Abu Dhabi food and beverages company Agthia acquired snacks maker BMB Group, marking its second acquisition within the healthy foods category as it seeks to further expand its portfolio.
The deal, which was for an undisclosed sum, is expected to increase Agthia's exposure to the $360 billion global market for healthy snacks and will allow the company to significantly expand its footprint, the company said on Wednesday.
“In addition to immediate access to new revenue streams and markets, we are excited by the prospect of exploring opportunities to fuel product innovation, such as the development of new healthy and specialist snacks in response to market trends,” Agthia chief executive Alan Smith said.
BMB manufactures and distributes a range of products under brands, including Asateer, Al Qamar, Freakin’ Healthy and Benoit. Formed in 2007, the company distributes more than 2,000 products in more than 23 countries worldwide, including the UAE, Saudi Arabia and the US.
The company's revenue for the 12-month period to the end of June stood at Dh268m while earnings before interest, taxes, depreciation and amortisation were Dh54m in the same period. BMB's Ebitda margins are expected to grow by about 20 per cent this year, Agthia said.
The transaction is expected to be fully funded by cash and will be immediately accretive to Agthia’s earnings, the company said.
The deal is subject to satisfying customary closing conditions, including obtaining relevant regulatory approvals.
Agthia, which is owned by Abu Dhabi's state holding company ADQ, reported a 17.5 per cent increase in its second-quarter net profit this year as acquisitions boosted revenue. Net income for the three months to the end of June climbed to $5m from the same period a year earlier.
The company has made a number of acquisitions in recent months as it vies to become a leading regional player in the industry.
Deals have included the purchase of Kuwait's Al Faysal Bakery and Sweets, Egypt's Ismailia Investments, Jordan's Nabil Foods and the world's largest date processing and packaging company, Al Foah.
The acquisitions have boosted the net revenue contribution of Agthia’s consumer business by 20 per cent annually to Dh855m, it said earlier this year.
The company is currently looking at a pipeline of potential acquisitions and is interested in acquiring assets in the UAE, the Mena region and Pakistan, Mr Smith told The National earlier this year.
Targets beyond these regions would be interesting if it finds assets that are complementary to its business, he said.
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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If you go
The flights Etihad (www.etihad.com) and Spice Jet (www.spicejet.com) fly direct from Abu Dhabi and Dubai to Pune respectively from Dh1,000 return including taxes. Pune airport is 90 minutes away by road.
The hotels A stay at Atmantan Wellness Resort (www.atmantan.com) costs from Rs24,000 (Dh1,235) per night, including taxes, consultations, meals and a treatment package.
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