Abraaj General Presentation

Abraaj Capital

September 2005

2

§ Who we are: Abraaj Capital Limited (“Abraaj”) is a premiere investment firm that specializes in Private Equity investments in the Region. The management team has brought together some of the most compelling and successful transactions in the history of leveraged acquisitions across the region. With over US$260 million of assets currently under management, Abraaj has pioneered institutionalizing private equity practice in the region and is setting trends and benchmarks for others to follow.

§ Our track record: The management team has a strong track record of success including some landmark transactions such as the leveraged buyout of Inchcape’s Middle East businesses. Abraaj, through Abraaj Buyout Fund, started investing in the region in early 2002 with the successful leveraged buyout of Aramex International. Over the years, Abraaj has established a permanent presence through a series of successful acquisitions of well established companies across various parts of the region. Today, Abraaj is a recognized leader in the private equity industry of the region having invested over US$140 million of the existing funds under management in over 15 separate transactions valued at over US$250 million.

§ The opportunity: The region comprising of the Middle East, North Africa and South Asia presents a very attractive investment opportunity. The changing economic environment, including growing capital markets, increasing number and openness of privatizations, as well as limited competition present a window of opportunity for private equity investment.

§ Our process: We follow a clear and structured investment process through deal sourcing, screening, selection and execution by our management and investment teams, followed by active portfolio management and concluded with a successful exit strategy. We source deals through extensive relationships, within the region and with international firms, and through our knowledge of the corporate developments in the region.

§ The proposal: The Abraaj Buyout Fund II, launched in March 2005, will seek capital commitments of US$ 500 million. This Fund is the successor to the US$116 million Abraaj Buyout Fund, closed in June 2003, which is now largely invested. The Abraaj Buyout Fund II will follow the same investment mandate as the earlier fund, targeting investments in the Middle East, North Africa and South Asia, acquiring controlling or significant interests with board representation in stable, mature, well-managed businesses and creating value through operational and financial improvements, management incentives and the use of leverage.

Executive Summary

3

1. Who we are2. Our track record

3. The opportunity

4. Our Process

5. The Proposal

4

§ Abraaj Capital Limited (“Abraaj”) is a leading private equity firm in the region: defined as comprising principally the GCC countries, the Levant region, and including opportunistically, other countries within the Arabic speaking (world often referred to as MENA) and the South Asian sub-continent

§ Headquartered in Dubai, the Firm has a highly qualified and diverse team of over 40 people including 23 investment professionals, with a long history of working together at the senior level

§ The Firm’s Primary Expertise is in private equity buyout investments, strategic block positions in public enterprises and Real Estate within the region as defined above. Investments are carried out through funds, limited partnerships and special purpose investment vehicles

§ The Firm distinguishes itself by its disciplined approach to investment criteria throughout the investment cycle process from evaluation screening through to exit. A key feature is an active emphasis on post-acquisition buy-and-build initiatives that create value around the acquired company’s core businesses

§ Abraaj is committed to a Corporate Governance Process that ensures adherence to “global best practice” standards and transparency in operations

§ Abraaj is committed to being in the forefront of Thought Leadership in the region insofar as it pertains to the private equity industry by actively working with high quality external advisors, think tanks, private sector initiatives and governmental bodies

§ Having fully invested the existing Buyout and Special Opportunity Funds, Abraaj has launched Abraaj Buyout Fund II L.P. (ABOF II), which is being marketed at present selectively to certain strategic LP’s

Introduction to Abraaj..

5

PE SKILLSADDING VALUE TO DEALS &

PORTFOLIOMANAGEMENT

REGIONAL INTELLIGENCESOURCING, CREATING,

& EXITING DEALS

ACCESS TO CAPITALIN THE REGION

Abraaj ü ü ü

§ 1st institutional Private Equity firm in the region

§ Strong management success track record and highly experienced professional team

§ Extensive portfolio management and corporate finance talent

§ Extended regional network with access to high potential deal sources

§ Extensive market knowledge and regional intelligence and experience

§ Developed and structured idea generation and screening criteria

§ Established and strong investor base

§ In excess of US$ 830 million under management

§ Strong network of investors and prospects

Abraaj Assessment..

6

Abdulrahman Ali Al Turki, Chairman§ Chairman & CEO of A.A. Turki Corp. Trading &

Contracting (ATCO Group), Saudi Arabia§ Director and Board Member of a number of firms

across the region including INVESTCORP, Bahrain

Hussain J Al Nowais, Non-executive Vice Chairman§ Chairman and MD of Emirates Holdings, a

leading diversified business groups in UAE§ Board member of a number of large corporations

in the region, including the Abu Dhabi Chamber of Commerce & Industry

Sheikh Sultan Bin Saqr Al Qassimi§ Co-Founder of GIBCA Group, diversified into

construction, industrial, insurance and banking activities

§ The founding member of the UAE’s first National Banks Association

Hamid D. Jafar§ Chairman, CEO, and sole owner of the Crescent

Petroleum Group of Companies§ Serves as Director on the board’s of numerous

companies in the region

Sheikh Nawaf Nasser Bin Khalid Al Thani§ President of NBKS Automobiles Group, the sole

distributor of Daimler Benz products in Qatar§ Chairman of Doha Insurance Company

Saud Abdulaziz Kanoo§ Chairman of Ossis Property Developers,

Bahrain, a leading property developers in the region

§ CEO & Deputy Chairman of Yusuf Bin Ahmed Kanoo WLL (Property Company)

Bassam Ghais§ MD of Al Jaber Energy Services, a premier

construction, logistics, oil and gas services, landscaping, industrial development, and trading group in the UAE

Non-Executive Directors..

7

§ Over 22 years of experience in banking, finance, and investment in the Middle East and South Asia

§ The Non-Executive Vice-Chairman of the Cupola Group which he founded in 1994

§ Track record in private equity is well recognized with his participation in some of the landmark private equity deals in the region including the LBO of the Inchcape Group’s Middle East businesses

§ From 1990 – 1994 was the Vice President of Business Development at the Olayan Group, Saudi Arabia’s largest private trading company where he was involved in numerous industrial projects and franchise development activities

§ Member of the Young Presidents Organization, Emirates Chapter Chairman in 2002-2003

§ Designated a New Asian Leader by the World Economic Forum in 2003-2004

§ Graduate of the London School of Economics

Executive Directors..

