Middle Eastern buyout firm seals first deal

GrowthGate, a Middle East-focused private equity firm targeting a $500 million fund, has made its first investment, backing a Dubai-based transport and logistics company.

GrowthGate, a private equity firm targeting the Middle East, has completed its first deal, taking a minority stake in Dubai-based transport and logistics business E-Freight.

Terms of the transaction were not disclosed, but Reuters reported that GrowthGate has taken a 49 percent stake.

According to Reuters, GrowthGate is raising a $300 million buyout fund, although earlier reports have suggested that the firm is targeting as much as $500 million.

Karim Souaid, a leading Lebanese banker, is leading the investment. According to the Middle East Economic Digest, he was previously head of HSBC’s investment banking division in the region.

Souaid told Reuters that GrowthGate’s aim was to create pan-Arab businesses: “The objective is to buy successful local companies and turn them into regional champions. There will be one trademark and one administration, which will lower costs and raise sales and profitability.”

Souaid said he hoped most companies in GrowthGate’s portfolio would eventually be floated on the public market, providing a boost to the economy in the Middle East.

E-Freight is on a strong trajectory of growth. Revenues rose from $23.1 million (€18.0 million) in 2005 to $52.8 million (€41.5 million) in 2006.