In an effort to explore the growth opportunities in the consumer sector of Saudi Arabia, Citigroup Inc.‘s (C) venture capital unit and Levant Capital, a Dubai-based private equity firm, have acquired a $100 million controlling stake in Al-Raya For Foodstuff Co Ltd, a Saudi Arabian supermarket chain. The deal closed on Tuesday.
Citi Venture Capital International (CVCI) is a leader in global Emerging Markets private equity and invests in companies with compelling growth prospects across India, China, Asia Pacific, emerging Europe, Africa and Latin America. It is a part of Citi Capital Advisors. CVCI manages $7 billion in equity investments and committed capital.
Based in Jeddah, Al-Raya operates 25 supermarkets across 14 cities in Saudi Arabia. It offers Citi the opportunity to benefit from the growing consumer sector in Saudi Arabia, the largest economy in the gulf region. With consumers shifting toward organized retail outlet, the supermarket chain is expected to grow significantly in the region.
Last December, Coca-Cola Company (KO) also announced a deal to acquire 50% of the Aujan Industries, the leading independent beverage sellers in Saudi Arabia. The deal has been finalized at $980 million and is expected to close in the first half of this year.
Faced with a slowdown in the U.S. market, Citi is emphasizing on growth in the international markets. The company has an impressive overseas presence and is making every effort to expand and tap opportunities in the emerging markets.
Citiwill also launch its own credit card business in China. Its Chinese subsidiary Citibank (China) Co. Ltd. has received approval from the China Banking Regulatory Commission. The company will launch both retail and commercial cards before the end of this year. This marks a landmark for Citigroup–the first U.S.-based bank to introduce its own credit card in China.
Going forward, we believe that such strategic efforts will enhance Citi’s global network and boost its revenue base by leveraging faster-growing economies, thereby increasing its market share internationally.
Citi currently retains its Zacks #3 Rank, which translates into a short-term Hold rating.
Zacks Investment Research