Arif Masood Naqvi, Executive Vice-Chairman & CEO

8

§ Over 16 years of international experience in investment and merchant banking§ Currently a Director at Aramex Holdings, previously served as a Director of the Commercial Bank of Oman, Al Ahlia Capital Markets, TAIB

Venture Capital (Mauritius) Limited, and Memo Express§ Founded Oriel Investment Co. LLC, Dubai, in 1998, which became a leading regional corporate finance firm§ From 1994 – 1997, worked with TAIB Bank in Bahrain where he was responsible for direct equity investment and syndication activity in the

GCC§ From 1991 – 1994, worked at ANZ Investment Bank’s Capital Markets Group where he was responsible for developing corporate finance

businesses with an emphasis in M&A and corporate restructuring § Trained with Salomon Brothers and BDO Binder Hamlyn in London between 1989 – 1991§ Graduate of the London School of Economics

§ Over 12 years of experience in private equity, corporate finance, business strategy, and consulting§ During his tenure at Abraaj he has led a number of key transactions that the firm has consummated and represents the firm on the boards of

a number of portfolio companies including Aramex, Septech, and JorAMCo.§ Former Vice-President and Head of Strategy and Investments at the Cupola Group where he was responsible for investment strategy and

for managing and restructuring the group’s private equity portfolio§ Between 1999 and 2000, he was at Mashreq Bank in Dubai where he was responsible for credit portfolio management and for

institutionalizing credit portfolio management strategy and processes§ Worked with McKinsey & Company in India where he was a member of the firm’s Asia Pacific Energy Practice focusing on the privatization

of the energy sector and was part of the team that set up the McKinsey Knowledge Center near New Delhi§ Holds a Bachelor of Science in Engineering from AMU, India

Shirish Saraf

Humayun Shahryar

Simon Davies

Executive Directors..

§ Over 23 years of experience within the finance field, in both public practice and in industry, with the last 17 years spent as a Finance Director for medium to large sized firms.

§ At Abraaj he is responsible for the financial management of all portfolio companies in addition to the firm itself. § Finance Director for 6 years prior to 2002 at Publicis Groupe UK, one of the world's largest communications groups§ Between 1994 and 1995, was the Head of Research and Finance Director of Global Emerging Markets Limited§ From 1992 to 1994, was Group Finance Director for Flightbookers, a retail travel agent and airline GSA now known as ebookers, Europe’s

largest internet travel portal§ Qualified as a Chartered Accountant in 1985 and is a member of the Institute of Chartered Accountants in England and Wales

9

VALUE GENERATING PROCESSES

INFLUENTIAL SHAREHOLDERSWITH EFFECTIVE BOARD

REPRESENTATION

COMPLEMENTRY SKILLS OFMANAGEMENT

SUPERIOR DEAL FLOW STRONG RESEARCH

PROVEN APPROACH TO PORTFOLIO MANAGEMENT DIRECTORS’ TRACK RECORD

EFFECTIVE CONTROL SYSTEMS & EXIT STRATEGIES

SUPERIOR RETURNS FOR OUR SHAREHOLDERS

Multi-faceted Value Generating Approach..

10

§ Relevant Experience: Over 100 years of PE-related experience between them.

§ Industry Backgrounds: Private Equity, Investment Banking, Financial Research, Operating Companies, Strategy Consulting, Accounting

§ Sector Expertise: Finance, Insurance, Real Estate, Retail, Industrials, Telecom, Media, Technology, Healthcare

§ Languages: English, Arabic, Urdu, Hindi, French, German, Spanish, Italian

§ Nationalities: Pakistani, Indian, Lebanese, Egyptian, Jordanian, British, Omani, American, German, Australian, Sri Lankan, Swiss

§ Company Backgrounds: Accenture, N. M. Rothschild & Sons, Credit Suisse First Boston, Walt Disney Co, McKinsey & Co, Goldman Sachs, Mercer Management, Salomon Bros, Lehman Bros, Merrill Lynch, Citigroup, Jardine Fleming, Nomura, Robert Flemings, Olayan, Forte Hotels, Dubai Islamic, Atlas, Dubai Investments PJSC , Majid Al Futtaim Investments

§ Educational Backgrounds: London School of Economics, Stanford, MIT, Sorbonne, University of Massachusetts (Amherst), University of London, University of Reading, University of Strathclyde, ESLSCA University, Concordia University, Buckingham University, International Partnership of Business Schools

Strong and Diverse Team..

11

1. Who we are

2. Our track record3. The opportunity

4. Our Process

5. The Proposal

12

The Abraaj Buyout Fund L.P. (ABOF)

The Abraaj Special Opportunities Fund L.P. (ASOF I)

Fund Background & Performance § First Middle East focused buyout fund § Closed in June 2003 with total commitments of US$ 116 million§ Fully drawn down in January 2004 and fully invested by the end of 2004§ Target IRR 30%§ The Net Asset Value per US$ 1 invested was US$ 1.58 as of 15 March 2005§ Fund made a total of eight investments;

§ Six under portfolio management - Amwal Capital (Financial Services - Qatar), Spinneys Holdings (Retail - Regional), BMA Capital (Financial Services - Pakistan), Septech Emirates (Waste management - GCC), JorAMCo (Aircraft maintenance services – International), Maktoob (Online Portal - Regional)

§ Two exited - ONIC (Insurance and Financial Services - Oman, gross IRR of 84%, a 1.7x gain on invested capital), & Aramex (Logistics - International, gross IRR of 74%, a 5.6x gain on invested capital)

§ Closed at US$ 32.6 million on December 31, 2003§ Primarily focused on equity investments in listed GCC companies and pre-IPO situations§ Target IRR 30%§ 100% of invested capital returned to L.P.’s in May 2005§ Profits distributed in June 2005§ Gross Fund IRR 59%

The Abraaj Real Estate Fund L.P. (AREF)

