The Private Equity division of EFG Hermes (HRHO.CA), a leading regional private equity investor, completed today the sale of its 19% stake in Damas International Limited, MENA’s prime jeweler, to Qatar’s Mannai Corporation QSC in an all-cash transaction valued at USD 150 mn, generating IRR of c.40% and a cash-on-cash multiple of 1.8x.
EFG Hermes’ investment in Damas was concluded in May 2012 after the firm joined hands with Mannai to launch a USD 445 mn public tender offer to acquire 100% of the company’s shares.
“In less than two years, our private equity team nearly doubled their investment and that of their limited partners, creating some USD 65 mn in new value,” noted Karim Awad, Co-CEO of EFG Hermes Holding.
“We believe that this transaction is a launching pad for our new initiative for the private equity business, which is a significant pillar of the future growth strategy that we will be communicating to the market within the coming few months. We are confident that we have one of the most experienced and dynamic private equity teams in place as well as the fire power and reach to continue delivering interesting investment opportunities and lucrative returns for our co-investors and fund holders,” Awad added.
Following the acquisition of Damas, the company embarked on a broad set of business initiatives designed to boost its performance and complete the turnaround envisioned by its new shareholders. These initiatives included a full revamp to the company’s top management team, a refinancing of debts amounting to AED 2.3 bn at the time of acquisition, the realignment of unprofitable business lines, and strengthening the Damas brand via launching new luxury brands and introducing retail store formats capable of growing the brand’s equity.
“The extensive turnaround program, which strengthened the company’s business model and financial position, led to a near doubling of EBITDA and an almost 10-fold increase in operating income. It has been a pleasure to work alongside Mannai to complete such a successful turnaround,” noted EFG Hermes Private Equity division Co-Head Karim Moussa, who is also a Board Member of Damas.
Damas today stands as MENA’s leading luxury jewelry business with more than 300 stores spanning from United Arab Emirates to Bahrain, Qatar, Kuwait, Oman and Saudi Arabia. A world-class design house in its own right, Damas also represents select global brands.
“The generation of such growth in a very compressed time period is a testament to the strength of our hands-on approach to value creation and distinguishes our private equity business as a leading regional franchise,” added Moussa. “We believe Damas has now crafted a sustainable business model that can support the firm’s long term growth and drive the brand forward under the leadership of Mannai.”
The exit caps a busy two-year run for the firm’s Private Equity division, which in addition to its USD 85 mn investment in Damas, and as one of five founding sponsors of InfraMed (the largest investment vehicle dedicated to infrastructure investments in the Southern and Eastern Mediterranean), has participated in several high-profile investments spanning the region. EFG Hermes’ Private Equity division has over the past 18 years invested in a diversified set of sectors, including tourism and real estate, financial services, industrials, building materials, oil and gas, food and agribusiness, FMCG and retail, and was able to deploy USD 652 mn in 36 investments and realize 26 exits to date with an aggregated IRR of c.20%.
EFG Hermes’ Investment Banking division acted as financial advisor and Freshfields was the legal advisor to the Private Equity division on the Damas exit.