Private equity firm splashes $98 million on Redington stake

Redington Gulf sells a 36% stake in its Middle East and Africa business to Bahraini private equity firm Investcorp

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By  Andrew Seymour Published  October 15, 2008

Volume distributor Redington has sold a 36% stake in its Middle East and Africa business to Bahraini private equity firm Investcorp for $98 million.

The move, which values Redington Gulf at $272 million, makes Investcorp a significant minority shareholder in the company. Shares in Redington, listed on the Bombay stock exchange, rallied 8% on the announcement.

Redington says the cash injection will be used to support the growth of its business in the MEA region, as well as providing a war chest for potential acquisitions that may expand its geographic footprint.

Investcorp intends to play an active role in Redington’s corporate development by assisting with takeovers, banking and financial relationships and balance sheet optimisation.

“Investcorp’s expertise and brand name in the region will be of very significant help to us over the next few years as we seek to sustain the rapid growth in revenues we have achieved,” explained Raj Shankar, CEO at Redington Gulf.

“Investcorp’s operational expertise in a wide range of relevant industries and situations will help us continue to drive improvements in our company, and its financial relationships and experience will be of great value in broadening our financing options and managing our financial stakeholders,” added Shankar.

Redington Gulf is active in 23 MEA markets and employs almost 600 staff. PCs and printers contribute the largest portion of sales, but its mobile phone business has also been growing, particularly in Africa. The company is bidding to be the first IT distributor to earn revenues of $1 billion from the Middle East and Africa theatre.

Investcorp’s investment is the first that it has made through its $1.1 billion Gulf Opportunity Fund I. Azmat Taufique, managing director and co-head of the Gulf growth capital business at Investcorp, says one of the asset management specialist’s major priorities in the MENA market is to work with mid-sized international players to set up and expand joint ventures in the region.

“Redington Gulf has excellent prospects due to strong underlying demand in the Middle East and Africa, driven in part by the massive investment programmes of Gulf governments in health, education, and infrastructure, as well as the surging African telecoms market,” said Taufique.

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