Abraaj Capital and BMA Capital launch the first and largest Pakistan focused Private Equity Fund of US$300 million
• Fund looks to fully close by September 2006
• Targeted internal rate of return of 30%
• Fund to pursue broad-based & opportunistic strategy and not sector-focused
Abraaj Capital, one of the leading private equity firms in the Middle East, North Africa and South Asian region and BMA Capital, one of the most prominent investment firms in Pakistan’s financial markets launched a US$ 300 million Abraaj BMA Pakistan Buyout Fund L.P. It is the largest Private Equity fund targeted to investments in Pakistan.
The announcement was made by His Excellency the Prime Minister of Pakistan Shaukat Aziz in a ceremony held at the Prime Minister’s Secretariat in Islamabad. While commenting on the announcement the Prime Minister congratulated Abraaj Capital and BMA Capital on their pioneering effort, and added, "This fund is a testimony to the economic progress of Pakistan and the favorable conditions that are available for investment." He also re-emphasized the role of FDI and Private Equity in Economic development of Pakistan and commended Abraaj and BMA for taking the lead role.
The Abraaj BMA Pakistan Buyout Fund will target an internal rate of return of 30% and will pursue a broad-based and opportunistic strategy, rather than a sector focused strategy. The fund will concentrate on sectors with high growth rates and proven business models. It will also look into fragmented sectors with room for consolidation, with significant barrier to entry and with stability of business cycle and resistance to recession.
Commenting on the announcement, Arif Naqvi, CEO & Vice Chairman, Abraaj Capital said: “We are delighted to announce our latest buyout fund dedicated to Pakistan. Pakistan’s economy is the second fastest growing economy in Asia; the country has achieved an impressive 8.4% growth in GDP in 2005 with relatively low but rapidly increasing levels of debt financing, exports, and FDI creating significant economic upside. The Government’s increasing focus on privatization and the extremely conducive regulatory environment for foreign investment present great opportunities for business and we are proud to be part of it.”
He added: “Private Equity as an asset class (conspicuous by its absence until now in Pakistan) in conjunction with government’s ongoing initiatives can be a major facilitator of wealth creation for all the social and economic classes, thus helping to bring about a balanced and broad-based growth across the populace. It is against this backdrop that Abraaj Capital and BMA Capital have launched the Abraaj BMA Pakistan Buyout Fund. The proposed fund will provide its global investors with an opportunity to participate in Pakistan’s success story through a unique and novel asset-class, and through the use of co-investments and leverage, it will facilitate investments of up to US$ 1 billion into Pakistan, across a range of industries over the next four years. We believe that the partnership between Abraaj Capital and BMA Capital is perfectly positioned to leverage the present opportunity.”
Farrukh Khan, CEO, BMA Capital, said: “Abraaj and BMA together aim to be a formidable force in channelling global private equity capital to high growth Pakistan based opportunities. In short, our mission is to further transform the investment image of Pakistan Inc. by making it one of the emerging investment destinations of choice. Moreover, being committed to growth and innovation in Pakistan's Capital Markets; we are particularly happy to be involved in the first large scale private equity fund. I am confident this will act as an important catalyst for further FDI. The timing is perfect, as Pakistan has increased its rate of privatization completing US$ 4.7 billion of privatizations in the last three years with the current pipeline estimated at over US$ 10 billion. Pakistan has also received record FDI of approximately US$ 3 billion this year. The mandate of the fund is influenced and shaped by the important structural changes undertaken by the present government, current and anticipated macro-economic factors and favorable demographic changes in the medium- to long-term, resulting in outstanding investment opportunities in Pakistan.”
“We see a number of consolidation opportunities in many fragmented industries such as insurance, banking, basic materials, power, automotive parts, telecom, textiles, etc. With BMA’s deep knowledge and understanding of Pakistan and involvement in landmark transactions in Pakistan and Abraaj Capital’s regional expertise in private equity, we intend to focus on ‘buy & build’ initiatives, under-leveraged companies with quality assets or stable cash flows and under-managed or under-capitalized assets, adding significant value for both our partner companies and shareholders in the process ” he added.
Moazzam Malik, Managing Director and Head of Private Equity at BMA Capital said, "BMA Capital has already commenced on the ground due diligence with Abraaj teams on transactions in Pakistan and we have an extensive deal pipeline in key growth sectors. Abraaj and BMA provide a winning combination for target companies and the fund's investors. We are keen to attract the best talent to this opportunity as we expand."
About Abraaj Capital: A member of the Dubai International Financial Centre, Abraaj Capital is one of the leading asset management firms in the Middle East, North Africa and South Asian region. It has US$ 1.5 billion of assets under management. The firm’s primary expertise is in private equity buyouts, strategic minority block positions in public enterprises and real estate investments within the region. As recognition of its operating excellence and regional expertise, Abraaj received the ‘Middle Eastern Private Equity Firm of the Year’ award from Private Equity International in March 2006. In addition, it has received the ‘Best Private Equity House’ award from the Banker Middle East in May 2006. Recently, Abraaj Capital has entered into a joint venture with Deutsche Bank and Ithmaar Bank to raise a US $ 2 billion Shari’a compliant ‘Infrastructure and Growth Capital Fund’ in the region. The team of professionals at Abraaj (representing over 20 nationalities) has a long history of working together and has been associated with some of the landmark private equity transactions in the Middle East, including Aramex (the first ever tender/buyout of an Arab company listed on the NASDAQ), Inchcape Middle East, Spinneys, Joramco and 25 other companies across the region. About BMA Capital:
BMA Capital is one of the leading investment firms in Pakistan’s financial markets. The firm and its group companies provides a wide range of services with a particular focus on capital markets, corporate finance, asset management and retail brokerage, and has been a corporate member of the Karachi Stock Exchange (KSE) since 1992. BMA is one of the leading brokers in the equity, fixed income and inter-bank foreign exchange markets.In June 2005, BMA Asset Management was licensed to provide Investment Advisory and Asset Management services to launch both open-ended and closed-end mutual funds. The BMA Group has been instrumental in the launch of the BMA Pakistan Opportunities Fund (POF), which is Pakistan’s first open end offshore fund, focusing on investment opportunities in listed securities in Pakistan and has rapidly established a strong presence with Assets under Management crossing the Rs.4 billion mark in record time. In April 2006, BMA Capital’s Corporate Finance & Advisory successfully completed the largest privatization transaction in the history of Pakistan, advising Etisalat on the acquisition of PTCL; the firm has the distinction of successfully advising on over 50% of all privatizations in Pakistan, amounting to nearly US$4 billion. BMA has also won the mandate to lead manage an international GDR offering for OGDC, Pakistan’s largest oil and gas exploration and production company, in a consortium consisting of BMA, Goldman Sachs and Citigroup. BMA Trade, the firm’s retail brokerage brand, is currently in soft launch and will be opening its first flagship outlets in Karachi and Islamabad in June 2006.Abraaj Capital