§ Closed on December 15, 2004 with commitments of US$ 113.5 million§ Fund is 75% drawn down and invested. Expected to be fully drawn down and invested by end of 2005§ Target IRR 15%§ The Net Asset Value per US$ 1 invested was US$ 1.75 as of 15 March 2005§ Fund currently has a total of seven investments;

§ Arab Technical Construction Company (Construction - UAE, market value at US$ 24 million, a 4.0x gain on invested capital), The Dead Sea Company for Conferences and Exhibitions (Commercial -Jordan), Emirates International Holdings (Commercial - UAE & Australia), Abanar LLP (Commercial -UK), ART Marine (Marine Leisure & Hospitality - Regional), Twin Islands (Residential – Pakistan), Emirates Heights Development Limited (Hospitality – Mixed Use Real Estate, UAE)

In Excess of US$260 Million Under Management (First Generation of Funds)

13

The Abraaj Buyout Fund L.P. II (ABOF II)

The Abraaj Special Opportunities Fund L.P. II (ASOF II)

Fund Background & Performance

§ Successor Fund to ABOF I§ Target Size – US$500 million§ First closing on July 31st, 2005 with total commitments of US$ 300 million§ Expected closing September 31st, 2005§ Target IRR 30%

§ Successor Fund to ASOF I§ Closed at US$ 100 million on August 8th, 2005§ Fund is 50% drawn down and invested. Expected to be fully drawn down and invested by the end of 2005§ Target IRR 30%

US$600 Million Under Management (Second Generation of Funds)

14

All in US$ (000’s) Business Description

Investment Date

Exit Date Valuation Invested

CapitalRealized Proceeds

Value of Unrealized

Investments

Total Value of Investments

Multiple of Cost

Gross IRR

Aramex International Logistics – Middle East Feb-02 Jun-05 Realized 15,000 83,639 - 83,639 5.6x 74%

ONIC HoldingsInsurance & Financial Services –Oman

May-03 Apr-04 Realized 11,038 19,017 - 19,017 1.7x 84%

Total Realized Investments 26,038 102,656 - 102,656 3.9x 79%

Amwal Capital Financial Services –Qatar Jul-03 - Cost 3,300 - 3,300 3,300 - N/M

Spinneys Retail – Lebanon Apr-04 - Cost 27,200 - 27,200 27,200 - N/M

BMA Capital Management

Financial Services –Pakistan Apr-04 - Cost 7,300 - 7,300 7,300 - N/M

Septech EmiratesWaste Water Management -U.A.E.

Sep-04 - Cost 6,200 - 6,200 6,200 - N/M

Jordan Aircraft Maintenance Company

Aircraft Maintenance Services – Jordan Jan-05 - Cost 28,000 - 28,000 28,000 - N/M

Maktoob Online Portal –Jordan Jan-05 - Cost 5,200 - 5,200 5,200 - N/M

Total Realized & Unrealized Investments 103,238 102,656 77,200 179,856 1.7x NM

Exited investments at 3.9x multiple of cost

The Abraaj Buyout Fund L.P. Performance..

15

Abraaj Special Opportunities Fund I Performance..

$32.6

$14.6

$32.6$18.0

$20.1

Committed Capital

Realized Proceeds

(April 6th 2004)

Realized Proceeds

(May 5th 2005)

Profit (Distributed)

Realized Proceeds

(May 5th 2005)

Holding Period 18 Months Gross IRR 59%

45% of committed capital



US$ millions June 30th 2005

16

Abraaj Real Estate Fund Performance..

All in US$ (000’) SectorInvestment

DateInvested Capital

Realized Proceeds

Value of Unrealized Investments

Total Value of Investments

Multiple of Cost

Arab Technical Construction Company

Construction - UAE August 2004 6,000 - 24,000 24,000 4.0x

Dead Sea Convention Centre

Commercial - Jordan

September 2004 2,000 - 2,000 2,000 1.0x

ART Marine Tourism -GCC March 2005 10,000 10,000 10,000 1.0x

ABANAR LLP Commercial-UK April 2005 9,000 - 9,000 9,000 1.0x

Emirates International Holdings

Commercial-UAE & Australia

April 2005 18,800 - 18,800 18,800 1.0x

Twin Islands Development

Residential -Pakistan May 2005 18,000 - 18,000 18,000 1.0x

Emirates Heights Development Limited

Commercial-UAE

June 2005 20,000 - 20,000 20,000 1.0x

Total 83,800 - 101,800 101,800 1.2x

17

Company Profile

§ Had been operating in the Middle East for over 130 years through 15 companies in 11 countries

§ Was the leading retailer, wholesaler, and distributor of leading food products, beverages and fast moving consumer goods (FMCG)

§ Acquired in April 1999 for US$ 101.8 million in a leveraged buyout financed by ANZ Investment Bank

§ Leveraged buy out structure using US$ 4.3 million in equity, US$ 37.5 million subordinated loan notes, US$ 40 million of senior debt, US$ 20 million in deferred payment bank guarantees

Post Acquisition

§ 10 companies divested over a period of approximately 3 years for a total of US$ 173 million

§ Gross capital gain of 1,630% on exited investments over the three year period

§ Three operating companies remain in the portfolio

One of the landmark leveraged buyout deals in the Middle East generating a gross capital gain of 16.3x equity on exited investments

Past Transactions: Inchcape Middle East

18

VEHICLE: The Abraaj Buyout Fund

WEBSITE: www.aramex.com

COUNTRY: International

SECTOR: Logistics

ACQUISITION DATE: January 2002

TRANSACTION SIZE: US $ 65 million

STAKE: 100%

EQUITY: US $ 25 million

DEBT: US $ 40 million

STATUS: Realized

EXIT: June 2005

HOLDING PERIOD: 3.25 years

EXIT VALUE: US $ 192.4 million

IRR: 66.4%

COMPANY PROFILE: Founded in 1983, Aramex is the region’s leading logistics and courier provider with a network of 132 offices in 34 countries. Aramex is the founding member and chair of the Global Distribution Alliance (GDA), which partners with other regionally focused logistics firms to allow for a greater global presence. It was the first Arab company to list on the NASDAQ stock market (listed in 1997). With its comprehensive multi-product offering, Aramex has become a one-stop total transportation solutions company for retail and wholesale customers worldwide.

