DUBAI, May 28 (Reuters) - Standard Chartered’s private equity arm is seeking to sell its stake in a unit of Saudi Binladin Group, the construction group whose owners were entangled in Saudi Arabia’s anti-corruption purge, said three sources familiar with the matter.
Construction Products Holding’s (CPC) parent company Binladin is undergoing a restructuring which will likely affect its hundreds of units, after the government took a stake in the conglomerate and formed a committee to oversee its management.
Two of the sources said Standard Chartered was not comfortable with uncertainty over what the shake-up could mean for CPC, which specialises in building materials and services, in the absence of specific details about the restructuring.
Standard Chartered declined to comment. CPC could not immediately be reached for comment.
It was not immediately clear if the bank had any plans to sell its stake before Binladin was caught up in the government’s anti-graft campaign, which sent shockwaves through the business community late last year.
The situation exposes the potential pitfalls for foreign investors resulting from the crackdown, in which scores of royals and top businessmen, including several members of the Binladin family, were detained in the Ritz Carlton hotel in Riyadh. Most have been freed after reaching settlements with the state.
Saudi Arabia is keen to attract foreign investors as it tries to diversify the Arab world’s largest economy away from oil.
Standard Chartered Private Equity bought a minority stake in CPC for $75 million in 2011, its first investment in Saudi Arabia, as it sought to benefit from the firm’s leading role in the kingdom’s construction market and its regional growth plans.
CPC has operations in countries including Saudi Arabia and Egypt. In 2014, when it had been considering an initial public offering (IPO), it had annual sales of about 10 billion riyals ($2.7 billion).
But the IPO has yet to materialise and, like many other construction industry players, CPC has been hurt by delays in payments and projects as the Saudi government trimmed spending in recent years due to lower oil prices.
$1 = 3.7502 riyals Additional reporting by Marwa Rashad in Riyadh Editing by David Holmes