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05 January, 2015

Massar Solutions P.J.S.C. Announcement of intention to float and list on the Abu Dhabi Securities Exchange

Massar Solutions P.J.S.C. Announcement of intention to float and list on the Abu Dhabi Securities Exchange

Emiratis now able to buy shares in a successful, long established and growing business

Abu Dhabi, 5 January 2015: The Shareholders Committee of Massar Solutions PJSC ("Massar" or the "Company"), (formerly Al Wathba Company for Central Services PJSC) a market leader in fleet solutions, vehicle rental and supply chain solutions in the United Arab Emirates ("UAE"), announces the intention of the Company's shareholders to sell 240,000,000 ordinary shares in the share capital of the Company, being 40% of the Company's total issued share capital (the "Offer") and to apply for admission of the Company's ordinary shares (the "Shares") to the Abu Dhabi Securities Exchange (the "ADX"). 

Mr Khalaf Al Dhaheri, Chairman of Massar, commented on the Public Offering:

"I am delighted to announce our plan to list Massar on the ADX and look forward to this exciting new phase of our development. We are pleased to become the first mobility solutions provider in the UAE to go public and that UAE nationals will now be able to participate in the continued success that we have enjoyed over the past fifteen years.

This is a highly significant day in the history of our company. We have ambitious plans for the future of Massar and an IPO is the logical next step in this process. The IPO will raise our profile and comes at a time when our business is accelerating as we build upon our stable foundations in fleet solutions and vehicle rental to provide innovative supply chain solutions to our clients. We look forward to welcoming future investors as stakeholders, as we continue our long term growth trajectory."

Paul Greenwood, Chief Executive Officer of Massar, commented:

"We recently refreshed our brand from Al Wathba to Massar, which means "path" in Arabic. This resonates with the fundamentals of our business, managing our customers' mobile assets and setting them on the right path. Everything we do is geared towards keeping cargo, cars and companies moving forward through our commitment to innovation and excellence and the IPO is the next step along our own path of sustainable growth." 

Key highlights:

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Massar is a public joint stock company established and operating from 1998 in the Emirate of Abu Dhabi, UAE, and today, is a market leader in fleet solutions, vehicle rental and supply chain solutions. 

The Company's current shareholders are Abu Dhabi Investment Company ("Invest AD") and Abu Dhabi National Energy Company P.J.S.C ("TAQA") (together the "Selling Shareholders"). Invest AD and TAQA own 51% and 49% of the existing shares respectively.

The Company provides a comprehensive range of services across three core divisions: fleet solutions, vehicle rental services, and supply chain solutions to government, semi-government and private sector clients operating in the UAE's industrial and commercial sectors.

Massar business model combines the core stable income from the fleet solutions and vehicle rental divisions - generated from short-to-medium term lease, fleet management and rental contracts - with targeted growth from the supply chain solutions operations, which was established in 2014 to address the growing demand for outsourced logistics services in the UAE and GCC region.

The Company has secured a strong market position by leveraging its competitive advantages, including its comprehensive service offering and deep market knowledge, efficient management of the asset lifecycle, strong purchasing power, leading technology and well-established relationships with governmental clients.

Massar currently owns and operates a fleet of approximately 9,755 vehicles and manages a further fleet of approximately 6,755 for third party clients. It is diversified across all passenger and commercial vehicle classes, including buses, light/medium/heavy commercial vehicles, and light passenger vehicles. The Company plans to increase its fleet and managed vehicles to 16,000 and 20,000 units respectively over the next five years.

Massar's financial year starts on 1 January and ends on 31 December each year. For the nine month period ended 30 September 2014, the Company had net profit, revenue, and total assets of AED 64.9 million, AED 342.1 million, and AED 1,055.5 million respectively. For financial years ended 31 December 2011, 2012, and 2013, net profit was AED 93.9 million, AED 111.0 million, and 129.4 million respectively. The Company achieved strong net profit margins for the full financial years, exceeding 20%.

