Saudi investors of Abraaj Capital sell their 30% stake in National Air Services to Kingdom Holding Company

Kingdom Holding Company founded by HRH Prince Alwaleed bin Talal bin Abdulaziz Al Saud, generates a 52% internal rate of return (IRR) over a two-year holding period. The implied valuation of NAS increased by four times over this period, providing an excellent return to the Abraaj Saudi investors.

Founded in 1999 in Riyadh, NAS today is a leading provider of aviation services in the Middle East. The company's diverse portfolio of products and services includes Nas Air, the Kingdom's first low-cost carrier; NetJets Middle East, which provides fractional aircraft ownership and leasing; Al Khayala Airlines, an all-business-class carrier serving Jeddah, Riyadh and Dubai; Aircraft Management Services, Aircraft Charter Services and other unique aviation solutions.

Over the past two years, the active strategic involvement of Abraaj Capital allowed NAS to expand its reach and range of services substantially. In December 2006, NAS became the first private company to receive a Saudi Arabian government license to provide commercial aviation services from Riyadh.

Last year, the company launched Nas Air, which was introduced with a fleet of five aircraft and is expected to increase to 18 aircraft by 2010. Nas Air currently serves 20 domestic routes with 241 flights per week. It has already started its first international flights to the UAE and plans to rapidly expand its international operations in 2008.

In 2007, NAS, with the support of Abraaj Capital, finalised one of the biggest aircraft acquisition deals by a private company in the history of Middle East aviation, by signing contracts with Airbus, Gulfstream, Dassault and Hawker Beechcraft. With an investment of US$4 billon, these agreements will bring the company's total fleet size to 167 aircraft by 2012, confirming its status as the fastest-growing private aviation fleet in the Middle East.

"National Air Services was founded less than a decade ago by a group of Saudi Arabian investors who shared a vision of the potential future of the aviation sector in the Kingdom and the wider region," said Arif Naqvi, Vice Chairman and Group Chief Executive Officer, Abraaj Capital.

"Keep in mind that, at the start of 1999, oil was selling at barely $12 a barrel and Saudi Arabia's annual GDP stood at just $140bn, compared to $572bn in 2007. A decade ago, few could have predicted the enormous economic expansion that has taken place in Saudi Arabia in the past few years - and fewer still saw the opportunity in the aviation sector.

"Over the past two years, Abraaj Capital has made an extremely significant contribution to unlocking the value of this visionary company, which has undergone a corporate restructuring during this period of sustained organic growth and unparalleled expansion," he added. "By contributing our management expertise, we have clearly positioned NAS for even greater future growth. We wish the company continued success."

"National Air Services has broadened its product and service portfolio, and enormously accelerated its growth trajectory," said Ayed Al Jeaid, Chairman, National Air Services. "There is no question that this targeted expansion has been facilitated by the strategic support of Abraaj Capital, which has contributed to the ascension of NAS into the Middle East's premier provider of aviation services. We remain grateful to the firm for its lasting contribution to our record of achievement."

"The current economic growth that is being witnessed by the Arab world in general and the GCC countries in particular is creating a demand in the aviation sector parallel to this growth. As a result, this will create a strong need for the presence of a regional service provider in the aviation sector to meet the increased demand. Our strategic goal is to rely on the competitive advantages of NAS to develop this regional entity," said Ahmed Halawani, Executive Director of Private Equity in Kingdom Holding Company.

"Last year, Middle East passenger traffic grew by 11.4%, including a record increase of 19.2% in December 2007 alone. That growth was concentrated in the Gulf, and led by the most rapidly expanding economies, such as Saudi Arabia," he added. "We are confident that NAS will continue to be seen as the region's leading provider of aviation services, and as the first-choice carrier for travelers based in the Kingdom and across the Middle East."