Information on the Target

L’azurde Company for Jewellery, known as L’azurde, is the largest manufacturer and wholesaler of gold jewellery in the Middle East and ranks as the fourth largest gold jewellery manufacturer worldwide. In 2015, the company generated revenues of $141.4 million, reflecting an increase of approximately 13% compared to the previous year. Since its acquisition by Investcorp in early 2009, L’azurde has experienced significant transformation and growth, driven by strategic initiatives and strong operational improvements.

The management team, in collaboration with Investcorp and its partners, has led efforts to penetrate new markets, diversify product offerings, and enhance capital and operational efficiencies. Additionally, L’azurde has established a robust corporate governance framework and made key senior management hires to institutionalize its operations, contributing to its current success as a publicly listed company on the Saudi Stock Exchange.

Industry Overview in Saudi Arabia

The gold jewellery sector in Saudi Arabia constitutes a vital part of the country's cultural heritage and consumer market. Saudi Arabia is one of the largest consumers of gold globally, driven by cultural norms that value gold jewellery for both personal adornment and as a symbol of wealth and status. The local market has seen steady demand, bolstered by population growth and a rise in disposable income among consumers.

In recent years, the Saudi government has taken steps to diversify the economy away from oil dependency, promoting various sectors, including manufacturing and retail. The jewellery industry, with a focus on gold, is poised to benefit from this diversification strategy, encouraging investment and growth in local production capabilities and international market outreach.

Additionally, Saudi Arabia's Vision 2030 initiative aims to elevate the country’s economic standing by enhancing domestic industries, including the jewellery sector. With a strong push for development in the retail and manufacturing spaces, gold manufacturers like L’azurde stand to gain from increased governmental support and investment opportunities.

The combination of robust domestic demand and strategic governmental initiatives positions Saudi Arabia's gold jewellery sector for significant growth in the coming years, making it an attractive environment for investment and expansion within the industry.

The Rationale Behind the Deal

The decision to list L’azurde on the Saudi Stock Exchange reflects the company's robust financial performance and successful growth strategy cultivated by Investcorp and its partners. By publicly listing, L’azurde gains increased visibility, access to capital markets, and the potential for greater market share, which are all crucial for sustaining its growth trajectory.

The success of this IPO demonstrates the effective collaboration between Investcorp and the L’azurde management team, which has enabled the company to adapt and thrive in a competitive environment. The listing is expected to provide L’azurde with the resources necessary to continue innovating and expanding its operations, reinforcing its status as a leading player in the global jewellery market.

Information about the Investor

Investcorp is a prominent global provider and manager of alternative investment products, with a strong focus on corporate investments in both mature and emerging markets. With a robust portfolio in the Gulf region, Investcorp currently holds stakes in eight companies, six of which are located in Saudi Arabia. Collectively, these businesses employ nearly 25,000 people and generate over $2 billion in revenue.

Investcorp's experience and expertise in operational and financial management have empowered its portfolio companies to excel. The firm emphasizes a hands-on approach to transforming businesses, establishing sound governance, and driving strategic growth, making it a valuable partner for L’azurde and other firms in its portfolio.

View of Dealert

The listing of L’azurde on the Saudi Stock Exchange represents a significant milestone, showcasing the firm’s operational successes and growth potential. From an investment perspective, this IPO seems like a wise decision given the rising demand for gold jewellery, not only in Saudi Arabia but also in the broader Middle Eastern market.

Investcorp's strategic involvement has proven beneficial, aligning operational improvements with market opportunities. The backing of a reputable investment firm adds credibility, positioning L’azurde favorably as it seeks international recognition and expansion.

Moreover, as the regulatory environment in Saudi Arabia continues to evolve, and as the overall market for gold jewellery strengthens, L’azurde is well-positioned to leverage these developments. The combination of solid fundamentals, branding, and supportive economic policies suggests that L’azurde could not only maintain its market dominance but also experience substantial growth moving forward.

However, vigilance is necessary as external market factors, such as fluctuations in gold prices and broader economic conditions, may impose challenges. Overall, the investment outlook for L’azurde appears promising, making it a potentially strong addition to Investcorp’s portfolio.

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