Massar has a clear strategic direction for its future growth:

Fleet Solutions: As the foundation of the Company's stable profits, this division will consolidate its service offerings and also grow its suite of value-add products. The Company is focused on expanding its brand and presence into Dubai and the Northern Emirates and diversify its customer base by focusing on revenue from the private sector.

Vehicle Rental: The Company is seeking to build on its existing platform through the launch of new products, such as a private usage-based consumer lease product in partnership with Arvento; in addition to growing the Payless Car Rental brand in Dubai and the Northern Emirates with future branch openings planned in Dubai, Sharjah and Ras Al Khaimah.

Supply Chain Solutions: Established to fulfil the regional need for outsourced logistics and after identifying opportunities in the Fast Moving Consumer Goods ("FMCG") sector, is foreseen to be the largest contributor to future growth through increasing the operational units from 150 to 1,000 units, and investment into additional warehouse capacity and services.

Key offer highlights:

The Selling Shareholders are offering 240 million ordinary shares (the "Offer Shares") in the share capital of the Company, representing 40% of the Company's total share capital. The offer price is AED 2.40 ("Offer Price") per Offer Share. Invest AD and TAQA own 51% and 49% of the Shares respectively and are selling 120 million Offer Shares each.

The Offer Shares will be allocated through two tranches:

  • The first tranche is open to individuals (natural persons) who are UAE nationals with a minimum subscription of 5,000 Offer Shares. The first tranche comprises a total of 48 million Offer Shares representing 20% of the Offer.
  • The second tranche is open to individuals (natural persons) who are UAE nationals, sole proprietorships and companies owned 100% by UAE nationals, public bodies and authorities of the federal government of the UAE or any one of the Emirates, including the EIA pursuant to the UAE Council of Ministers' Resolution No. 8 of 2006, with a minimum subscription of 1,001,000 Offer Shares. The second tranche comprises a total of 192 million Offer Shares representing 80% of the Offer.

Applicants who wish to apply for Offer Shares need to ensure that they have an up-to-date National Investor Number registered through ADX.

Subscription for shares will open on 11 January 2015 and will close on [25 January 2015]. Following the Offer and the completion of the sale process, Massar will apply to list its Shares on the ADX.

The offer proceeds will be paid to the Selling Shareholders, as is standard for a share sell-down.

Macquarie Capital Middle East LLC and National Bank of Abu Dhabi P.J.S.C have been appointed as Joint Financial Advisers. National Bank of Abu Dhabi P.J.S.C is acting as Sole Lead Manager and Lead Receiving Bank. Abu Dhabi Islamic Bank P.J.S.C, Dubai Islamic Bank P.J.S.C, First Gulf Bank P.J.S.C and Union National Bank are acting as Receiving Banks in connection with the Offer. Allen & Overy LLP is acting as Legal Adviser to the Company and the Shareholders Committee and Latham & Watkins LLP is acting as Legal Adviser to the Joint Financial Advisers and Lead Receiving Bank. 

Investment Highlights

First business operating in the mobility solutions sector to be listed in the UAE:

Massar's listing will provide investors with a unique opportunity to benefit from exposure and growth in the fleet management, car rental and supply chain solutions sectors, in addition to enhancing industry diversification on the ADX.

Strategic shareholders:

The success of Massar is supported by its major strategic shareholders, TAQA and Invest AD. Both are prominent pillars in the UAE economy, and they will each continue to maintain a significant stake in Massar's post-IPO.

Market leader:

Massar's modern fleet is comprised of the leading vehicle brands with a focus on optimising resale values. The diversity within the fleet also allows Massar to meet a wide range of customers' needs and required specifications.

Massar enjoys long-standing relationships with government, semi-government and private sector clients operating in the UAE's industrial and commercial sectors. It also boasts high client retention rates, exceeding 85% in the fleet solutions division.

Strong growth prospects:

Fleet solutions division, the foundation of Massar's profitability, intends to increase their lease units from 8,677 to 12,000 and its managed units from 6,755 to 20,000, while the vehicle rental is planning to increase its fleet size from 1,088 units to 4,000 units in the next five years.

