Abraaj acquires 50 per cent of BMA

The acquisition, involving a total investment of AED25.7 million (US$7 million), was made through the Abraaj Buyout Fund (the "Fund"). It is also the Fund's first private equity investment in Pakistan.

Arif Naqvi, CEO and vice chairman of Abraaj Capital, said that the investment made by the Fund is strategically structured as a capital injection into BMA. He added that the capital expansion will enable BMA to offer its clients a broader and more complete range of financial services, including retail brokerage, asset management and private equity.

BMA currently offers brokerage and financial advisory services to Pakistani and international clients. The firm is recognised as one of the top five brokerage houses in Pakistan's equity, bond and foreign exchange markets.

The company has also participated as lead domestic advisor or manager in some of the most significant privatisation transactions in Pakistan, including the AED3.3 billion Global Depositary Receipts (GDR) issue of Pakistan Telecommunication Company and AED5.9 billion privatisation of Kot Addu Thermal Power Plant.

"A combination of several factors made this transaction very appealing: BMA is operating in a market where returns have recently been amongst the highest in the world; BMA has a well established and recognised brand name that is highly regarded in Pakistan's financial market; The firm has superior internal quality control and corporate governance standards and an exceptionally clean business track record; Also, more importantly, BMA has a solid and experienced management team of high caliber professionals, a critical aspect of our assessment when making investment decisions," explained Naqvi.

Farrukh H. Khan, chief executive of BMA, said that the capital expansion of BMA could not have come at a more favourable time given the kind of opportunities that are now available in Pakistan's market. He also added that while capital is a necessity for business expansion, equally important is the knowledge, expertise and strategic input of the investor. "With Abraaj, BMA could not have found a better partner," remarked Farrukh.

Simon Davies, executive director and chief financial officer of Abraaj Capital, said that the capital expansion will enhance operational flexibility, increase core business strength and add new revenue lines that will diversify BMA's overall revenue stream. Through this exercise, the firm will emerge as a fully integrated financial services provider.

"We see a lot of potential and value realization opportunity in BMA, which has had an outstanding run since the time it was established in 1992. Despite variations in political stability and fluctuations in the equity markets of Pakistan, for the five years, ending June 2003, the company witnessed a compounded annual growth rate of 12 per cent in revenue. With the implementation of the newly formulated business plan, in the next few years we expect BMA to grow into a solid financial house whose integrated services outstrip competition," Davies added.