Al Rajhi Capital, the investment banking subsidiary of Saudi Arabian Al Rajhi Bank, has joined forces with Bahrain-based investment house Arcapita Bank for the launch of a $500 million real estate fund.
The pair are targeting income generating assets in Saudi Arabia and other GCC countries, according to an announcement.
The ARC Real Estate Income Fund, the first private equity collaboration between the two organisations, will be seeded with $50 million in equity from each party. The vehicle has been launched to buy “high quality, income-generating” assets, predominately logistics warehouses, healthcare and education related assets.
The fund will be managed by Al Rajhi Capital although deal sourcing and investment will be completed by a bespoke “real estate advisor” to be staffed with professionals from both partners. It will be marketed to institutional and high net worth individuals within the GCC.
The fund has already made its first purchase. It has acquired a logistics and distribution centre in Riyadh occupied by Azizia Panda United Company, the Saudi supermarket chain, for $79.7 million via a sale and leaseback agreement. Aziza Panda has leased the property for 18 years.
Jorge Cantonnet, managing director and head of private equity at Al Rajhi Capital, said: “As the economic downturn shows signs of bottoming out, we are beginning to see good opportunities for investors with available capital for investment. Early responses from investors have been positive.”
Hisham Al Raee, executive director of investment placement at Arcapita, said: “Economists predict that over the next decade, GCC growth will outpace global growth, and this income fund offers diversified exposure to the regional growth story.”