asali, Managing Partner – Alternative Investments at QFB, said:
“This has been a very good investment for the Bank, and we still hold shares in the group to benefit from future upside. We are delighted to have contributed to their continuing success, which surely strengthened their expansion plans and capabilities in providing global reach and best practices within the healthcare industry”.
QFB sold 44% of its shares in this investment generating more than 2x cash on cash returns on the exited stake.
A spokesperson on behalf of the group said:
“QFB has been a great partner for our group and backed us in building the foundations for our next phase of growth across the GCC and selected cities in South East Asia. We are delighted to continue having QFB as shareholders and we look forward for further successes”.
During 2016, the global investment market continued to go through major challenges. This resulted in a downward revision of the valuations of some of the Bank’s investments across several markets. Specifically, QFB’s private equity portfolio, which had consistently generated significant returns over the last 6 years, has been negatively impacted by country-specific events in both Turkey and the UK.
“Despite the downward revision in 2016, the current valuation for both of our investments in Turkey, Memorial Healthcare Group (“Memorial”) and English Home, is still 47% higher than their acquisition price; both companies continue to grow in sales and profitability and occupy leading positions in their respective industries.”
The decrease in the valuation of QFB’s Turkish investments reflects the effect of the macroeconomic and extraordinary factors that the country has faced during 2016. The main impact came from the depreciation of the Turkish Lira against the US Dollar and the decrease in number of international visitors which affected the healthcare and retail sectors.
On the other hand, the Bank’s investments in the UK were also affected by the significant depreciation of the Pound Sterling against the US Dollar and the weakening of the real estate sector, principally as a result of the Brexit referendum.
Asali added: “Despite the depreciation in currency, our UK investment, luxury jeweler David Morris, is still significantly above our acquisition cost, both in Pounds and Riyals. This investment had strong performance during 2016.”
QFB’s current portfolio of alternative investments are within various sectors including healthcare, energy, consumer finance, real estate, industrial, retail, luxury, food & beverage; spread across diversified geographies. Since its incorporation, QFB’s Alternative Investment division has closed a number of successful transactions across Qatar, Turkey, the United Kingdom, Africa and the MENA region with carrying value of total equity investments (including subsidiaries) of QAR 1.73 billion (30 June 2016). Over the years, the team has successfully exited six investments, in addition to three partial exits, and generated healthy returns to Shareholders with an average IRR of 36%.
Makkawi concluded: “QFB’s strategy focuses on our role as a trusted advisor, a gateway for investors who wish to tap into innovative, Shari’ah compliant, investment opportunities in local, regional and global markets. During 2017, we will ccontinue to diversify our portfolio and focus on business services, healthcare, education and real estate sectors while expanding into new geographical markets regionally and internationally. We are well positioned to provide capital solutions to growing businesses in the region that will benefit from our experience and network. We look to partner with likeminded investors who share our philosophy of creating value by investing in market leaders where one can follow a disciplined approach and add operational value to portfolio companies. Additionally, we will continue to operate according to international best practice and attract third party money from both private and institutional investors.”