CEB goes to market to raise extra capital for its regional expansion
Jordan-based Kawar Group is planning to raise nearly $30 million through a share issue to finance the regional expansion of recently-acquired Al-Faris, a publicly-listed group with IT systems integrator CEB within its operation.
CEB, one of only a few listed IT companies in the Middle East and the first to do so on the Jordan Stock Exchange earlier this year, will use the capital raised to go on an aggressive acquisition route to expand its footprint in key regional markets, with Saudi Arabia being the main target.
“We’re also planning to expand and diversify the company’s operations to provide regional consulting and outsourcing services,” says Rudain Kawar, CEO, Kawar Group, a privately-owned, broad-based company, which now owns about 80% of Al-Faris.
The Kawar Group’s business activities include shipping, IT, healthcare and travel.
“We were interested in CEB because we see great potential in the company. Jordan is a very fragmented IT market and CEB as a company that’s been around for more than 25 years, is one of the stronger players there and we intend to build on the CEB brand to address markets, specifically the mid-market sector, throughout the region,” he says.
He sees the expansion taking the companies’ revenues from $10 million a year to more than $70 million in the short term and up to $250 million within five years.
Stage one of the expansion will focus on the Gulf region with stage two, possibly a few years down the line, looking for opportunities in the Levant and North Africa. In addition to acquisitions, it will include establishing partnerships with key players, such as the recent joint venture between CEB and the Qatari-based IT Group, Al Majaz, to form CEB Qatar.
“We have already identified the companies that we want to talk to about acquiring or partnering with and we’re at an advanced stage of negotiations with several of them. We expect to finalise the first stage of our expansion plan by the end of the year,” says Kawar. He also sees CEB, which is currently a 125-man operation, more than doubling the number of its employees under expansion plans.
The company’s current solutions portfolio now includes document management and workflow, banking and micro-finance, insurance, kiosks and portal systems, ITIL training and consulting and IT documentation and publication services. In addition, it also represents global hardware brands such as HP, Acer, Nexans, Oracle, Microsoft, Mitel, Internet Security Systems, Bull, Symantec and Friendlyway.
“One of the reasons we decided to add two new arms to the company is to create extra revenuegenerating operations regionally. As purely a systems integrator, CEB would have been limited in the hardware solutions it could deploy regionally because of distribution agreements which are restricted to Jordan,” he adds.
The Kawar Group has an existing IT operation called Ideal. This comprises a number of operations including systems integration, software development, internet services, and training. While there are no immediate plans to merge Ideal and CEB, Kawar says there are several synergies and skills between the two companies that each company can leverage.