May 18 2010
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The largest private equity MENA deal of the year to close in Iraq
Dubai - 18th May 2010: With its latest deal, MerchantBridge , a direct investment and private equity company focused on Middle East investments, has now invested and managed in excess of US$1.5bn in debt and equity in Iraq.
MerchantBridge has recently been awarded an existing cement plant contract under a 15-year lease in the Kerbala Governerate, 80 miles south west of the capital Baghdad. The contract was awarded by the Government of Iraq's Ministry of Industry and Minerals. This transaction marks the largest privatization and debt arrangement in Iraq (outside oil and gas), as well as the largest contract in the Middle East region so far this year. The plant will go through a complete rehabilitation program via an investment of US$200m and it is expected the facility will achieve production in excess of 1.8million tons per year. By 2013 the rehabilitated plant could contribute approximately 10% of the total cement market in Iraq. Lafarge, the world leader in cement production, is joint partner and will be operating the plant.
The plant has been damaged by years of underinvestment and lack of spare parts and is operating at 300,000 tons per year, which is well below capacity. Domestic production currently meets around half of the local demand, a trend which is expected to continue for the coming decade.
MerchantBridge is now embarking on a targeted campaign in the GCC to highlight the opportunities Iraq offers and actively encourage investment in what it considers the first 'live' opportunity for regional investors in the country.
MerchantBridge with its extensive experience and knowledge of Iraq, has generated substantial returns for its investors, as well as establishing a number of partnerships with international companies in Iraq. In 2003 and 2004, it advised the Iraqi government on the leasing of 35 state-owned enterprises in several economic sectors.
Mr. Ameen Killidar, Managing Director, explains: "Iraq represents a unique opportunity for early investors given the expected economic growth to be generated by the massive investments announced by the IOCs and the large government reconstruction plan"
The Iraqi government has estimated US$180bn of investment is needed over four years to fulfil its reconstruction and infrastructure programme, targeting sectors that will create a heavy demand for cement.
Mr. Killidar added: "The Kerbala cement plant is strategically located to serve the needs of the entire south of Iraq and is one of the few plants which can produce specialised cement for dams, bridges, ports, airports, oil installations and any other construction where ordinary cement cannot be used. Our market potential is enormous, especially when you consider the needs of the international oil companies which have recently signed contracts with Iraq. The plant is already operating albeit at a much reduced rate due to lack of investments since the early 1990's. The qualified workforce is already present and the new capital will ensure that the plant is brought up to the latest standards."
Construction and infrastructure are expected to remain the driving force in Iraq over the coming decade, with over US$140bn of projects already announced, of which US$60bn is from GCC investors.
MerchantBridge in Iraq:
MerchantBridge is amongst the largest private sector investor in Iraq, with the following track record:
Mesopotamia Fund: launched a US$50 million fund, the first fund to invest in the Iraq Stock Exchange, which has a market capitalisation of US$3.3 billion.
Mansour Bank: one of the largest capitalized bank in Iraq.
Asiacell: 2nd largest GSM Operator with over 7.5 million subscribers.
Oil and Petrochemical Sector: Formed a joint venture with Dalma Energy to provide drilling and other oil field services.
Government: In 2003 and 2004, advised the Ministry of Industry and Minerals on the leasing of 35 factories in a number of economic sectors.
Cement: Received a Greenfield license to build a 2 million tonnes cement factory in Kerbala (15km from the rehabilitation project). The project is currently in its inception phase.
Iraq the Big Picture:
With an improved security situation and the high price of oil, Iraq's economy is quickly rebounding and is expected to have real GDP growth of 6.1% pa over the next five years. The positive outlook for Iraq is supported by:
The second largest proved oil revisers with 115 million barrels of high quality and easily extractable oil and 220 billion of probable and possible reserves.
The tenth largest gas reserves in the world.
The country is water abundant with two major rivers and large arable land area.
Tremendous tourism potential with major archaeological and religious sites throughout the country.
A young well educated population of 31 million.
All sectors of the economy are expected to benefit from government development programmes as well as private sector investment.
MerchantBridge is a direct investment and private equity group established over a decade ago by a group of industry veterans focused on the Middle East and Europe regions. It is authorised and regulated by the FSA in London and also has offices in Dubai, Baghdad, Basra and Riyadh. MerchantBridge also offers corporate finance advisory services in select situations to multinational corporations and governments including having been the advisor to the UK Ministry of Defence on their offset program in Saudi Arabia. It specialises in identifying opportunities across the MENA region and Europe and executing on complex, cross-border opportunities. It completed eight private equity transactions in Europe and the Middle East over the past few years with US$400 million in committed capital and investments with Enterprise Value of over US$$3 billion. In Iraq, MerchantBridge is already engaged in telecommunications ("Asiacell"), commercial banking ("Mansour Bank") and oil and gas services. www.merchant-bridge.com
For more information please contact:
Bassam Al Naimi
Dubai Cell: +971 50 956 6829
Doha Cell: +974 327 6789
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