INVESTMENT RATIONALE: Aramex was a very attractive acquisition candidate with a P/E multiple of 14.7x and total revenue of US$ 117 million in 2001. With a strong and dedicated management team, a large client base and solid IT infrastructure in place, there was high potential for fast organic growth and revenue growth. The rapid growth and fragmented nature of the transportation market provided attractive consolidation opportunities.

ACQUISITION STRUCTURE: Leveraged buyout structure financed by US$ 25 million in equity, US$ 30 million in 5-year senior loan notes financed by a syndicate led by Export and Finance Bank, Jordan, and US$ 10 million in mezzanine debt.

POST ACQUISITION STRATEGY: A four-fold value addition strategy was implemented; new incentive schemes for management were introduced including a cash based incentive program, a bonus plan and an employee stock option plan (ESOP). Strategic acquisitions in high growth markets, namely MEMO Express, UAE and Jordan Distribution Agency, Jordan were identified and structured. Overheads were reduced by optimizing operational efficiencies & effective planning and existing assets were leveraged to service a greater number of clients. Cash collection was improved by linking management incentives with DSO targets. Consequently, EBITDA at the time of acquisition of US$ 8.8 million (year-end 2001) has grown to US$ 20 million in 2004.

EXIT : IPO on Dubai Financial Market

Aramex International Ltd.

EBITDA 2003: US$ 16.8 million

Book Value 2003: US$ 52.4 million

Net Income 2003: US$ 10.1 million

Abraaj Buyout Fund L.P. – Selected Deals..

19

189167

137

117

0

50

100

150

200

250

'31-Dec-01 31-Dec-02 31-Dec-03 31-Dec-04

US $

Mill

ions

20.0

16.8

11.2

8.8

0

5

10

15

20

25

'31-Dec-01 '31-Dec-02 '31-Dec-03 '31-Dec-04

US

$ M

illio

ns

EBITDAREVENUES

13.0

10.1

4.04.4

0

2

4

6

8

10

12

14

16

18

'31-Dec-01 '31-Dec-02 '31-Dec-03 '31-Dec-04

US $

Milli

ons

NET INCOME

* Unaudited

* *

*


Aramex International Ltd.

20

COUNTRY: Oman

SECTOR: Insurance & Financial Services

ACQUISITION DATE: May 2003

TRANSACTION SIZE: US$ 11 million

STAKE: 16.7%

EQUITY: US$ 11 million

DEBT: 0

STATUS: Realized

EXIT: April 2004

HOLDING PERIOD: 11 months

EXIT VALUE: US $ 19 million

IRR: 84%

VEHICLE: The Abraaj Buyout Fund COMPANY PROFILE: Based in Oman, the ONIC Holding (Oman National Investment Company) is an investment holding company primarily engaged in the business of insurance and financial services through its subsidiaries and associates. ONIC’s subsidiary companies include: Al-Ahlia Insurance, National Life Insurance Co., and the Oman Investment and Finance Co. ONIC Holdings is publicly listed on the Muscat Securities Market.

INVESTMENT RATIONALE: ONIC Holdings was in a restructuring mode in May 2003. The underlying holdings, primarily in the insurance sector, had a dominant market share and at the agreed acquisition price of RO 2.38, ONIC was perceived to be trading at a significant discount to its intrinsic net asset value. It had strong cash flows and zero debt on the balance sheet that could be leveraged in the future to provide for an optimal capital structure. Abraaj became the majority shareholder by acquiring 16.7% of the company stock.

ACQUISITION STRUCTURE: 100% financed through equity.

POST ACQUISITION STRATEGY: Abraaj worked closely with management on new strategicinitiatives, including geographic expansion and sales of some subsidiary companies, in orderto unlock hidden value and optimize returns of the operating units. During the holding period,profits soared from US $ 10.1 million to US $ 23.8 million and stock market sentimentimproved dramatically. ONIC shares outperformed the Muscat Stock Exchange Index (MSI)by 55%.

EXIT: Strategic interests were sold to a regional financial institution 11 months after acquisition for a gross capital gain of 72% and at an IRR of 84%.

ONIC Holdings, Oman

EBITDA March 2004: US$ 15.5 million

Book Value March 2004: US$ 69.3 million

Net Income March 2004: US$ 23.8 million


21

ONIC Financials (Year End 31 March)

14

3 4

21

1310

16

2425

0

5

10

15

20

25

30

Revenues EBITDA Net IncomeU

S $

Mill

ions

Mar-02 Mar-03 Mar-04

0

2

4

6

8

10

12

14

13 April 2003 13 April 2004

ONIC stock price- appreciated by 96% during the holding period

ONIC stock price


ONIC Holdings, Oman

22

WEBSITE: www.qlic.com

COUNTRY: Qatar

SECTOR: Financial Services

ACQUISITION DATE: July 2003

TRANSACTION SIZE: US $ 3.3 million

STAKE: 25%

EQUITY: US $ 3.3 million

DEBT: 0

STATUS: Unrealized

VEHICLE: The Abraaj Buyout Fund COMPANY PROFILE: Amwal Capital (formerly known as the Qatar Ladies Investment Company) is the first licensed investment company in Qatar, providing financial planning, investment banking and asset management services. The firm’s long-term strategy is to be a regional player in financial planning in 2008 and a leading player in investment banking and asset management in Qatar.

INVESTMENT RATIONALE: The acquisition gave entry into the lucrative and growing Qatari financial market. The firm has one of only three available investment licenses in Qatar and a strong shareholder base including some of the most respected institutions such as Qatar National Bank, Qatar Foundation & Qatar Navigation.

ACQUISITION STRUCTURE: 100% financed through equity.

POST ACQUISITION STRATEGY: A 5-year business plan was developed towards optimizing value by creating a full fledged, fully integrated investment banking outlet. Implementation ensued immediately with branding, formation of an Executive Committee in 2004 and hiring a new CEO as well as new Heads for Financial Planning, Research and Asset Management divisions. Amwal recently floated a fund and is also developing its research group and real estate portfolio.

Amwal Capital

Revenue 2004: US$ 1.9 million

Net Income 2004: US$ 600,000

Abraaj Buyout Fund L.P. – Other Acquisitions..

