Abraaj Capital, one of the leading private equity firm in the Middle East, North Africa and South Asian region, has entered into a joint venture with Deutsche Bank and Ithmaar Bank, to raise a US$ 2 billion Shari’a Compliant Alternative Assets Fund. The announcement was made at the World Economic Forum.
The “Infrastructure and Growth Capital Fund” (IGCF) will be one of the largest ever raised in the region. It will be managed by Abraaj Capital and co-sponsored by Ithmaar Bank and Deutsche Bank.
The fund will have a target IRR (internal rate of return) of 15% p.a. and have a life of ten years. The predominant focus of the fund will be to take majority / minority stakes in greenfield projects, participate in large scale privatizations and invest in buyout and restructuring opportunities. The fund will also look to provide mezzanine funding to companies in its targeted sectors.
The key targeted sectors for the fund will be Oil & Gas, Petrochemicals, Telecom, Power, Water, Roads, Healthcare and Education. The investment opportunity in these sectors exceeds well over US$ 1 trillion.
Commenting on the announcement, Arif M. Naqvi, CEO and Executive Vice Chairman of Abraaj Capital, said: “We are delighted to partner with two outstanding institutions in this ground-breaking fund. Shari’a Compliant finance is the fastest growing area of the global financial industry and Private Equity the fastest growing asset class in the Middle East. Bridging the two together creates an enormous opportunity for investors to participate in the regional success.” He added, ”By capitalizing on the heavy investment bias in the region across targeted sectors either directly or through investment in businesses that service the lead players in this space, we will capture the growth in the current environment and at the same time protect against the downside in case of an economic slow-down.”
Khalid Abdulla-Janahi, Chairman of Ithmaar Bank, said: “Our experience in Islamic Finance will compliment the global strength and intellectual capital of Deutsche Bank with the proven track record of Abraaj Capital to create the perfect partnership. It is our firm belief that the skills that each partner brings to the joint venture will make this fund a great success.” He added “Ithmaar and its largest single shareholder, Dar Al Mal Islami Group, has enormous experience in the field of Shari’a Compliant projects and is recognised as a global leader in this field. We believe that bringing this asset class to Shari’a Compliant investors is a major step forward in the world of Islamic finance products.”
Ashok Aram, Managing Director of Deutsche Bank, and a board member of Abraaj Capital, said: “As one of the world’s largest financial institutions, Deutsche Bank has identified this region as important to its continued growth. The coming together of critical and complimentary skills in this “Infrastructure and Growth Capital Fund” provides investors a unique opportunity to participate in the ongoing economic growth and long-term development of this region.”
About Abraaj Capital: A member of the Dubai International Financial Centre, Abraaj Capital is the leading asset management firm in the, Middle East, North Africa, South Asia region. It has US$1billion of assets under management. The firm’s primary expertise is in private equity buyouts, strategic minority block positions in public enterprises and real estate investments within the region. As recognition of its operating excellence and regional expertise, Abraaj received the ‘Middle Eastern Private Equity Firm of the Year’ award from Private Equity International in March 2006. In addition, it has received the ‘Best Private Equity House’ award from the Banker Middle East in May 2006.
The executive directors of the firm have a long history of working together and are associated with some of the landmark private equity transactions in the region such as the acquisition of Aramex, Inchcape Middle East, the first and largest leveraged buyout transaction in the region, and Jordan Aircraft Maintenance Company (JorAMCo), a privatisation by the Government of Jordan. For more information, visit www.abraaj.com
About Deutsche Bank: Deutsche Bank is a leading global investment bank with a strong and profitable private clients franchise. A leader in Germany and Europe, the bank is continuously growing in North America, Asia and key emerging markets. With Euro 1,035 billion in assets and 64,103 employees, Deutsche Bank offers unparalleled financial services in 73 countries throughout the world. The bank competes to be the leading global provider of financial solutions for demanding clients creating exceptional value for its shareholders and people.
Ithmaar Bank B.S.C.: Ithmaar Bank was incorporated in Bahrain in 1984 as Faysal Investment Bank of Bahrain, a wholly owned subsidiary of Shamil Bank of Bahrain. The Bank’s name was changed to Ithmaar Bank in 2003, subsequent to the sale of Shamil Bank’s shareholding to Dar Al-Maal Al-Islami Trust (DMI). Following a recent private placement and successful IPO, Ithmaar Bank has a paid-up capital of US$360 million.
The Bank is a full service investment bank with operations spanning the Middle East and North Africa (MENA) region, as well as Asia and Europe. Besides holding significant investments in the banking and financial services sector in different markets, the main activities of the Bank include underwriting business (equity and debt), private equity (structuring, participation and portfolio management), project financing, and advisory business (capital market, merger & acquisitions and project advisory). Ithmaar Bank’s flagship companies include Islamic insurance company, Solidarity, based in Bahrain, asset management firm Islamic Investment Company of the Gulf (Bahamas), Faisal Finance (Switzerland) and Faysal Bank Limited (Pakistan).
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