Supply chain solutions division has also been established to address the growing demand for outsourced logistics services in the UAE and GCC region. After identifying opportunities in the FMCG sector, this division is foreseen to be the largest contributor to future growth, which will be achieved through increasing its operational units from 150 to 1,000 units, and investment into additional warehouse capacity and services.

Professional and experienced management team:

Massar is proud of its proven and experienced management team with wide experience in fleet management, car rental and supply chain solutions.  

Consistent historical profitability with robust revenue visibility:

Massar has demonstrated consistent and strong profitability in all years since inception. The Company enjoys robust revenue visibility provided by medium-term lease contracts generating approximately 85% of Massar's current revenue. Massar maintains strong EBITDA margins between 56% and 64% from YE 2010 to YE 2013 as a result of enhanced fleet profile and efficiency in operations.

The Company is committed to maximising shareholder value through dividend distributions.

Conservative capital structure:

Massar has a conservative capital structure with an underleveraged balance sheet compared to its peer group companies, giving it the opportunity to fund future capital expenditure through increasing leverage and enhancing returns to shareholders.

Enquiries:
Public Relations Manager

Bell Pottinger
Archie Berens 055 559 7407

Layla Haroon 055 636 0425

Rima Ali 055 559 7414

DISCLAIMERS

The contents of this announcement have been prepared by and are the sole responsibility of Massar Solutions PJSC. (the "Company") and the Abu Dhabi Investment Company and Abu Dhabi National Energy Company PJSC (together, the "Selling Shareholders").

The information contained in this announcement is for background purposes only and does not purport to be full or complete. This document is not an offer of shares in the Company ("Shares") for sale or a solicitation of an offer to purchase the Shares in the United Arab Emirates (the "UAE"), the Dubai International Financial Centre (the "DIFC") and/or elsewhere. No reliance may be placed for any purpose on the information contained in this announcement or its accuracy or completeness.

The distribution of this announcement may be restricted by law in certain jurisdictions, and persons into whose possession any document or other information referred to herein comes should inform themselves about and observe any such restriction. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.

This announcement does not constitute or form a part of any offer to sell or solicitation of an offer to purchase or subscribe for the Shares in the United States, Australia, Canada, Japan or any other jurisdiction in which such offer or solicitation is unlawful. Any offer to acquire the Shares will be made, and any investor should make his investment, solely on the basis of information that will be contained in an offering memorandum to be published in connection with such offering. However, these materials (including the offering memorandum) do not constitute or form a part of any offer to sell or solicitation of an offer to purchase or subscribe for the Shares where such offer or sale would be unlawful.

The Shares mentioned herein have not been, and will not be, registered under the United States Securities Act of 1933 (the "Securities Act"), or with any securities regulatory authority of any state or other jurisdiction in the United States. The Shares may not be offered or sold in the United States, except pursuant to an exemption from the registration requirements of the Securities Act. There will be no public offer of securities in the United States or any other jurisdiction other than the UAE.

This announcement does not contain or constitute a financial promotion, offer, sale or delivery of shares or other securities under DIFC Markets Law (DIFC Law No. 12 of 2004), as amended or under the Markets Rules of the Dubai Financial Services Authority.

This communication is directed only at (i) persons who are outside the United Kingdom or (ii) persons who have professional experience in matters relating to investments falling within Article 19(2) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended from time to time (the Order) or (iii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2) of the Order or (iv) certified high net worth individuals and certified and self-certified sophisticated investors as described in Articles 48, 50, and 50A respectively of the Order or (v) persons to whom this communication may otherwise be lawfully communicated (all such persons together being referred to as relevant persons). Any investment activity to which this communication relates will only be available to and will only be engaged with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents.

This communication is distributed in any member state of the European Economic Area (the "EEA") which applies Directive 2003/71/EC (this Directive together with any amendments thereto including Directive 2010/73/EU to the extent implemented in such member state of the EEA and any implementing measures in any member state, the Prospectus Directive) only to those persons who are qualified investors for the purposes of the Prospectus Directive in such member state, and such other persons as this document may be addressed on legal grounds, and no person that is not a relevant person or qualified investor may act or rely on this document or any of its contents.

