Arcapita Bank BSC(c), a leading international investment firm headquartered in Bahrain, has announced that it and its affiliates have completed the acquisition of Varel International Ind, LP, a leading manufacturer of drill bits for the oil and gas industry for a transaction value of $401.4 million.

Varel manufactures high-performance polycrystalline diamond compact and roller cone drill bits for the oil and gas and mining and industrial industries, and is a technology leader in its field.  Varel invests heavily to maintain technological advantage, and currently has 38 patents registered and pending.  This technology advantage is very significant as reserves become more difficult to reach, requiring more complex horizontal and directional drilling.  The company is headquartered in Texas in the United States, and has 1,100 employees operating out of 22 countries, allowing Varel to deliver prompt and efficient service to a diversified customer base consisting of the world’s leading oil and mining companies throughout the world. 
Commenting on the transaction, Atif A Abdulmalik, CEO of Arcapita, said: “Earlier this year, we achieved a very profitable exit from our investment in Roxar, another company operating upstream in the oil and gas industry and we believe that Varel has similar potential to penetrate the $3 billion oil and gas drill bit market. Since 2004, the company has been growing at over 40 per cent per year, and the management team has completed strategically important human and capital investments to allow the company to maintain this trajectory.”
Varel’s sustained performance record is being attained in an industry that is experiencing high growth rates, driven particularly by high demand for energy and mineral products being mined from deeper and more inaccessible reserves.  Charlie Ogburn, head of corporate investments for Arcapita said: “Drill bit malfunctions and maintenance are expensive occurrences, so customers are naturally very demanding over the quality and reliability of their drill bit suppliers.  Varel’s vigorous implementation of lean manufacturing, the geographic coverage of its operations and its dedication to ongoing technical research leave Varel well placed for continued growth in both revenue and in market share.  We also believe that we will be able to successfully leverage our resources in the GCC to assist Varel in accelerating market penetration within this important region”.
Together with the recent acquisition of Profine in Germany, Arcapita has now successfully completed over $1.4 billion of investments within the last two months, in an environment in which transaction financing is unavailable to many institutions.
Profine GmbH, headquartered in Germany, is the leading European developer, manufacturer and marketer of PVC window and door frames. Profine was previously owned by Advent International and Carlyle Group. It has a production capacity of more than 450,000 tonnes of high-quality PVC frames.