Want to gain access to the success of family businesses in the Middle East? If so, you’ll need to be very well connected, because most family businesses aren’t looking for capital, and even less are looking to list their companies.
Despite the region being dominated by family-owned and run enterprises, very few of them are listed and it would appear very few have any intention to do so. The recent announcement of the planned listing of Investment Holding Group, a Qatari construction and trading business, looks to be the exception that proves the rule. IHG, controlled by the Al Hodaifi family, plans to list around 60% of its shareholding, according to reports in the local media.
But last year there were only three initial public offerings in the Gulf region, all of them in Saudi Arabia, and none of them was family-controlled. Private equity deals involving family businesses in the Middle East are even rarer. Analysts say private equity isn’t targeting Middle East family businesses because few of them are looking for capital and even fewer are looking at selling to private equity groups.
“For the most part, families aren’t interested in listing their business,” Fathi Ben Grira, CEO of Menacorp, an Abu Dhabi-based corporate financial group, told Family Capital in an earlier interview. “All the families know each other and once you’ve listed your business everyone has access to all your financials. Few families want that.”
Ben Grira says families will borrow money from banks if they need capital, but many of the region’s family businesses, particularly in the Gulf, are awash with capital and seldom look to borrow. If few are borrowing from banks, even less are likely to sell equity.
According to PWC, 80% of the region’s businesses are family owned or controlled by families, and around 60% of the Middle East’s GDP is generated by family businesses. That’s among the highest percentages of any region in the world.