Bahrain-based Energy Capital Group (ECG), a private global investment firm focused on energy and energy-related corporate investments, announced that United Safety, in which the firm owns a majority stake, has achieved further international growth and significantly greater penetration of the MENA oil services sector since the Canadian $127million acquisition of the company by ECG, alongside Morgan Stanley Principal Investments Group and company management, in December 2008.
United Safety, headquartered in Alberta, Canada, is a leading global provider of specialized safety equipment and technical services and training for the oil and energy industry including providing its services to the onshore and offshore drilling operations, processing and refinery operators and the petrochemical and power generation industries.
In cooperation with ECG and its shareholders, which include some of the Middle East’s largest energy and industrial investment groups such as Rawabi Holding Company, ATCO, Al Muhaidib Group and Al-Ansari Holding Company, United Safety has successfully grown its global footprint. Prior to its acquisition, the company operated in four countries, whereas today United Safety operates in more than nine countries around the world.
Notably ECG has helped United Safety to launch their services in a number of new Middle East markets such as Bahrain, Iran and Iraq and has lead the company into being the frontrunners for several key projects in Oman, Abu Dhabi and Qatar, among others, where it soon expects to become active.
Iit has also helped the company make further inroads into the Saudi Arabian market. Prior to its acquisition, United Safety operated in Saudi Arabia through a 50-50 joint venture with Rawabi Holding Company, and that joint venture represented only 5% of the company’s global revenue pre-acquisition. One year after the ECG lead acquisition, United Safety’s Saudi’s market share, as a percentage of their total revenue, grew to 16% of the company’s total revenue. This was the result of ECG helping the company’s management to invest in new equipment and the opening the only MENA based H2S safety and general oil and gas safety services training facility (called the Technical Operations Center, TOC) in Saudi Arabia, where the company’s Saudization percentage jumped from 20% to 65% in less than one year at the joint venture level.
United Safety generated enough free cash flow at the global company level in the same one year period. This was supported by ECG opening up several new opportunities for the company in the MENA region that helped the company pay roughly two-thirds of the debt that was on its books when the company was acquired by ECG.
A key part of United Safety’s international expansion strategy has also been realised since its acquisition by ECG. This includes the establishment of a hub in the region from which it will serve the MENA and global markets. In 2010, ECG assisted United Safety in establishing its Dubai operations, located in the Jebel Ali Free Zone, and in building an executive team there with the right regional and global experience to further capitalize on growth opportunities in the MENA markets and beyond. From this base in the Middle East, United Safety has not only entered key regional markets but further expanded the business in other promising territories such as China and North and West Africa, where it also sees significant room for growth.
In addition to expanding the company’s market reach and further diversifying its customer base in terms of geography, ECG has also worked with United Safety to further expand its service offering. The core upstream safety and industrial turnaround service lines remain with a wider risk management service division added to meet clients’ demands in the important area of safety.
“We are delighted with the progress made by United Safety since our acquisition of the company. ECG is focused on investing in small to medium sized companies with strong near-term potential for growth globally and in the MENA markets in particular,” Ali Abdulaziz AlTurki, Founding Partner and CEO of Energy Capital Group, said.
“These results validate ECG’s ability to identify promising investments and to then leverage our regional expertise, network and strong shareholder base in order to help companies quickly establish themselves in new markets and build relationships that will help them to secure potentially large and lucrative contracts in the vast MENA and international energy sector. At the same time, these results also demonstrate the value proposition ECG offers to investors by underscoring our ability to effectively manage and grow our investments and thus ensure our ability to generate attractive and ongoing returns for our investors and clients,” he added.
“United Safety, working with ECG and its shareholders, will continue to build on growing demand for equipment and safety services in the MENA markets and beyond. Positive trends supporting growth include an increase in oil and gas drilling activity and exploration spending, more outsourcing of safety services by companies due to significant cost advantages, predictable plant maintenance schedules and increasingly complex and stringent regulatory requirements across global markets given the potentially catastrophic human and economic costs associated with industrial accidents such as those recently seen in the energy sector.”
“In addition to focusing on effectively managing and growing current assets such as United Safety, ECG is also pursuing further investments in order to fully capitalise on the significant opportunities that exist for a broad range of energy services providers in the MENA region, the world’s largest hydrocarbon territories, and other neighbouring markets. We have a strong pipeline as well as significant interest from investors that are keen to participate alongside EGC though our recently established $300 million investment vehicle, for which we have targeted a first close of $200 million in committed capital in the coming months.”
ECG, which was established in 2008, has already completed over $100 million of investments in global and Middle East energy services companies. Currently, the firm is evaluating opportunities to invest in a number of global companies that are among its network of over 250 international partners operating in the energy and related energy services sector. Globally and in the MENA region in particular outlook for the sector remains strong and supported by factors including a major supply and demand imbalance and high depletion rates, which require a great deal of additional capacity to be added. Current data shows that new oil capacity equivalent to three to four times Saudi Arabia’s present production capacity must be added by 2020 in order to meet global demand. With much of this added capability expected to come from the MENA region, there are extensive opportunities for the oil services companies being targeted by ECG and for investors with exposure to the sector.
Established in 2008, ECG, is a private global investment firm engaged in originating, structuring and acting as a lead equity investor in the energy and related services sectors.
The firm, which operates offices in Bahrain, Dubai and London, and is managed by a team of leading investment and energy sector experts and backed by a group of strategic shareholders.