Abraaj announces first closing of ABOF II with commitments of USD300 million

The Fund is expected to be fully subscribed with US$ 500 million in commitments upon its second and final closing.

Significant response from regional institutions such as Dubai International Capital, which has committed $25 million to the Fund, has also led Abraaj to bring forward the final closing of ABOF II to September 30 from December 31, 2005.

Arif Naqvi, vice chairman and chief executive of Abraaj Capital, described the phenomenal response to the Fund as an endorsement of private equity investing in the Middle East and sub-continent region and acknowledgement of Abraaj Capital's solid track record.

He said: "This response is not just about Abraaj's past successes, but it also is a reflection of the heightened interest of investors, financial institutions as well as individuals, in private equity investing in the Middle East.

" We are privileged to have been the region's pioneers in institutionalising private equity, an asset class that now has emerged as an industry. Our Abraaj Buyout Fund I (ABOF I) which is fully invested, was the region's first private equity buyout fund and we are extremely happy that today the Fund, within 18 months of its final closing, has already paid back its investors 85 per cent of their principal with exits from Oman National Investment Corporation Holding SAOG (ONIC) and Aramex International Limited."

The ABOF I continue to be invested in six companies in the Middle East and Pakistan. Exits from ONIC on the Muscat Securities Market, last year, generated an Internal Rate of Return (IRR) of 84 per cent, while the recent trade sale of Aramex to Arab International Logistics at over 5 times return on original cost, generated an IRR of 74 per cent over a three and a half year holding period.

Shirish Saraf, executive director of Abraaj Capital, said he is confident that ABOF II, which targets capitalisation of $500 million, will be significantly over subscribed, given the enthusiasm the Fund has generated among institutional investors. Already, the first closing amount makes the Fund the largest in private equity throughout the region.

"We have drawn down ABOF II's first capital drawdown of 25 per cent and we intend to fully deploy this capital in the next six to eight months time," he said.

The new Fund inherits the investment approach from ABOF I, as both the funds invest opportunistically and are not sector specific. However, ABOF II will be looking out for deals that demand larger funds commitments, according to Saraf.

He explained that the Middle East and sub-continent region is witnessing significant deal flows and cross-border opportunities that include big-ticket privatisation deals. The ABOF II will be closely following privatisation bids across the region and is likely to actively participate in those deals that provide the right investment opportunity for the private equity major.

"We already have a number of identified transactions that we have been working on over the last year and expect to close these transactions imminently. On an overall basis, we expect ABOF II to invest in up to 20 companies.
We have the regional expertise and experience with a very strong management team and are very confident that with ABOF II, we will bring substantial dynamism and value in the region's M & A scenario in the coming months," Naqvi concluded.