Foodco opens foodservice subsidiary

Foodco plans to supply restaurants, hotels and other retailers in the GCC’s hospitality sector with its new subsidiary.

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By  Roger Field Published  December 13, 2005

The Abu Dhabi National Foodstuff Company (Foodco), one of the UAE’s largest food distributors, has established a new subsidiary worth AED33 million, to supply restaurants, hotels and other retailers in the GCC’s hospitality sector. The board of Foodco will hold a 50% stake in the new company, and the remaining 50% of the shares will be offered to the company’s existing shareholders. “The new operations are projected to generate an additional turnover of between 35% to 39% annually that will add to our…bottom line,” said Ahmed bin Ali Khalfan Al Dhahery, Foodco’s managing director and member of the board of directors. “We hope this will bring further improvement to our profitability. The newly established subsidiary will create synergy with our already established operations in the foodstuff sector.” Shariq Azhar, an investment banker who works closely with Foodco’s majority owner, Ali & Sons Group, told Retail News Middle East that Foodco is already in negotiations with “a couple of global chains” on prospective projects for the new subsidiary. He added that Foodco expects the new business to grow rapidly, and that it is likely to develop into a number of subsidiaries supplying the foodservice sector right across the Middle East. “We expect to see a lot of growth. It really depends on market conditions in a few years time,” he said. “It may be that the market is saturated in certain locations. Of course, we are looking to invest only in growth markets for the specific type of things we are doing.” It is planned that after three years, the new subsidiary will transform into a public shareholder company and the price of one stock will be between AED5 and AED6. Foodco has assigned two of its existing employees to manage the new company and is planning to recruit three more people soon.

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