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Abraaj will also acquire a minority stake in Bosicor Pakistan Limited, equivalent to the shares acquired through a mandatory tender offer to be made to the other shareholders in BPL.
The group's subsidiary, BPL, currently operates the fifth-largest oil refinery in Pakistan, with a rated capacity of 30,000 barrels per day (bpd) and a market share of 12%.
Established in 1995, BPL is listed on all three stock exchanges in the country. BPL is active in the production, marketing and sale of petroleum products.
The investment in Bosicor was made through Abraaj Capital's $2bn Infrastructure and Growth Capital Fund, which seeks to address the infrastructure requirements of the MENASA region in various sectors, including transportation, education, healthcare, water, manufacturing, petrochemicals, and power and utilities.
The investment will fund the establishment of a petrochemical plant and a refining unit that will provide the Bosicor Group with an initial aggregate refining capacity of 145,000 bpd and create an integrated platform that operates across the full value chain in the oil sector.
Further investments in related infrastructure are planned over the next few years with a view to creating Pakistan's first global-scale refining, petrochemicals and energy conglomerate.
With demand from transportation, power and manufacturing sectors increasing due to thriving economic activity in Pakistan, including annual GDP growth of up to eight%, the country's total demand for petroleum products is forecast to rise at a five-year compound annual growth rate of five% until at least 2010.
Pakistan currently imports over 50% of its high-speed diesel requirement and almost 100% of petrochemical products.
Arif Naqvi, Vice Chairman and Group Chief Executive Officer, Abraaj Capital said:
"This investment in the future of Pakistan - one of many made by Abraaj Capital and the first by IGCF - will greatly enhance the country's ability to fuel its ongoing economic expansion. Led by an expert management team and benefiting from Pakistan's extremely competitive labour and production costs, Bosicor is poised to become the clear leader in this key sector. Abraaj Capital's investment in Bosicor will not only contribute significantly to the company's physical expansion, but also assist Bosicor in increasing efficiencies through an ongoing programme of vertical integration. Already one of Pakistan's top five energy firms, Bosicor will shortly make an even greater contribution to the prosperity of one of South Asia's true economic success stories."
"This partnership with Abraaj Capital, which provides us with both additional capital and global management best practices, will greatly enhance our ability to contribute to Pakistan's future growth," said Amir Abbassciy, Chairman, Bosicor. "By addressing the current supply-demand imbalance in the national energy sector through the establishment of a new oil refinery and petrochemical production facility, Bosicor will help ensure that Pakistan continues to realise the promise of sustained economic expansion."
Posted by Eman Hassan
