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DevCorp
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Press Releases 2001-2003
November 15, 2002SAGIA Issues License to Interactive Saudi Arabia Ltd.SAGIA, the Saudi Arabian Government Investment Authority, recently issued an investment license to Interactive Saudi Arabia Limited, a joint venture company whose shareholders are Ram World, Hoshan Company Limited, Interactive Limited of Dubai and the Saudi Offset Limited Partnership. Ram World is one of the first web design and development organizations to be established in the Kingdom. Ram World has won awards for a number of its web designs and is owned by Princess Arwa Bint Fahad Bint Abdullah al Saudi. Hoshan Co., Ltd., is one of Saudi Arabia’s leading corporations providing state-of-the-art office equipment, telecommunications equipment and service, and office automation services. Interactive Limited is an award-winning web-based solution developer in the Middle East, with expertise in developing applications for government departments and financial institutions. In Saudi Arabia, Interactive Limited will focus on Saudi Government and Government related entities, Saudi financial institutions and Saudi corporations. Interactive Saudi Arabia Limited will web-enable existing systems, provide creative e-government solutions, integrate existing packaged solutions to the web, introduce IT for office reengineering and offer new IT technology. The new company, capitalized at Saudi Riyals four million (SR 4,000,000) is formed under the Saudi Offset Limited Partnership (SOLP) with the approval of the Saudi Economic Offset Program. DevCorp International is the General Partner of the Saudi Offset Limited Partnership which is funded by Thales International Offset and Raytheon Company as Limited Partners. Mr. William Barilka, Managing Director, Riyadh Office of DevCorp International says, “We are excited at the prospect of establishing a new IT company in Saudi Arabia which will offer a wide variety of browser based solutions and applications and the latest internet technology to Saudi institutions. We hope the company will significantly increase efficiencies, reduce cost and enable organizations to rapidly move towards “best practices” in their respective businesses.” Ziad Tassabehji, Chief Executive Officer of Interactive Limited adds, “We are very pleased to have been selected as part of the Economic Offset Program, an innovative investment program that will help us enjoy substantial investment incentives and support. We treat the Offset Program as a strategic advantage at a time when the Saudi Government has identified the development of e-government as an important national goal.” Commenting on the partners of the new venture, Tassabehji adds, “We have invested a lot of effort at selecting the right partners to enter this market. Our partners have been brought together with a common interest at the highest levels. The common denominator of all the projects in which we are involved is the transfer of useful technology and the establishment of meaningful skills and the employment opportunities for Saudi Arabian Nationals.”
March, 2002New Directors for DevCorp International E.C.DevCorp International E.C. convened its annual general meeting with all shareholders present at its offices in the Manama Center, Bahrain, on Monday, March 2, 2002. DevCorp International E.C., a wholly American-owned venture development company, focuses on project identification, development funding and implementation in the GCC. DevCorp provides a comprehensive service enabling clients to take advantage of opportunities and develop business potential in the Gulf region such as its on-going shrimp farm in Duqm, Oman. Founded in March 1996 by two American entrepreneurs, James Lewis Greenberg and Uwe Jahnke, DevCorp has become the General Partner of the Saudi Offset Limited Partnership (SOLP), which is is a direct equity, venture development limited partnership designed to invest offset funds in effective commercial ventures in the Kingdom of Saudi Arabia. The SOLP now has $35 million under management and is developing projects in downstream petrochemicals, telecommunications, internet applications, and waste-oil re-refining. At the annual general meeting Directors’ and Auditor’s reports and Financial Statements were approved and Arthur Andersen, Bahrain, was reappointed as Auditors. Mr. Ibrahim Al Mishari and Mrs. Susan Jahnke were appointed as Directors for a term of three years. Approval was also given to begin a search for value-added individuals or company(s) to whom to sell a minority interest in DevCorp to assist in its growth and performance.
