Abraaj Capital joins forces with Air Arabia

Abraaj Capital became a co-founder shareholder ahead of Air Arabia's AED2.5 billion initial public offering (IPO), which opened on March 18, 2007, and will close on March 27, 2007. The IPO is the largest offering in UAE history to date.

Abraaj Capital provides expertise through its extensive investment track record, which complements the carrier's own management strength. Abraaj Capital has added great value to the initial public offerings of portfolio companies such as Arabtec, a firm specialising in investment in the regional construction sector, and Aramex International, the global logistics company. Working alongside the management of these firms, Abraaj led them through a successful IPO process, and made lasting contributions to their corporate governance, financial engineering, M&A advice and deal sourcing.

In addition to acquiring a strategic minority stake in the Sharjah-based LCC through its Infrastructure and Growth Capital Fund (IGCF), Arif Naqvi, Vice Chairman and Chief Executive Officer of Abraaj Capital, and Mustafa Abdel-Wadood, the firm's Managing Director, have joined the Board of Directors of Air Arabia. These appointments, which come at a key moment in the LCC's corporate history, will add greater support to the management of Air Arabia.

Arif Naqvi said: "The LCC segment is poised for rapid growth in the MENASA region, with established airlines such as Air Arabia especially well positioned to benefit from strong demand for low-cost regional travel. Indeed, as a pioneer in the LCC space and with world-class management, Air Arabia has rightly earned a reputation as the clear leader in its field."

Mustafa Abdel-Wadood said: "The low-cost model, which has proved so successful globally, has an especially strong future here in the region. By offering flights of not more than five hours and with best practice operational reliability and aircraft utilisation, Air Arabia keeps its planes in the air, rather than on the ground. Even more important, the airline is able to elevate its financial performance to equal heights."

Having served more than 3.4 million customers since it began operations and currently serving 35 destinations, Air Arabia has been profitable since its second year of operations. The investment made by Abraaj will support the airline's regional expansion plans and aircraft acquisition strategy, as well as provide capital for infrastructure development at Sharjah Airport, where passenger traffic increased more than 36 per cent last year, and the facility received more than 3 million passengers.

Abraaj Capital's investment in Air Arabia is fully in line with the aims of the IGCF, which more broadly seeks to address the infrastructure requirements of the MENASA region, including transportation, healthcare, water, petrochemicals, power and utilities, and education. The investment required in these sectors over the next decade exceeds well over US$630 billion, including US$188 billion for transportation alone, according to "The Infrastructure Investment Requirements of the MENASA Region," an Abraaj Capital research report.