Abraaj Capital, the Dubai-headquartered private equity firm, has acquired a 50 per cent stake in BMA Capital Management Ltd, a leading Pakistan financial securities firm and a corporate member of the Karachi Stock Exchange.
The acquisition, involving a total investment of Dh25.7 million ($7 million), was made through the Abraaj Buy-out Fund. It is also the funds first private equity investment in Pakistan.
Arif Naqvi, CEO and vice-chairman of Abraaj Capital, said the investment made by the fund is strategically structured as a capital injection into BMA. He added the capital expansion will enable BMA to offer its clients a broader and more complete range of financial services, including retail brokerage, asset management and private equity.
Naqvi said: "A combination of factors made this transaction very appealing. BMA operates in a market where returns have recently been amongst the highest in the world, it has a recognised brand name in Pakistan, it has an exceptionally clean business track record and a solid, experienced management team a critical aspect of our assessment when making investment decisions."
BMA offers brokerage and financial advisory services to Pakistani and other clients. It is recognised as one of the top five brokerage houses in Pakistan's equity, bond and foreign exchange markets.
The company has also participated as lead domestic adviser or manager in several privatisation transactions in Pakistan, including the Dh3.3 billion Global Depositary Receipts issue of Pakistan Telecommunication Co and Dh5.9 billion privatisation of Kot Addu Thermal Power Plant.
Farrukh H. Khan, chief executive of BMA, said the capital expansion could not have come at a more favourable time given the kind of opportunities that are now available.
Simon Davies, executive director and chief financial officer of Abraaj Capital, said the capital expansion will enhance operational flexibility, increase core business strength and add new revenue lines that will diversify BMAs overall revenue stream. The firm will emerge as a fully integrated financial services provider.
"We see a lot of potential and value realisation opportunity in BMA. Despite variations in political stability and fluctuations in the equity markets of Pakistan for the five years ending June last year, the company saw a compounded annual growth rate of 12 per cent in revenue.
"We expect BMA to grow into a solid financial house whose integrated services outstrip competition."
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