Walking the Path

How will Al Rajhi continue to invest in diversification?

The Mohammad Al Rajhi holding company used to be a holding, managing all companies and with everyone reporting to them with 100% control. Now, all the companies have separated with independent board members. It gradually became a private equity investment house. Down the road, we will reduce our stakes. Today, we have sold 30%. To replace this 30%, we will diversify and invest somewhere else. Steel is an important business for us. We are one of the leading steel manufacturers and produce over 2 million tons of rebar. We are a 100% Saudi company. It was the core business of Al Rajhi when it went industrial. It started with home appliances and then steel. Today, we have two steel manufacturing plants, one in Riyadh and the second in Jeddah. Our base in the latter employs the latest technology. We have built our company on the latest technology and are one of the leaders in the market, like that of Danieli. We expect to grow further into the industry. We have a plan, through M&A to grow and acquire a greater market share and spread all over the country and the GCC, as well as other emerging markets. We are studying existing strategies, with the first choice to go with an IPO of 30-40%. It is whatever the board and the stakeholders decide. The business of the steel industry in Saudi Arabia is growing, and there are many projects beginning. Many things need to be looked at, yet I believe steel will be our main choice to keep growing, establish a long track record, and maintain a market share. The board of Al Rajhi Industrial has decided to look for new opportunities. It said that it is an investment hub for industries, and wanted to invest in any opportunities related to the industry. In 2014, we invested in fiberglass. This was one of the opportunities that we opened recently. After that, we have three more areas of interest, one of which is food manufacturing. For our exit strategy in our companies, we will shift this money to consider new investment opportunities. We prefer to invest and work either in brown or mature investments rather than to be in the greenfield, which is not in our scope.

In the short term, what are your expectations or priorities to have finished by the end of this year?

We want to spin off some of the companies that we work and manage 100%, and we are looking to invest in two or three different companies. By the end of 2015, three companies will be separated and might have possibly gone public. We will need to make a decision regarding investing in other sectors. These are my ultimate goals for 2015. You can say that this is the beginning of a new phase at Al Rajhi. We are seriously looking to build up a strong private equity company whereby we can acquire more companies in manufacturing and industry. The record of the Mohammed Abdulaziz Al Rajhi Company for the last 20 years has been that of a success story. We are one of the great companies in the market and have built up a strong know-how over the last 50 years and built a track record that we have capitalized on. Today, we need to capitalize on companies with a proven track record that have done well and are well-established. They need to be leaders in the industrial area. We need to take this privilege and capitalize on any company that we acquire. We will introduce corporate governance, a vision, a mission, as well as management. We have done it previously and went through many learning curves. However, at the end of the day, we did well by having these companies well positioned. We took the principle of them and applied it to others. I would even like to give this experience to other family companies in which the founder is getting old, and in which the second generation is not in a position to manage its wealth. It would be good for them to come and knock on our door and tell us that they need to partner with us. We will introduce our value-added concepts into the company and make it larger, give it more corporate governance, and a clear direction based on our track record.