Abu Dhabi-based private equity firm BlueFive Capital has launched a new investment unit to buy up Gulf insurance companies, with a view to later expanding across Southeast Asia.
The firm, which raised $2 billion for its first buyout fund this year, said the unit’s first deal would be a stake in Saudi Arabia’s Gulf General Cooperative Insurance, one of the smallest of the kingdom’s 25 players.
BlueFive didn’t disclose the size or value of the stake, but aims to be a controlling shareholder and later rebrand the company and use it as a vehicle to acquire other firms, according to people familiar with the matter.
The deal will be a welcome bit of foreign direct investment into the industry. Saudi regulators have been pushing insurers to consolidate for years, after too many licenses were issued, leaving many unprofitable.
Ratings agency Fitch said in June that consolidation among Saudi firms would accelerate over the next two years, as new capital requirements and competition lead firms to join forces.