Arcapita completes oil and gas play

The private equity arm of the former First Islamic Investment Bank has paid $200m for a Norwegian oil and gas technology business.

London, Atlanta and Bahrain-based Arcapita, the private equity arm of investment bank Arcapita Bank, has along with management acquired a 100 percent interest in Roxar, a provider of technology services and equipment to the oil and gas industry.
The $200 million (€168 million) transaction included senior and mezzanine financing of $91 million and a $25 million working capital facility, both provided by Royal Bank of Scotland and Barclays Bank.

There are few major new discoveries in this sector, so recovery and getting more out of existing reservoirs will be the technology of the future in oil and gas.

Mounzer Nasr, executive director, Arcapita

Mounzer Nasr, executive director of Arcapita and head of corporate investment in Europe, told PEO that the investment was made from the bank’s balance sheet, as with all of its corporate investments in Europe. The firm launched Arcapita Ventures, a $200 million investment fund focused on growth capital investments in the US, last October.
Arcapita acquired Roxar from Lisme, a holding company owned by US private equity firm Lime Rock Partners and Smedvig, a Norwegian offshore drilling contractor. Lisme paid an undisclosed sum to purchase Roxar in February 2003.
Roxar’s senior management team, headed by CEO Sandy Esslemont, will retain a 1.2 percent shareholding following completion of the transaction.
Nasr said the Roxar acquisition is Arcapita’s largest European private equity deal to date. The firm previously invested in Vogica, a French retailer and wholesaler of bathrooms and kitchens, in October 2004.
Arcapita began looking at investments in the oil and gas sector around 18 months ago, according to Nasr. “We began looking particularly at technology companies in the sector,” he said. “John Madden [a principal in the London office], who has an oil and gas background from Lehman Brothers, was in charge of the initiative and he heard from Deutsche Bank that they were selling Roxar.”

Nasr: looking at more investments in the oil and gas sector

Nasr said that Roxar can be a leading player in the sector as concerns regarding the availability of natural resources grows. “There are few major new discoveries in this sector, so recovery and getting more out of existing reservoirs will be the technology of the future in oil and gas,” he said. Nasr added that Arcapita will continue to look at further investments in the sector, including complementary acquisitions for Roxar.
Stavanger, Norway-headquartered Roxar supplies products and services for national and international oil companies including Saudi Aramco, ExxonMobil, BP, Norsk Hydro, PDVSA, Petronas, ConocoPhilips, Shell and Statoil. Founded in May 1999, the firm generated revenues of approximately $120 million in 2005.
Bahrain-based First Islamic Investment Bank, along with subsidiaries Crescent Capital Investments in the US and Crescent Capital Investments (Europe) in Europe officially changed their name to Arcapita Bank and Arcapita respectively in February 2005.