BinDawood eyes SAR 1.5B investments, mostly in Saudi Arabia: CEO

BinDawood Holding Co.’s CEO Ahmad BinDawood said that the group plans to inject additional capital investments of between SAR 1-1.5 billion over the next two to three years.

These investments are aimed to finance the establishment of BinDawood’s new plants in Saudi Arabia and expand the production capacity of its plant in Estonia, noting that the majority of these investments will be focused within the Kingdom.

Speaking to Al Arabiya TV, BinDawood said the group’s total investments in acquisitions and expansions since adopting its new growth strategy in 2020 amounted to around SAR 1.8 billion, excluding the value of the latest transaction involving a dairy plant in Estonia.

Regarding its expansion in Estonia, BinDawood explained that the acquisition covered an industrial asset rather than the entire company, meaning that the group would not assume any existing liabilities or debt of the acquired company, while gaining ownership of the plant and the technologies related to dairy and dairy-derivative production.

The plant holds around a 15% share of Estonia’s cheese market, and is expected to begin making a meaningful contribution to the group’s results within a short period. The group aims to raise utilization rates to more than 80% of production capacity within less than six months of commencing actual operations, according to the top executive.

He added that the group would be able to provide a clearer picture of the plant’s financial impact and expected revenues around three months after operations begin. Preliminary studies indicate an internal rate of return (IRR) of more than 15%, potentially exceeding 18%, subject to market developments and the level of competition.

BinDawood also said the group began implementing a series of acquisitions of strategic companies and assets in 2022 that align with its long-term objectives, with the latest transaction falling under its food manufacturing expansion strategy.

“Our move into food manufacturing was driven by lessons learned from the COVID-19 pandemic, which exposed gaps and opportunities in food supply chains and prompted us to adopt a strategy aimed at strengthening food security and improving supply efficiency,” said BinDawood.

The group currently owns three plants in Jeddah specializing in meat, cheese, and fresh food products, in addition to its previous acquisition of Wonder Bakery in the UAE, said the CEO. He revealed that future plans include establishing a new plant in Saudi Arabia to bolster self-sufficiency and support food security objectives.

He further stated that the contribution of food manufacturing to the group’s operations is expected to increase to between 18% and 20% of total business in the medium term, driven by new acquisitions, operational expansions, and the establishment of new plants.

The group also continues to evaluate investment opportunities and potential acquisitions both inside and outside Saudi Arabia, provided they align with its strategic criteria and generate attractive returns for shareholders, he added.

Regarding debt, BinDawood disclosed that the group’s total outstanding loans amount to less than SAR 600 million, noting that the companies acquired over the past several years have helped enhance profitability and create additional value for shareholders.

According to Argaam data, BinDawood Holding recently announced that its wholly owned subsidiary, JUUST & JUBN OÜ, won a bid to acquire assets belonging to AS E-Piim Tootmine in Estonia for SAR 585.85 million (EUR 135.25 million).