23

WEBSITE: www.joramco.com.jo

COUNTRY: Jordan

SECTOR: Aircraft Maintenance, Repair, and Overhaul (MRO)

ACQUISITION DATE: January 2005

TRANSACTION SIZE: US $ 58 million

STAKE: 80%

EQUITY: US $ 28 million

Debt: US $ 30 million

STATUS: Unrealized

VEHICLE: Abraaj Buyout Fund COMPANY PROFILE: JorAMCo is a well-established aircraft MRO (maintenance, repair & overhaul) provider operating out of Jordan, offering MRO services at competitive prices and at par with industry quality and turn around time (TAT) standards. The Company is certified by a number of international aviation authorities including the FAA (USA), EASA (Europe) and CAA (Jordan) to provide MRO services for seven different types of aircraft. A three-bay hangar is located at Queen Alia International Airport free-zone supported by 600 employees with various aviation certifications.

INVESTMENT RATIONALE: JorAMCo was acquired as part of the privatization program of the Government of Jordan. The investment will provide an entry into the lucrative and growing MRO industry through a well-established player with potential for tremendous growth and operational enhancements. There is great potential for generating more business with a similar cost structure according to the analysis conducted by Mercer Consulting and in light of the poor marketing strategy of the company. JorAMCo has the added advantage of being one of the lowest cost facility in the region and can therefore easily capitalize on the growth of regional airlines, especially budget carriers.

ACQUISITION STRUCTURE: Leveraged buyout structure financed by US$ 28 million of equity & US$ 30 million of senior debt.

POST ACQUISITION STRATEGY: The post acquisition strategic plan for JorAMCo aims to develop the company into a major player in the airframe MRO business by building on its strong reputation for quality and speed, creating an impressive list of clients and rapidly growing revenues and profits. An aggressive post acquisition efficiency improvement program will be undertaken to increase the currently low levels of labor and capacity utilization. A number of internal workflow processes will be implemented including IT systems, man-hour and inventory management. The Government of Jordan has agreed to build a new hanger that will be leased to JorAMCo which will double its capacity. The operational improvements, expansion and low costs combined with an aggressive marketing campaign will position the company to capture an increased number of international clients including low cost carriers from Europe and the Sub-continent

Jordan Aircraft Maintenance Ltd.

EBIT 2004: US$ 5.0 million

Net Income 2004: US$ 2.4 million


24

§ Largest supermarket chain in Lebanon.

§ launched in 1998 with the opening of the Spinneys store in Dbayeh

§ Since then a number of stores have been opened and the chain now has 5 supermarkets

§ Commercial terms finalized for 9,500 sq.m outlet in Cairo, Egypt. Store due to open in December 2005.

§ One of the leading brokers in the equity, fixed income and inter-bank foreign exchange markets in Pakistan and has been a corporate member of the Karachi Stock Exchange since 1992

§ Active in all areas of Pakistan’s financial markets with particular focus on capital markets

§ Staff strength of about 65 people with a corporate culture which has a customer focus

§ Relationships with over 100 leading institutions including banks, domestic and international fund managers and public and private sector corporations

§ With the exception of its first year, the company has been profitable in each year of its operations

§ Regional player focused primarily on the business of manufacturing and installing sewage treatment plants

§ Products include pre-cast concrete components as well as entire treatment plants ranging from small to medium size, but exclude mega-size plants

§ In 2004, the company had revenues of US$ 2.3 million and net income of US$ 532,000 representing a net margin of 23%

§ Managed by David Heffernan, who also has 18 years experience in the sewage treatment business, and having 33 employees altogether, the company is a lean and well managed operation

§ Actively diversifying its client base and expanding its product range to include sewage-related machinery and consumables, and service and maintenance, as well as non-sewage-related areas of pre-cast concrete such as pontoons


25

Gross capital gain of 16.3x equity on the Inchcape Middle East buyout

Note: The deferred payment bank guarantees have been offset with the sale proceeds from Spinneys, Dubai, as the proceeds were received right after the equity injection causing an extraordinary increase in the actual equity IRR

Team Track Record..

26

Inchcape Exited Investments (US$ 000’s)Regional Transactions

Holding Period (Yrs)

Acquisition Cost Exit Proceeds Profit on Exit Gross Capital Gain

United Engineering Services, Oman 2.4 6,468 22,133 15,665 242%

Spinneys, Dubai - 6,899 20,100 13,201 191%

MMI, Abu Dhabi 2.6 6,871 14,422 7,551 110%

MMI, Dubai 1.2 28,237 51,650 23,413 83%

Oman United Agencies 1.8 6,683 9,450 2,767 41%

MMI, Bahrain 0.7 23,676 30,900 7,224 31%

Spinneys, Abu Dhabi 1.2 11,496 14,800 3,304 29%

Family Choice Trading Company (MAX), KSA 1.2 3,802 4,400 598 16%

Al Qureshi Marketing, KSA 1.0 1,025 900 (125) -12%

Ali bin Ali & Partners, Qatar 0.8 6,990 4,700 (2,290) -33%

Total - 102,147 173,455 71,308 70%

Non-Regional Transactions (US$ 000’s) Holding Period (Yrs)

Acquisition Cost Exit Proceeds Profit on Exit Gross Capital Gain

Atlantic Teleservices, US 2.7 1,867 3,879 2,012 108%

OfficeFlex, US 1.3 2,100 3,487 1,387 66%

Eurobuns UK Limited 1.4 512 605 93 18%

Montres Jacquet-Droz, Switzerland 0.9 1,678 1,720 42 3%

Delta Microsystems, US 3.0 5,650 - (5,650) -100%

Total - 11,807 9,691 (2,116) -18%

Gross capital gain of 70% on regional investments

The gross capital gain figure shows the gain over investment (equity+debt). The above list excludes the overall performance on the acquisition of Inchcape Middle East in 1999,since a full exit has not yet taken place. In the opinion of the Management, listing IRR’s on the above completed transactions would be misleading due to the highly leveraged nature of these acquisitions and the relatively short holding periods (yielding IRR’s of over 1,000% in some cases). Exit multiples in each case, where a non-venture capital-type investment was exited, are between 5.5 and 10. Figures relating to the above transactions are extracted from Cupola Group financial statements audited by KPMG.

