Complex Made Simple

Massar Solutions announcement of intention to float and list on the Abu Dhabi Securities Exchang

The Shareholders Committee of Massar Solutions PJSC (“Massar” or the “Company”), (formerly Al Wathba Company for Central Services PJSC) a market leader in fleet solutions, vehicle rental and supply chain solutions in the United Arab Emirates (“UAE”), announces the intention of the Company’s shareholders to sell 240,000,000 ordinary shares in the share capital of the Company, being 40% of the Company’s total issued share capital (the “Offer”) and to apply for admission of the Company’s ordinary shares (the “Shares”) to the Abu Dhabi Securities Exchange (the “ADX”).

Mr Khalaf Al Dhaheri, Chairman of Massar, commented on the Public Offering:
“I am delighted to announce our plan to list Massar on the ADX and look forward to this exciting new phase of our development. We are pleased to become the first mobility solutions provider in the UAE to go public and that UAE nationals will now be able to participate in the continued success that we have enjoyed over the past fifteen years.
This is a highly significant day in the history of our company. We have ambitious plans for the future of Massar and an IPO is the logical next step in this process. The IPO will raise our profile and comes at a time when our business is accelerating as we build upon our stable foundations in fleet solutions and vehicle rental to provide innovative supply chain solutions to our clients. We look forward to welcoming future investors as stakeholders, as we continue our long term growth trajectory.”
Paul Greenwood, Chief Executive Officer of Massar, commented:
“We recently refreshed our brand from Al Wathba to Massar, which means “path” in Arabic. This resonates with the fundamentals of our business, managing our customers’ mobile assets and setting them on the right path. Everything we do is geared towards keeping cargo, cars and companies moving forward through our commitment to innovation and excellence and the IPO is the next step along our own path of sustainable growth.”?

Key highlights:
• Massar is a public joint stock company established and operating from 1998 in the Emirate of Abu Dhabi, UAE, and today, is a market leader in fleet solutions, vehicle rental and supply chain solutions.
• The Company’s current shareholders are Abu Dhabi Investment Company (“Invest AD”) and Abu Dhabi National Energy Company P.J.S.C (“TAQA”) (together the “Selling Shareholders”). Invest AD and TAQA own 51% and 49% of the existing shares respectively.
• The Company provides a comprehensive range of services across three core divisions: fleet solutions, vehicle rental services, and supply chain solutions to government, semi-government and private sector clients operating in the UAE’s industrial and commercial sectors.
• Massar business model combines the core stable income from the fleet solutions and vehicle rental divisions – generated from short-to-medium term lease, fleet management and rental contracts – with targeted growth from the supply chain solutions operations, which was established in 2014 to address the growing demand for outsourced logistics services in the UAE and GCC region.
• The Company has secured a strong market position by leveraging its competitive advantages, including its comprehensive service offering and deep market knowledge, efficient management of the asset lifecycle, strong purchasing power, leading technology and well-established relationships with governmental clients.
• Massar currently owns and operates a fleet of approximately 9,755 vehicles and manages a further fleet of approximately 6,755 for third party clients. It is diversified across all passenger and commercial vehicle classes, including buses, light/medium/heavy commercial vehicles, and light passenger vehicles. The Company plans to increase its fleet and managed vehicles to 16,000 and 20,000 units respectively over the next five years.
• Massar’s financial year starts on 1 January and ends on 31 December each year. For the nine month period ended 30 September 2014, the Company had net profit, revenue, and total assets of AED 64.9 million, AED 342.1 million, and AED 1,055.5 million respectively. For financial years ended 31 December 2011, 2012, and 2013, net profit was AED 93.9 million, AED 111.0 million, and 129.4 million respectively. The Company achieved strong net profit margins for the full financial years, exceeding 20%.
• Massar has a clear strategic direction for its future growth:
­ Fleet Solutions: As the foundation of the Company’s stable profits, this division will consolidate its service offerings and also grow its suite of value-add products. The Company is focused on expanding its brand and presence into Dubai and the Northern Emirates and diversify its customer base by focusing on revenue from the private sector.
­ Vehicle Rental: The Company is seeking to build on its existing platform through the launch of new products, such as a private usage-based consumer lease product in partnership with Arvento; in addition to growing the Payless Car Rental brand in Dubai and the Northern Emirates with future branch openings planned in Dubai, Sharjah and Ras Al Khaimah.
­ Supply Chain Solutions: Established to fulfil the regional need for outsourced logistics and after identifying opportunities in the Fast Moving Consumer Goods (“FMCG”) sector, is foreseen to be the largest contributor to future growth through increasing the operational units from 150 to 1,000 units, and investment into additional warehouse capacity and services.
Key offer highlights:

The Selling Shareholders are offering 240 million ordinary shares (the “Offer Shares”) in the share capital of the Company, representing 40% of the Company’s total share capital. The offer price is AED 2.40 (“Offer Price”) per Offer Share. Invest AD and TAQA own 51% and 49% of the Shares respectively and are selling 120 million Offer Shares each.