February 18, 2002Thales Contributes to Saudi Offset Limited Partnership
Thales, the French electronics company (formerly Thomson-CSF), has committed to invest $10 million in the Saudi Offset Limited Partnership (SOLP). The SOLP, initiated in 1997 with a $25 million investment from the Raytheon Company, is a development and financing mechanism which fosters private sector economic growth by developing and implementing viable joint-venture projects. . According to M. Majewski, the SOLP is an “extraordinary financial vehicle for developing project initiatives in the Kingdom.” Through the creation of joint ventures between foreign and Saudi companies, the SOLP furthers the specific objectives of the Economic Offset Program: industrial diversification, technology transfer, import substitution, employment growth, private sector growth, and utilization of local raw materials. The SOLP is almost unique in the GCC countries in its willingness to pursue and fund projects during the high cost early development stages. The SOLP is managed by the General Partner, DevCorp International EC. Managing Director James L. Greenberg welcomes the participation of Thales in the SOLP. “This welcome addition to the fund makes it possible for us to both accelerate projects and increase the number of projects being developed which will build jobs and investment opportunity in Saudi Arabia,” he noted. “The participation of Thales is particularly important because it widens the investor support for this new development mechanism and will further enhance its effectiveness.” February 2, 2002SIDF Approves LAB Project in Yanbu
Saudi Indo Petrochemicals Company (SIPCO) recently received Saudi Industrial Development Fund (SIDF) approval for the establishment of a Linear Alkyl Benzene (LAB) project to be implemented in Yanbu. This green light means that LAB as well as the associated N-Paraffin will be in production in Yanbu in late 2004. The N-Paraffin and LAB projects will be in one integrated petrochemical complex in Yanbu with two products: N-Paraffin and LAB. This petrochemical complex is the culmination of a three and a half year effort by Gulf Petroproduct Company E.C., a Bahrain registered exempt joint stock company shared 50-50 between Tamilnadu Petroproduct Limited (TPL) and the Saudi Offset Limited Partnership (SOLP). The publicly traded Tamilnadu Petroproduct Limited (TPL) is one of the largest producers of N-Paraffin and LAB in India. Its standards and efficiency are so high that the TPL plant in Chennai, one of the most modern in the world, is used as a reference plant by UOP, the provider of the technology for the production process. The Saudi Offset Limited Partnership is a private equity, venture development limited partnership designed to invest offset funds in effective commercial ventures in the Kingdom of Saudi Arabia. Developed under the auspices of the Saudi Economic Offset program, the SOLP actively originates projects which make financial sense in Saudi Arabia. The SOLP then brings together technology, financing, and local partners to structure the project and ensure its implementation. The SOLP, originally founded by DevCorp International E.C. as General Partner and the Raytheon Company as Limited Partner with a $25 million investment, has recently been expanded with a $10 million contribution from Thales International. To implement the N-Paraffin and LAB projects, a new joint venture named Saudi Indo Petrochemical Company (SIPCO) has been established between Gulf Petroproduct Company E.C. and the Al-Zamil Group as the lead Saudi investor. The Al-Zamil Group will lead a Saudi investment group which will take 40% of the projects. Linear Alkyl Benzene is the primary biodegradable ingredient for the production of Linear Alkyl Sulfonates (LAS) used in detergents. The key to the successful project implementation of the N-Paraffin/LAB plant lies in the two-year multimillion dollar testing and analysis program of locally available kerosene and the return stream of kerosene to the refinery performed with the assistance of Shell Global Solutions. The products, targeted to the detergent market which is rapidly growing in the Middle East/Africa and the Southeast Asian regions, are needed. Buyers have been identified and TPL has already offered to take the remainder of N-Paraffin after meeting captive requirements of the project. According to Jim Greenberg, general manager of DevCorp, “This green light from the SIDF means that Saudi Arabia will soon be producing a new downstream petrochemical product, Linear Alkyl Benzene, for the GCC and international markets. This will complete the total integration of the detergent industry in Saudi Arabia. With private sector financing from Saudi Arabia as well as SIDF financing, we look forward to putting Saudi money to work in Saudi Arabia. Our partners, the Al Zamil Group and Tamilnadu Petroproducts Limited, have been extraordinarily persistent and resolute in pursuing these projects.”
February 2, 2002Shrimp Harvested SuccessfullyDevCorp International E.C.’s shrimp venture in Oman, the Oman International Shrimp Company (OISC), SAOC, successfully harvested its first shrimp crop. After a short three and one half month grow-out period, the average shrimp size was 35 grams. This result tops OISC’s original expectations, that a five-month grow-out period would be required to produce 35+ gram shrimp. This first pond is part of an initial 11-hectare trial farm. The remaining ponds will be harvested in March. OISC built and manages a shrimp hatchery housed at the Marine Science Center of Oman in Muscat and a shrimp farm based in Duqm, 600 kilometers to the south of Muscat. Building on the success of its first harvest, Oman International Shrimp Company SAOC plans a three-phase environmentally sensitive development program of the 2000 hectare site. The first commercial phase, consisting of 200 hectares and an expanded hatchery will now be launched. In the second and third phases, the remaining 1800 hectares will be developed and will include a processing plant. The shrimp culture sector today faces multiple challenges, particularly those of disease and hygiene. Consequently, OISC has identified those management practices and systems which are environmentally sustainable in coastal areas. At the OISC hatchery, according to manager Glen Bieber, “ we are taking steps to prevent diseases from being introduced into Oman.” These steps include DNA testing of all brood stocks. Jim Greenberg of DevCorp International, E.C., notes that “Our success in aquaculture reveals the importance of careful site selection, a process which took us over four years, and the integration of modern technology to insure that our shrimp are disease-free. The local response to our first crop has been tremendous and we are in active discussions with potential large buyers in the GCC countries, Japan, and the United States.”
