Dubai-based private equity firm evaluates divesting from the Canadian coffee chain after four years.
A private equity firm based in Dubai, Gateway Partners, has resolved to offload its stake in the Gulf franchise of Tim Hortons Inc., four years after the firm invested a massive amount in the Canadian coffee chain. People familiar with the matter said that Gateway is working with BNP Paribas SA to sell its stake. The business said nonbinding bids would be submitted over the coming weeks.
PC: World Coffee Portal
According to sources that asked not to be identified because the information is proprietary, the plans are yet at preliminary stages and are likely to be modified in the future. Representatives for Gateway Partners and BNP Paribas declined comment on the possible sale.
Increasing Investor Interest in Regional Retail Market
The interest in getting out of the Tim Hortons Gulf franchise comes at a time when investors are increasingly eager to bet on the Middle Eastern retail sector. This comes off the back of a rapidly expanding middle class with higher disposable income. Regional retail companies have become more attractive to international investors as a result. For instance, the owner of US discount retailer T.J.Maxx recently acquired a stake in Dubai-based discount retailer Brands for Less. Bloomberg News reports that cosmetics brand Huda Beauty has been trying to sell off its perfume division.
Gateway’s Investment in Tim Hortons
Gateway Partners in 2020 first acquired 40% of the regional franchise of Tim Hortons for about $50 million. It is an operation owned by AG Café International-a joint venture of Dubai-based Apparel Group and Gateway that operates in excess of 338 outlets across the region in Saudi Arabia, the United Arab Emirates, and India.
The first Tim Hortons café in the region was opened in Dubai in 2011. Within a very short period since Gateway invested into the brand, growth has been immense, with the number of outlets, as of now, doubled over across the region.
Gateway’s Expansion and Recent Developments
In addition to its interest in Tim Hortons, Gateway Partners itself has had recent company-level changes. A Japanese financial conglomerate, SBI Holdings Inc., and former Federal Reserve official Roger Ferguson recently acquired minority stakes in the firm. Gateway, a private equity firm co-founded by Viswanathan Shankar, a former top executive at Standard Chartered Plc, continues to be a big player in the private equity landscape across emerging markets.
Another chapter in Gateway’s evolving portfolio is the company’s potential selling of its interest in Tim Hortons as it seeks to seize a growing retail market in the Middle East while exploring other new investment opportunities.
The sale process is at its introductory step, and potential bidders are expected to make their offers soon. Whether Gateway will continue selling or change the plan is all up to the bids and market conditions in the coming weeks.