Any purchase of Shares in the proposed initial public offering by the Company (the "Offering") should be made solely on the basis of the information contained in the final Offering Memorandum  to be issued by the Company in connection with the Offering (the "Offering Memorandum"). No reliance may or should be placed by any person for any purposes whatsoever on the information contained in this announcement or on its completeness, accuracy or fairness. The information in this announcement is subject to change.

The Offering timetable, including the date of admission of the Company to the Abu Dhabi Securities Exchange ("Admission"), may be influenced by things such as market conditions. There is no guarantee that Admission will occur and you should not base your financial decisions on the Company's intentions in relation to Admission at this stage. Acquiring investments to which this announcement relates may expose an investor to a significant risk of losing all of the amount invested. Persons considering making such investments should consult an authorised person specialising in advising on such investments. This announcement does not constitute a recommendation concerning the Offering. The value of shares can decrease as well as increase. Potential investors should consult a professional advisor as to the suitability of the Offering for the person concerned.

This announcement may include statements that are, or may be deemed to be, "forward-looking statements". These forward- looking statements may be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans",

"projects", "anticipates", "expects", "intends", "may", "will" or "should" or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions. These forward looking statements include all matters that are not historical facts and involve predictions. Forward-looking statements may and often do differ materially from actual results. Any forward-looking statements reflect the Companys current view with respect to future events and are subject to risks relating to future events and other risks, uncertainties and assumptions relating to the Group's business, results of operations, financial position, liquidity, prospects, growth or strategies. Forward-looking statements speak only as of the date they are made and cannot be relied upon as a guide to future performance.

Each of Macquarie Capital Middle East LLC and National Bank of Abu Dhabi PJSC (the "Joint Financial Advisers"), and the Company, the Selling Shareholders and their respective affiliates  and advisers expressly disclaims any obligation or undertaking to update, review or revise any forward looking statement contained in this announcement whether as a result of new information, future developments or otherwise.

The Joint Financial Advisers are acting exclusively for the Company and the Selling Shareholders and no-one else in connection with the Offering. They will not regard any other person as their respective clients in relation to the Offering and will not be responsible to anyone other than the Company and the Selling Shareholders for providing the protections afforded to their respective clients, nor for providing advice in relation to the Offering, the contents of this announcement or any transaction, arrangement or other matter referred to herein.

In connection with the Offering, each of the Joint Financial Advisers and any of their affiliates, acting as investors for their own accounts, may subscribe for or purchase Shares and in that capacity may retain, purchase, sell, offer to sell or otherwise deal for their own accounts in such Shares and other securities of the Company or related investments in connection with the Offering or otherwise. Accordingly, references in the Offering Memorandum, once published, to the Shares being issued, offered, subscribed, acquired, placed or otherwise dealt in should be read as including any issue or offer to, or subscription, acquisition, placing or dealing by, each of the Joint Financial Advisers any of their affiliates acting as investors for their own accounts. In addition, certain of the Joint Financial Advisers or their affiliates may enter into financing arrangements and swaps in connection with which they or their affiliates may from time to time acquire, hold or dispose of Shares. None of the Joint Financial Advisers nor any of their respective affiliates intends to disclose the extent of any such investment or transactions otherwise than in accordance with any legal or regulatory obligations to do so. The approval of the Securities and Commodities in connection to the Offering and the Offering Memorandum shall neither be deemed as an approval of the investment feasibility, the valuation contained in this Offering Memorandum or the valuation of the Independent Valuer  nor a recommendation to apply for the purchase shares in the Company.

Neither of the Joint Financial Advisers or any of their respective directors, officers, employees, advisers or agents accepts any responsibility or liability whatsoever for or makes any representation or warranty, express or implied, as to the truth, accuracy or completeness of the information in this announcement (or whether any information has been omitted from the announcement) or any other information relating to the Company, its subsidiaries or associated companies, whether written, oral or in a visual or electronic form, and howsoever transmitted or made available or for any loss howsoever arising from any use of this announcement or its contents or otherwise arising in connection therewith.

If you do not understand the contents of this document you should consult an authorised financial adviser.

© Press Release 2015