The remainder non-regional transactions relate to investments made by a venture capital fund managed by a company within the Cupola Group

Team Track Record..

27

38

420

40

Financing1

4

5

9

15

20

22

31

52

14

Al Qureshi, KSA

Family Choice, KSA

Ali bin Ali, Qatar

Oman United Agencies

MMI, AD

Spinneys, AD

Spinneys, Dubai

UES, Oman

MMI, Bahrain

MMI, DubaiTotal = 102

Past Performance: 1994-2001

Inchcape TransactionUS$ million

Senior Bank Debt

Subordinated Loan Notes

Deferred Payment Guarantees

Equity

Debt

96%

Equity

4%

Inchcape DivestmentsUS$ million

Total = 173

Gross Capital Gain of 70%

Other TransactionsUS$ million

0.5

1.7

1.9

2.1

5.7

Eurobuns, UK

MJD, Switzerland

ATS, US

Offcie Flex, US

Delta Microsystems, US

Exit ProceedsUS$ million

0.6

1.7

3.5

3.9

-5.7 Delta Microsystems, US

Eurobuns, UK

MJD, Switzerland

Office Flex, US

ATS, US

Total = 11.8

Total = 9.7

Gross Capital Loss of -18%

28

1. Who we are2. Our track record

3. The opportunity4. Our Process

5. The Proposal

29

§ Number of countries 17

§ Total population 2004 (billions) 1.7

§ GDP 2004 (US$ trillions) 1.7

Morocco

Algeria

Tunisia

LibyaEgypt

Saudi Arabia

Jordan

Kuwait

Lebanon

Bahrain Pakistan

UAE

Qatar

Iran

Syria

Oman

India

Source: Economist Intelligence Unit

Sri Lanka

Primary focus

Secondary focus

Tertiary focus

Excluded

Yemen

Iraq

Bangladesh

Target Region..

The Fund targets a region with a combined GDP of US$ 1.7 trillion and population of 1.7 billion, a market comparable to China..

30

Macro-economicConditions

Privatization & Deregulation

ConsolidationOpportunities

Family Groups

Management Buyouts

ExitMechanism

§ Increased government spending on the back of rising oil prices

§ Stable growth rates and high levels of GDP per capita

§ Post 9/11, significant regional capital invested in the US and Europe is returning to the region looking for alternative investments

§ There is a paradigm shift in the mindset of GCC governments, which are clearly seeing the role of the state as a facilitator of development rather than as a direct investor

§ Stock exchange deregulation and legal reforms are creating increasing investor interest

§ Fragmented nature of industries within the regional economies provide opportunities for consolidation across various sectors

§ Increased awareness and regulatory changes such as WTO and GATT are likely to further fuel the process

§ Groups looking to divest/acquire/expand businesses can benefit through association with private equity firms which provide viable exits with minimum risk to the reputation of the family group

§ Groups could also partner with private equity funds to benefit from their value creation discipline

§ Businesses in the region that have been grown and developed by management teams who are looking for opportunities to participate more directly in the ownership of their companies

§ A number of serious initiatives that are aimed to facilitate the development of capital markets have been launched. By and large, trade sales will remain the preferred exit route for private equity transactions in the region

Key Driver Description

The Regional Private Equity Opportunity..

31* The Target Region is (the Middle East, South Asia and North Africa)

Source: Global Venture Capital Database 2004

Global Private Equity Firm Distribution

1%

2%

7%

29%

61%

Target Region

Oceana

Rest of Asia

Europe

Americas Perceived Barriers

§ Lack of Information reliability § Unregulated market environment§ Relatively small capital markets§ Limited exit strategies§ Inefficiency of judicial system§ Non-supportive regulatory framework§ Political instability

Global private equity firms have historically ignored the region due to a number of perceived barriers…

*

Minimal Competition..

32

Improving Macro-Economic Conditions

Improving Regulatory Structure

Development of Capital Markets

Description & Examples

§ Stable growth and rising levels of per capita GDP in the Middle East and Sub-Continent and GCC

§ No corporate tax and low currency risk in the GCC§ Capital previously invested in US and European markets is returning to the region

looking for alternative investments

§ GCC free trade zones allowing 100% foreign ownership§ Development of new financial markets (e.g. Dubai International Financial Centre and

the Bahrain Financial Harbour) § Relaxation of banking laws in South Asia (e.g. banks can own brokerage houses in

Pakistan and foreign institutions can now own up to 74% of banks in India)§ Liberalization of foreign investment regulations in a number of industries in India

§ Market capitalizations in South Asia and GCC have grown at 57% and 48% CAGR respectively from 2000 – 2003 due to new listings and market appreciation

§ Recent Addar properties (UAE) IPO was 450 times oversubscribed with investors applying for over US$ 100 billion in shares indicating appetite of institutions and individuals for new stock listings

Perfect Timing for Launch..

Source: Zawya, Business Recorder, Economist Intelligence Unit

33

Weighted Average GDP Growth Rate

1998 to 2003

1.8

2.9

3.0

5.1

5.5

Levant

US & UK

GCC

Iran

South Asia

Middle East, South Asia and North Africa Weighted

Average of 4.4%

Rapid Growth in Comparison with other Markets..

Source: Economist Intelligence Unit

34

Cultural

Economic

Political

DescriptionFactors

� Strong linguistic links – 15 Arabic speaking countries

� Similar traditions, social milieus and shared history

� Trade links and treaties - Arab League Economic Treaty, Arab Free Trade Agreement, Euro-Mediterranean Agreements, South Asia Agreement for Regional Cooperation (SAARC)

� Resources - Oil rich GCC enjoying excess liquidity, Levant and Sub-Continent offer rich pool of human capital, management expertise, and a large market

� Complementary manufacturing facilities

� Proximity and location dependencies – exchange of resources

� Plans for GCC common currency (2010)

� GCC customs union

� GCC common grid

� SAARC

An Integrated Region..

35

21

4133

914

24

45

35

10 13

44

78

46

28

19

South Asia GCC Levant Iran North Africa*

Market Capitalization to GDP Ratio%, 2001 – 2003

Liquidity in the region’s stock markets is growing, creating a new and increasingly viable exit route..

