Ashmore Group is engaged in discussions to offload its majority stake in a Saudi waste management firm, two sources aware of the plan said, with a sale likely seen raising about $250-$350 million for the fund manager.
London-based Ashmore has identified two parties as potential buyers for its around 65-percent stake in Global Environmental Management Services (GEMS), and is currently in the process of picking a bidder to hold exclusive talks, one of the banking sources said, speaking on condition of anonymity as the sale process has not been made public.
Ashmore has appointed Bank of America Merrill Lynch to assist with the sale process, the sources said.
The source did not reveal the name of the bidders.
Jeddah-based GEMS and Bank of America were not available for comment. Ashmore declined to comment.
Ashmore, headed by billionaire Mark Coombs, has capitalized on the explosion in investor interest in emerging markets in recent years.
Though widely known to be an investor in listed equities, the firm also invests in unlisted firms such as GEMS for investors in its private equity and alternative investment funds.
GEMS provides services such collection, handling and disposal of petroleum and chemical wastes and is also involved in waste water treatment in Saudi Arabia.
Amid an industrial and infrastructure boom in the Gulf’s largest economy, demand for such services has seen a steady increase over the years, a second source said.
The kingdom is home to companies such as Saudi Aramco, the world’s top oil exporter and Saudi Basic Industries Corp, one of the world’s largest petrochemical companies.
Ashmore funds started investing in GEMS in the fourth-quarter of 2008 and then subsequently in the first quarter of 2009, Ashmore said in a filing in April.
“There have been several subsequent investment rounds to fund capacity increases and the consolidation of shareholdings,” it said without providing figures on its current ownership or the amount of investments.
“Shareholders have initiated discussions regarding several possible corporate events [merger, sale, third party funding],” it said at the time.
GEMS’ year-to-date earnings before interest, tax, depreciation and amortization (EBITDA) -- a key industry figure -- had increased 43 percent versus the year-ago period, Ashmore said in the filing, adding management expected to close the year “very close to the initial targets.”
Ashmore had assets under management of $78.5 billion as at end-September.