March, 2001Saudi Offset Limited Partnership Offers "First Stage" Venture Development
The GCC countries are thirsting for “first stage” venture development mechanisms capable of identifying good ideas and effectively turning them into financially viable ventures. The Saudi Offset Limited Partnership (SOLP) offers such a “first stage” development mechanism for Saudi Arabia. By performing and funding the up-front development efforts necessary for good projects, the SOLP provides a pro-active, integrated venture development capability. New ventures often require a two to three year development effort to bring them to the stage of financial close. First an idea must be identified that has the potential for a successful venture. Preliminary research must then be conducted to verify that there are sufficient advantages to implementing the project to warrant further development. Many ideas must be researched in order to identify those few that have real potential. More detailed market and financial studies must then be conducted for those few that appear to have the necessary elements for success. Possible international industry partners must be contacted and convinced that project makes sense and that Saudi Arabia is the best place to locate such a project out of the many choices available to such countries. Business structures must be negotiated with such international industry partners in addition to selected local partners. Most of this work must be done prior to knowing for sure that the project makes sufficient financial sense to be implemented. After bankable feasibility studies are conducted, financing for the project must be obtained. Such first stage development efforts can cost in excess of several million dollars for large projects. Smaller projects require less ready cash, but the costs still must be expended in the highest-risk part of the development effort. In many countries, venture capital firms, merchant banks, and independent companies fulfill this necessary “first stage” development role. However, regulatory regimes to support the non-banking financial services and capital markets sectors in the GCC countries have not yet been adequately implemented. Most GCC investors are reluctant to expend the time and financial resources required. Unfortunately, without a structure for non-banking financial services and more liberal capital markets, founding members (the entrepreneurs) of a project can rarely be compensated for the up-front work, costs, and risks associated with developing new ventures except through their own “cash” capital investment in a project. Such limitations tend to stifle “from the ground up” entrepreneurship prevalent in rapidly growing companies. DevCorp International E.C., a Bahrain-based exempt joint stock company owned by Americans, began five years ago to introduce a business model to fulfill this “first stage” role. After initially developing projects in Kuwait and Oman, DevCorp recognized a window of opportunity involving international contractors with offset obligations in Saudi Arabia. DevCorp structured, gained approvals, and formed a venture capital fund called the Saudi Offset Limited Partnership (SOLP) to develop and invest in projects for Saudi Arabia, requiring only investment and not expertise nor human resources, from contractors with offset obligations. The SOLP is similar to US private equity limited partnerships in which the investors are limited partners but the fund is managed and all development work performed by a General Partner, in this case, DevCorp International. DevCorp and Raytheon launched the SOLP in late 1997 with an initial $25 million investment commitment. Its charter is to develop and invest in joint ventures in Saudi Arabia. The SOLP was established under the auspices of the Saudi Economic Offset Program both as a vehicle to meet the offset requirements of international contractors and to make an investment grade rate of return. This results in a win/win for both the offset obligated contractors and the host country. Investments from additional contractors into the SOLP are now in negotiation. Over the past three years a pipeline of projects has been established. The first projects which have reached the launch stage include $160 million N-Paraffin, $140 million LAB, and $40 million copper tubing projects. Other projects are in various stages of development. Each project includes a major international industry partner. Mr. Jim Greenberg, DevCorp Managing Director, emphasizes five points that contribute toward the success of such venture capital limited partnerships as the SOLP: 1. The General Partner is highly motivated by profit sharing from the SOLP’s investment in each venture. This insures that the General Partner’s primary interests are the long-term success of each project. 2. A contractual fee paid to the General Partner to perform the development work minimizes development costs. This fee must be kept low in order to not “bleed down” the capital during the long gestation period for new ventures. 3. The General Partner is comprised of development specialists with extensive backgrounds in industry, operating management, finance, and law combined with many years experience in the GCC. 4. The General Partner operates during the development process using its experience and contractual fee to rationally budget time and costs rather than operating under time-consuming bureaucratic approval constraints. 5. The General Partner represents actual investment capital in its dealing with third parties and other potential partners. The above factors are all necessary for pro-active, effective venture development. The SOLP should be a model for other such mechanisms to accelerate the process of new venture development in the GCC.
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