*Excluding Algeria

Source: Economist Intelligence Unit, Respective Stock Exchanges

2001

2002

2003

Regional Equity Markets..

36

A new regional capital market offers world class regulations and standards as well as alternative exit routes..

Dubai InternationalFinancial Centre(DIFC)

Dubai InternationalFinancial Exchange(DIFX)

§ A liquid and transparent electronic market with state-of-the-art technology, capable of trading a wide range of securities, including equities, bonds, funds (index funds and unit investment trusts), Islamic compliant (Sharia) structured products, derivatives (futures, options etc), indices, alternative risk products

§ Dual listing offered to companies outside the region who may tap into the large pool of investible assets in the region through equity and/or bond financings.

§ A new global jurisdiction for financial institutions, offering a highly attractive investment environment, including 100% foreign ownership, zero rate tax and the freedom to repatriate capital and profits without restrictions

§ Core divisions include: a development authority, dedicated to helping businesses set up, a financial exchange offering a liquid and transparent electronic market, and a purpose-built financial district from where DIFC licensees will operate.

§ Activities will be governed by Dubai Financial Services Authority (DFSA), a regulatory and supervisory body adhering to international best practice regulations and staffed by experts from leading regulatory agencies around the world

Capital Market Developments..

Source: Zawya

37

Due to these factors, the private equity industry in the Middle East is expected to grow to US$ 2.6 billion

1998 2002 2007

800

2,100- 2,600

CAGR = 41%

CAGR = 21-27%

200

Size of the Regional PE Industry*

2002-2007(US$ millions)

* Measured by size of funds

Source: Start Consult Study: Private Equity a Catalyst for Middle East growth

Regional Private Equity Industry..

38

1. Who we are

2. Our track record

3. The opportunity

4. Our Process5. The Proposal

39

Investor Relations

Screening &Selection

Structuring &Execution

PortfolioManagement

Exit

Deal Sourcing

§ Abraaj is a leading private equity firm in the region and has substantial credibility and expertise as well as a strong network within the industry and the region

§ Deals are sourced through management contacts, market intelligence and industry analysis

§ Investment opportunities are actively identified, screened and analyzed and attractive candidates are filtered through rigorous investment criteria intended to reduce many of the risks typically associated with leveraged investing

§ Our negotiation capabilities and experience have enabled consistent advantageous results, through a sophisticated approach to extracting value. We take pride in building trust and rapport and in creating a winning environment for both the buyer and the seller

§ Abraaj actively contributes to the growth, development, and strategic direction of the acquired company by working with its management.

§ To realize the value we have created for our investors, we aggressively identify and develop exit strategies and continuously monitor their feasibility throughout the life of the investment

Structured Investment Process..

40

ExitBuy and BuildInvestment ApproachDeal Sourcing

§ Leverage and incentivize extensive regional network to source deal flow

§ Specific investment opportunities sourced by top management

§ Sector wide opportunities identified by investment team research, including proactive deal structuring

§ Broad based opportunistic approach to deal sourcing

§ Seek to pre-empt an auction process whenever possible

§ Filter attractive investment opportunities through the application of rigorous investment criteria

§ Maximize value through optimum use of leverage and manage risk associated with leveraged investing by investing in seasoned companies with strong and stable cash flows, enjoying competitive advantages, and large market share, and through the use of rigorous due diligence process

§ Seek and develop exceptional management teams in acquisition targets

§ Create value through innovative financial structuring and superior operational guidance and direction

§ Active at the board level without interfering with the day to day functioning of the management

§ Grow acquired businesses organically and through acquisitions

§ Develop solid business platform opportunities

§ Perform operational enhancements and introduce best practices in corporate governance, reporting, internal processes and procedures

§ Incentivize management and align shareholder and management interests

§ Exit potential and opportunity forms an important part of the investment strategy and the Firm follows a disciplined approach to identifying the appropriate time, method, and strategy to exit

§ The Firm will typically look at a 3-5 year investment holding period

“Acquire controlling stakes in stable, mature, profitable companies and create value through leverage, consolidation, operational enhancements and management incentives”

The Investment Strategy..

41

Yes

Initial Screening Process

• VP Team

(I)VP

Approval

VP Round Table (RT)• VP Team + Other VPs + SVP

(II)SVP

Approval

(III)Director Approval

Due Diligence (DD) Process

• VP Team + VP Legal + Consultants

(IV)Investment

Committee*/BOD Approval

Audit Review Process• Audit Firm + VP + CFO

Structuring and Negotiations

• VP + SVP + Directors + External Counsel

Completion Account & Audit Reports

• External Audit/ DD Reports

Acquisition Documents• Acquisition Finance Docs• Co-investor Documents

Buyer/Seller Agreement

Legal Documentation• VP Legal + External Counsel + VP + SVP + Directors

Closing• VP Legal + External Counsel + VP + CFO

Initial Screening Document

• 1 Page

Secondary Evaluation Document

• Additions to Preliminary Evaluation document based on RT review

• 5-7 Pages

Archived

Archived

Archived

Yes

No

Yes

NoNo

No

Yes

Yes

No

Renegotiate

Decision Points

Note: Duration of process varies on a deal by deal basis*Depending on size of the investment

Legal Documents & Agreements

• Shareholder Agreement• Share Purchase Agreement• Key Employee Contracts

Preliminary Evaluation Process

• VP Team

Preliminary Evaluation Document

• 3-5 Pages

Initial Proposal to Seller• Letter of Intent (subject to Due Diligence)

Seller Interest

DD Report + Investment Proposal

• 50-70 Slides + Appendices

No

Yes

Mirror Team Review

DocumentsProcesses

Mirror Team ReviewSVP Assignment

Director Input

Term Sheet• As an attachment to the DD Report + Investment Proposal Document

Investment Decision Process..

