Dr. Karim El Solh

Gulf Capital

Executive: Dr. Karim El Solh, Co-Founder and CEO
Investor Name: Gulf Capital
Investor Type: Private Equity Fund Manager
AUM: USD2.5b
Year Founded: 2006
HQ: Abu Dhabi, Dubai, Riyadh
Geo Focus: Middle East and North Africa
Target Sectors: Technology and payments; business services; healthcare; consumer services.

 

Gulf Capital has been investing across the Gulf Cooperation Council (GCC) and in neighboring markets since 2006. Please describe the opportunity set across the Middle East and North Africa, and in the GCC in particular. How do these markets differ on a local and regional level and what makes them an attractive investment destination for international investors?

Since its inception, Gulf Capital has been attracted to the positive demographics and growing consumption patterns in the GCC. The regional population has one of the world’s highest growth rates at 2.3% annually and has doubled in size over the last 20 years. 70% of the population is under the age of 34, the second youngest population in the world after Africa (76%). The GCC also has one of the highest GDP per capita in the world (over USD60,000 GDP per capita) which translates into very strong spending patterns. This makes the consumer sector in the GCC a particularly attractive sector for regional and global investors.

The Gulf states are also home to one of the highest internet and mobile phone penetrations globally. We are witnessing an explosion in e-commerce, social media adoption, and online payments, with e-commerce projected to grow at over 30% per year over the next three years. The digital payments space is also seeing rapid growth and we believe that this trend will only accelerate post the COVID-19 pandemic. In 2019 alone, the Middle East saw a remarkable 200% growth in contactless transactions. We are particularly excited about the prospects of the new economy and the digital payment industry in the GCC and have made six technology investments to date in the region. Our recent investment in Geidea, a payment solutions provider, was the largest private capital fintech investment in Saudi Arabia to date and is a good example of our increasing exposure to the digital payment industry in the region.

You recently made several investments in health care and healthtech companies, including IVI-RMA Middle East and Vezeeta. What makes the region an interesting market for this sector? Please share insights on the opportunity set for health care investing in the Middle East, particularly in the context of COVID-19. 

The region has undergone significant demographic and socioeconomic changes over the last few decades, leading to increased health care expenditure, with certain health care sub-sectors, such as obesity and diabetes treatments, women’s health and fertility, aesthetics, and digital health care technology, growing rapidly.

Gulf Capital is actively targeting investments in focused health care sub-sectors that are registering higher growth rates than the overall health care industry. We identified the fertility sub-sector as a priority focus, given its expected 15%+ CAGR over the next five years. GC Equity Partners Fund III acquired 100% of IVI-RMA Middle East (now rebranded as ART Fertility), an IVF service provider in the UAE and Oman, growing at a 50% CAGR since inception. Our strategy for rapid growth involves tripling the number of clinics by taking Art Fertility into the fast-growing Asian markets and pursuing an ambitious European acquisition strategy. Our end goal is to transform ART Fertility into one of the leading global IVF fertility platforms. Backing local businesses and transforming them into global leaders has long been a hallmark of Gulf Capital’s investment style.

Another recent health care investment is Vezeeta, a digital health care platform active in the Middle East and Africa. Through its booking platform, Vezeeta enables patients to search, compare, and book doctor appointments and services in real time. Gulf Capital led the latest USD40m Series D for Vezeeta, which will support the company’s mission to improve health care efficiency and empower patients in Middle Eastern and African markets. Vezeeta’s growth plans include rolling out its new digital capabilities of ePharmacy and telehealth across its existing footprint and new markets.

Furthermore, COVID-19 has underlined the importance and resilience of investment into the health care sector. We have seen the sector bounce back rapidly after initial challenges during lockdown periods. For example, Vezeeta’s growth has accelerated during the pandemic as the demand for its recently launched telemedicine and ePharmacy services has grown exponentially.

You recently exited Metamed via a sale to a consortium of regional and international investors. Please describe how Gulf Capital grew the company from a local business to a regional player and how you built the path to exit and identified the buyers. How do you generate exits and liquidity for your investors? 

Metamed is a chain of diagnostic imaging centers in the Middle East. Gulf Capital grew the business through an ambitious regional buy-and-build strategy that started at the end of 2009 with the acquisition of Technoscan, which at the time had 10 centers in Egypt. Shortly after, Gulf Capital acquired Consultant Radiologists Center Company in Saudi Arabia and MedRay Centers in Jordan. During Gulf Capital’s ownership, Metamed grew its total number of centers threefold, from 10 to 30 centers across Egypt, Saudi Arabia, and Jordan. Metamed’s services were also expanded to include adjacent health care offerings, such as clinical and anatomical pathology, nuclear medicine services, and women health care. During this period, sales in Egypt grew by five times from the entry level and profitability by 4.3 times. In Saudi Arabia, sales doubled and profitability grew by 2.5 times. The Metamed investment exemplifies Gulf Capital’s strategy of backing local businesses and transforming them into regional platforms, while making an important contribution to the delivery of better and more efficient health care services to a broader segment of society in the Middle East.

Once Metamed became a regional leader in medical imaging services in the Middle East, we launched an auction process and received a wide range of interest from regional and international strategic players and financial investors. The final sale was to a consortium of six parties led by private equity firm Mediterrania Capital Partners and consisting of a strategic buyer and four European DFIs in what was a complex and innovative transaction. We have closed several similar cross-border exits including global IPOs, strategic sales, and financial sales. For every exit, we continuously assess the most optimal local and global exit routes to ensure that we maximize proceeds and liquidity to our investors.