By Lynda Kiernan

Major Middle Eastern private equity firm, Gulf Capital, has acquired 100% of Multibrands Trading Co., one of the largest food and beverage distributor in Saudi Arabia for an undisclosed amount. Founded by Fozan Al-Fozan in 2006, Multibrands has contracts to distribute over fifty brands including Ocean Spray, McCain, and Sweet’N Low across five food and beverage categories and an annual turnover in excess of $100 million.

“This latest transaction, the largest of its kind in its sector, continues Gulf Capital’s strategy of investing in defensive and fast growing sectors across the Gulf. Gulf Capital has built to date a portfolio of defensive investments in resilient and fast growing sectors such as food and beverage, healthcare, education, power, water and FMCG,” said Dr. Karim El Solh, Chief Executive Officer of Gulf in a company statement.

This deal will pave the way for Gulf Capital to engage in the fastest growing non-oil sector within Saudi Arabia which is expected to grow from a current value of $56 billion to a value of $83 billion by 2020 according to Reuters.

“The F&B market in the Kingdom remains under-penetrated, with significant room for growth in the grocery retail outlets and food service retail outlets as well as in the hotels, restaurants and cafés segments,” noted Richard Dallas, Senior Managing Director Private Equity Group at Gulf Capital. “This growth trend is accentuated due to a growing population, rapidly growing tourist arrivals, rising affluence and shifting consumer preference towards convenience variety.”

Gulf Capital, which has been exploring the option of pursuing an initial public offering (IPO) within the next two to three years is one of the largest and most prominent private equity firms in the Middle East. It has raised over $1 billion over the past two years and has earmarked $250 million for investment this year.

The significant drop in oil revenue is driving the region’s private equity sector to expand into agricultural and food investments. This deal follows closely upon Saudi Arabia’s Almarai Group announcing its intention to acquire a majority stake in National Food Products Company (NFPC) of the United Arab Emirates in a deal that could be worth US$1.5 billion. NFPC has invited Almarai to begin a process of due diligence on the potential acquisition which would give Almarai the ability to expand into the UAE market at a time when domestic growth in Saudi Arabia is slowing as oil revenue dries up.