42

Portfolio Reviews Portfolio Reports Funds Performance Review & Exit Plans

Monthly Quarterly Quarterly Annually

Feedback

§ Monthly reviews of individual portfolio companies with an emphasis on management accounts

§ Analysis of individual investment risk and performance ratings, analysis of appropriate industry, sector, geographic and other pertinent concentrations

§ Assessment of all factors relative to post acquisition strategies and plans

§ Revise review process based on annual review if necessary

§ Portfolio reports containing cost basis, carrying values, estimated fair values, valuation discounts, and other factors summarizing the status of individual investments

§ Documentation of any departures from or variations to post acquisition plans, policies and procedures and management reporting

§ Review of reports by senior management in order to assess current position and develop action plans if required

§ Performance reports on every fund summarizing the overall position of each fund

§ Clear statement of management fees, profit share and carried interest paid to the Manager or General Partner

§ Clear statement of related party transactions, benefits and fees, broken down into principal categories

§ Complete reports that are ready for distribution to LPs

§ Collation of all feedback from monthly and quarterly reports and conducting an extensive annual performance review

§ The review includes financial and management performance of portfolio companies and forecasts, other key performance metrics and relevant items including current and future plans

§ Revisit and assess exit strategies for each investment, both primary and contingent and modify if necessary depending on feedback

Portfolio Management..

43

ADVISORYBOARD

BOARD OF

DIRECTORS

EXECUTIVE COMMITTEE

PROVIDE OPERATIONAL,INVESTMENT, AND

INDUSTRY INSIGHT

4 EXECUTIVE MEMBERSAND 7 NON-

EXECUTIVE MEMBERS

KEY COMMITTEE FOR

ALL INVESTMENTS

EXTERNAL NON-EXECUTIVE

BOARD OF DIRECTORS

CONVENTIONAL BOARD

POWERS AND ROLES

MAJORITY APPROVAL

REQUIRED TO APPROVE ANY INVESTMENT

ADHERENCE TO INTERNATIONAL CORPORATE GOVERNANCE BEST PRACTICE

Corporate Governance Structure..

44

1. Who we are

2. Our track record

3. The opportunity

4. Our Process

5. The Proposal

45

§ Timeline: First Closing June 2005Final Closing December 2005

§ Target Fund Size: US$ 500 million

§ Allocations by deal type: § Focus on Buyouts§ Opportunistic on other deal types

§ Excluded Investments: § New/unproven technologies§ Start-ups§ Turnarounds

§ Single Deal Equity Investment: § Minimum – US$ 10 million§ Maximum – US$ 75 million

The Abraaj Buyout Fund II L.P. - Salient Features

46

§Term of Partnership:

§Management Fee:

§Preferred Rate/Hurdle Rate:

§Carried Interest:

§Transaction Success Fee:

§Drawdown - Initial:

§Broken Deal Costs:

The Abraaj Buyout Fund II L.P. – Key Terms

§Placement Fee:

8 years (extendable for up to two consecutive one-year periods)

2% of committed capital for 4 years, 2% invested capital thereafter

8% per annum

20% share of carried interest to General Partner subject to clawback

subject to 3% of the total transaction value on investments

1%

25%

Borne by the Manager

47

Sectors Opportunities

Business Process Outsourcing (BPO)

Power & Energy

Print Media

Financial Services

Insurance

Pharmaceuticals

§ South Asia’s market is growing at an accelerated pace. Consolidation ongoing in the industry

§ India likely to capture 56% of BPO business by 2006 with demand for BPO services increasing at an annual growth rate of 50% during 2004 to 2006 (Source: ICRA)

§ Privatization of the power sector currently in progress in Jordan and Algeria

§ Oman has imminent plans to sell off some existing power assets

§ Directories businesses among the most successful business models worldwide, generating stable cash flows and posting attractive growth rates

§ Regional market is underdeveloped and has potential for significant growth and value extraction

§ Financial Planning slated to grow in a big way, driven by mature investor base and rapidly increasing demand for financial planning products

§ Exchange houses represent huge industry. The fragmented and traditionally managed family-based industry structure is providing room for value-addition through consolidation and modernization

§ Large sector with approximately US$ 2.5 billion premium revenues in GCC alone, with growth rates of 5% per annum in UAE and higher across the region

§ High growth due to low historical penetration and lowered pricing

§ Availability of privatisation and acquisition targets with strong brands and significant market shareTelecom

§ India emerging as a major supplier of bulk drugs worldwide and consolidation and pre-IPO opportunities abound

§ The Middle East region is a net importer of pharmaceutical products with small firms having growth opportunities

Selected Sector Opportunities..

We have identified a number of sectors that offer substantial value creation potential

48

Sectors Opportunities

Broadcast and News Media

Tourism

Retail

Transportation & Aviation

Water Treatment

F&B

§ While most of the television media remain in government hands, this is not the case across other traditional media channels such as publishing and radio

§ New media presents a clear opportunity for consolidation in SAMENA for reasons seen in other regions

§ Middle East tourism growth anticipated at 5.7% compared to world tourism at 4.5% through 2020

§ Post-9/11, the region as a whole is positioning itself as an alternative to “western” destinations

§ Stable cash flow business, with good ability to leverage

§ Availability of targets with strong brand and significant market share

§ Much dynamism has been created in the aviation industry through the wave of privatizations, increased competition as a result of open sky policies and the entry of low cost operators

§ Many opportunities exist within transportation and logistics in general as the sector grows in parallel with the region’s economies

§ Like transportation, this is an infrastructure-related sector where opportunities for consolidation and geographic expansion directly correlate with macroeconomic growth

§ An industry that has been a laggard in the Middle East but an important one in India and Pakistan

§ The subject of a concerted effort by various governments in the region to create more of an indigenous base of innovation and employment (e.g. Jordan)

Technology

§ New brand concepts and pan-regional chains will be created to cater to the growing manual labour and professional class that is involved in driving the growth in the region

§ This sector is still dominated by traditional family-run outlets that might be good platforms for geographic expansion or consolidation

We have identified a number of sectors that offer substantial value creation potential

Selected Sector Opportunities..

49

Level 7, Emirates Towers Offices, P.O. Box 504905, Dubai, U.A.E.

Tel. 971 4 319 1500 Fax 971 4 319 1600

www.abraaj.com

Middle East Private Equity: Times Have Changed

Abraaj General Presentation

Documents

Transcript of Abraaj General Presentation