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Abraaj Capital closes largest Middle East private equity transaction

Abraaj Capital, which specialises in private equity investment in the Middle East, North Africa and South Asia, has announced the closing of what it says is the largest private equity buyo

Abraaj Capital, which specialises in private equity investment in the Middle East, North Africa and South Asia, has announced the closing of what it says is the largest private equity buyout ever carried out in the Middle East and North Africa, the USD1.41bn acquisition of Egyptian Fertilizers Company.

The buyout of Egyptian Fertilizers, one of the country’s largest private-sector fertiliser manufacturers and exporters, was made by Abraaj through its Infrastructure and Growth Capital Fund and Abraaj Buyout Fund II.

Dubai Capital Group, the regional asset management arm of Dubai Group, Saudi-based Rashed Al Rashed & Sons and other prominent regional firms have co-invested in the transaction with the aim of pursuing further growth opportunities in the fast-growing fertiliser sector across the Middle East and Africa.

Dubai Capital chief executive Mustafa Farid will join Abraaj representatives on the board of Egyptian Fertilizers. Deutsche Bank acted as advisor and provided the acquisition finance for the transaction.

Egyptian Fertilizers was established in 1998 as a free-zone joint stock company in the Northwestern Suez Economic Zone, near Egypt’s Sokhna Port. The company, which operates two factories and employs approximately 600 staff, distributes its products worldwide.

Its main products are granulated urea and liquid ammonia, nitrogen-based fertilizers that are widely used in the agricultural industry in Egypt and abroad. Especially in the United States and Europe, demand for urea is increasing as a result of expanded production of biofuels such as ethanol.

Sheikh Abdulrahman Ali Al Turki, chairman of Abraaj Capital, says: ‘The region is witnessing unprecedented growth in both foreign and domestic investment. The acquisition exemplifies our confidence in Egypt’s increased attractiveness as an investment destination. Rising levels of regional cross-border capital flows are leading to greater economic integration and an even stronger economy.’

Adds Abraaj vice chairman and chief executive Arif Naqvi: ‘The size and scope of this transaction represents a landmark for the region and the private equity industry here. Egyptian Fertilizers is one of the most efficient firms in the high-growth global fertiliser industry

‘With state-of-the-art manufacturing facilities, an experienced management team, and competitive labour and production costs, it will continue to lead the sector in Egypt, while also increasing its international reach. Today’s announcement signals Abraaj Capital’s ongoing commitment to the economic development of Egypt, following our landmark investment in EFG-Hermes last year.’

In September 2006 Abraaj became the single largest shareholder in Cairo investment bank EFG-Hermes through a capital increase that brought Abraaj’s own issued share capital to USD1bn. Abraaj Capital is today one of the largest foreign investors in Egypt.

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