The Offer Shares will be allocated through two tranches:
• The first tranche is open to individuals (natural persons) who are UAE nationals with a minimum subscription of 5,000 Offer Shares. The first tranche comprises a total of 48 million Offer Shares representing 20% of the Offer.
• The second tranche is open to individuals (natural persons) who are UAE nationals, sole proprietorships and companies owned 100% by UAE nationals, public bodies and authorities of the federal government of the UAE or any one of the Emirates, including the EIA pursuant to the UAE Council of Ministers’ Resolution No. 8 of 2006, with a minimum subscription of 1,001,000 Offer Shares. The second tranche comprises a total of 192 million Offer Shares representing 80% of the Offer.
Applicants who wish to apply for Offer Shares need to ensure that they have an up-to-date National Investor Number registered through ADX.
Subscription for shares will open on 11 January 2015 and will close on . Following the Offer and the completion of the sale process, Massar will apply to list its Shares on the ADX.
The offer proceeds will be paid to the Selling Shareholders, as is standard for a share sell-down.
Macquarie Capital Middle East LLC and National Bank of Abu Dhabi P.J.S.C have been appointed as Joint Financial Advisers. National Bank of Abu Dhabi P.J.S.C is acting as Sole Lead Manager and Lead Receiving Bank. Abu Dhabi Islamic Bank P.J.S.C, Dubai Islamic Bank P.J.S.C, First Gulf Bank P.J.S.C and Union National Bank are acting as Receiving Banks in connection with the Offer. Allen & Overy LLP is acting as Legal Adviser to the Company and the Shareholders Committee and Latham & Watkins LLP is acting as Legal Adviser to the Joint Financial Advisers and Lead Receiving Bank.
Investment Highlights
First business operating in the mobility solutions sector to be listed in the UAE:
Massar’s listing will provide investors with a unique opportunity to benefit from exposure and growth in the fleet management, car rental and supply chain solutions sectors, in addition to enhancing industry diversification on the ADX.
Strategic shareholders:
The success of Massar is supported by its major strategic shareholders, TAQA and Invest AD. Both are prominent pillars in the UAE economy, and they will each continue to maintain a significant stake in Massar’s post-IPO.
Market leader:
Massar’s modern fleet is comprised of the leading vehicle brands with a focus on optimising resale values. The diversity within the fleet also allows Massar to meet a wide range of customers’ needs and required specifications.
Massar enjoys long-standing relationships with government, semi-government and private sector clients operating in the UAE’s industrial and commercial sectors. It also boasts high client retention rates, exceeding 85% in the fleet solutions division.
Strong growth prospects:
Fleet solutions division, the foundation of Massar’s profitability, intends to increase their lease units from 8,677 to 12,000 and its managed units from 6,755 to 20,000, while the vehicle rental is planning to increase its fleet size from 1,088 units to 4,000 units in the next five years.
Supply chain solutions division has also been established to address the growing demand for outsourced logistics services in the UAE and GCC region. After identifying opportunities in the FMCG sector, this division is foreseen to be the largest contributor to future growth, which will be achieved through increasing its operational units from 150 to 1,000 units, and investment into additional warehouse capacity and services.
Professional and experienced management team:
Massar is proud of its proven and experienced management team with wide experience in fleet management, car rental and supply chain solutions.

Consistent historical profitability with robust revenue visibility:
Massar has demonstrated consistent and strong profitability in all years since inception. The Company enjoys robust revenue visibility provided by medium-term lease contracts generating approximately 85% of Massar’s current revenue. Massar maintains strong EBITDA margins between 56% and 64% from YE 2010 to YE 2013 as a result of enhanced fleet profile and efficiency in operations.
The Company is committed to maximising shareholder value through dividend distributions.
Conservative capital structure:
Massar has a conservative capital structure with an underleveraged balance sheet compared to its peer group companies, giving it the opportunity to fund future capital expenditure through increasing leverage and enhancing returns to shareholders.