Ajlan Bin Abdulaziz Al Ajlan, Chairman of Ajlan & Bros Group, sees industrial and real estate companies as a safe haven against market fluctuations... In this way, Ajlan & Bros seeks to exploit the enormous potential in the GCC and Egypt
Family businesses are a major economic force in the Middle East region. With governments increasingly focusing on embracing privatization as well as strengthening the non-oil private sector, family groups are expected to seize opportunities in new arenas, at a time when they face global turmoil and the challenges of digital transformation.
"Many opportunities are available for the private sector today, including tourism, mining, industry and media,” said Ajlan Bin Abdulaziz Al-Ajlan, Chairman of Ajlan & Bros Group, which operates in more than 25 countries.
The Saudi businessman founded the family business in 1979 alongside his brothers Saad, Mohammed, and Fahd. Together, they launched a small shop in Riyadh's “Deira” market for fabrics and textiles, and have since expanded into many sectors, such as manufacturing, construction, real estate, energy, logistics, fintech, retail, mining, entertainment, and healthcare.
Over the past 5 years, Ajlan & Bros has made efforts to align its strategy with the Vision 2030, which aims to develop and diversify the Kingdom's economy, reduce its dependence on oil and enhance the role of the private sector. While family businesses contribute about 60% to the GDP of the GCC countries, and about 90% to the private sector economy. As such, it has a major role to play in the transition process, according to the Gulf Family Business Council. The Group expanded its business scope and became a holding company in 2017, targeting various sectors. Ajlan stated: "In Ajlan & Bros, we focus on expansion, through partnerships with foreign investors."
“Family businesses in the region are key partners for governments and are essential to achieving their ambitious goals for private sector and economic growth. This is why this is the best time to capitalize on their position to take advantage of the opportunities available,” said Adnan Zaidi, Principal and Private Business Officer at PwC Middle East.
Ajlan & Bros Group, in an alliance with Olam International Group, Al-Rajhi International Investment Company, and the National Agricultural Development Company "NADEC", acquired the Second Milling Company (MC2) in Riyadh, a deal worth $600 million, in December 2021.
In 2022, Ajlan & Bros Holding Group, as part of an alliance with Moxico Resources Company, obtained a tender for an exploration license in Al-Khiniqiyah, which extends over an area of 353.8km2 west of Riyadh in the Al-Quwaiyah Governorate in the Kingdom of Saudi Arabia, for $68 million. The group also acquired 30% of the $800 million Jubail IWP(3-B) project in 2021, which has a production capacity of 570,000 cubic meters / day of potable water, enough to supply two million people across Riyadh and Qassim when it becomes operational in 2024. The desalination plant project agreement for a period of 25 years was signed between the Saudi Water Partnerships Company (SWPC), and a consortium that includes Engie, Nesma and Ajlan & Bros Group in June 2022.
Expanding into other sectors, Ajlan & Bros Holding established Dussmann – Ajlan & Brothers, in cooperation with the German Dussmann Group, in the facilities management sector in 2020. AJEX was established in 2021, in partnership with SF Express, in the logistics services sector. In addition to multiple partnerships in the defense and military industries through its subsidiaries, SCOPA and TAL. The Pure Beverages Industry Company (PBIC) also launched its two bottled water brands, "Ival" and "Oska".
In 2022, Ajlan & Bros Holding Group joined Saudi Aramco in the fields of carbon fiber manufacturing, plastic recycling, and semiconductor manufacturing. It also launched Tiqmo, in partnership with SwiftPass, in the fintech sector.
Despite the multiplicity of various projects, industrial and real estate companies remain a safe haven against market fluctuations. Al Ajlan explains that Saudi Arabia has huge potential, as it is witnessing an increase in demand in many locations. He said: “The population increase in Riyadh led to the increase of demand for real estate, and there is also great development in Makkah and Madinah, attracting pilgrims, which will create a strong activity. The increase in the number of factories in the Eastern Region stimulates housing demand.”
With demand at record levels, Ajlan & Bros eyes a number of real estate projects, as it has more than 150 million square meters of land developed, as well as more than 70 million square meters of land in its investment portfolio.
Outside Saudi Arabia, Al Ajlan is looking to expand regionally, targeting mainly other GCC countries and Egypt. "There is huge potential in these countries, with population growth stimulating demand, unlike Europe, which has a smaller population," he stated.
He added, "I think this is the right time to invest in Egypt. There are many promising sectors such as: energy, water, health care, education, food, and beverages. The devaluation of the currency is also an incentive for investment and industrialization."
Investments from the GCC states are already pouring into Egypt, led by the United Arab Emirates and Saudi Arabia. “Egypt has received about $4 billion in investment from the GCC countries since the beginning of 2022,” says Hany Genena, an economic analyst and lecturer at the American University in Cairo. “The most attractive sectors today are green hydrogen, maritime transport, agriculture, automobiles, and tourism.”
For Ajlan & Bros, the ambitions transcend regional boundaries. Al Ajlan explains, without specifying specific companies: "We plan to inject more investments in the US and Chinese stock markets and take advantage of lower prices." He added, "Crises create opportunities, and I think there are a lot of attractive investments in global markets today." As the Saudi economy moves towards recovery, Al Ajlan is optimistic about the future.
He Added: "When the state's economy and its reserves are strong, this enhances confidence in investment, and the government's ability in terms of spending on projects becomes greater, which brings benefits to the private sector." For the businessman who has led his family's business for 43 years, he has become accustomed to the ups and downs of the economic cycle.
Al Ajlan recalls his family's humble beginnings: "My father worked as a trader in textiles, clothes, and foodstuff. We learned trade from him, when we worked with him, at a younger age." Following the example of their late father, four brothers decided to set up their own business to continue what he started. Al Ajlan revealed: "We started with negligible capital, and it may not be equal to the price of a plane ticket today."
While the textile business expanded rapidly, the company contracted with large brands such as: Projaih and Drosh and Al-Sami Shemagh, and two brands of bottled water: Ival and Oska. It then began trading directly with China, establishing its first factory there in 1999. Today, Ajlan & Bros employs more than 5,500 employees in its factory complex in Shandong Province, China. While expanding in the textile sector in China, the group's business also launched in the real estate sector in Saudi Arabia, where it established Abdulaziz Alajlan Sons for Trading & Real Estate Investments Co. "Ajlan & Brothers" in 2000, which today has assets exceeding $10 billion. The real estate company also acted as an international investment arm, with an investment portfolio of $3 billion in Asia, Europe, and America.
As the business continues to grow, responsibility is now being passed on to the third generation to preserve the family legacy. Al Ajlan explained: "All sons and daughters of the family, from the new generation, work with us in the group in different sectors. Each one of them works in a middle position in one of the subsidiaries, and not in leadership positions, because they are still learning."
According to Al Zaidi, the transfer of ownership from the current generation to the next is a major hurdle facing many family businesses today. “Given the current demographic trends of family businesses in the region, many of them are going through a critical phase in terms of their business ownership cycle, as transformations are expected to occur over the next 5 to 10 years,” he affirmed. However, this is not the only challenge facing the private sector, as there is also a lack of qualified local labor, high interest rates, and the high cost of energy and raw materials, all of which are major challenges, but Al Ajlan does not see this as a major concern, as the Holding Group exceeded many crises over 4 decades, in addition to the pandemic, which he believes is the worst crisis he has ever encountered. The Chairman expresses optimism about the future and sees promising opportunities ahead.
He emphasized: "Our region is growing rapidly thanks to the aware and active government administration, and the huge consumer base in the region. I believe that this is the right moment to take advantage of it."
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