Dubai-based private equity funds don't get to buy companies this big every day. In June, a consortium led by Abraaj Capital announced the record $1.41 billion (€1.05 billion) acquisition of the Egyptian Fertilisers Company from Saudi Arabia's Savola Group, the largest LBO by a Middle Eastern sponsor to date.
A few days later, Colony Capital's €4 billion ($5.4 billion) buyout of Tamoil from the government of Libya marked the largest private equity buyout from a MENA-based vendor, but Tamoil is essentially a European company, and Colony is of course US-based. EFC therefore stands as the largest deal carried out by a MENA principal taking over a MENA company.
Is this the beginning of a wave of mega buyouts rolling across the region? Perhaps not. Mustafa Abdel-Wadood, a managing director at Abraaj Capital, said: “Given the money invested regional funds at present, this deal will not be the typical size, even with consortiums pooling together.” But he also said he saw “a growing trend” for transactions of this kind.
As a producer and exporter of fertiliser, EFC is betting on a boom in bio-fuels and hybrid motor vehicles. Arif Naqvi, founder of Abraaj, told Arabian Business in a recent interview that his firm was in talks with other Egyptian companies in the sector with a view to making further acquisitions.
To come along for the ride, a number of existing shareholders in EFC, such as Dubai Capital Group and Saudi-based Rashed Al Rashed & Sons Group, have rolled their stakes into the new business. Dubai Capital Group sold the 9.8 percent stake it had held for two years and re-purchased a 15 percent interest alongside Abraaj.
To fund the deal, Abraaj arranged a record $1.25 billion of leverage to refinance $460 million of existing loans and to inject new debt.
Also in June, Abraaj announced the a “significant investment” in Global Education Management Systems, an international education provider headquartered in Dubai.
The equity for both deals came from Abraaj's Infrastructure and Growth Capital Fund.