Abraaj-led consortium sets record with $1.41bn buyout

Abraaj Capital, a Dubai buyout firm, is leading a consortium to take the Egyptian Fertilisers Company private eclipsing the firm’s previous record-breaking investment in EFG-Hermes, an Egyptian investment bank.

A consortium led by Dubai-based buyout firm Abraaj Capital has acquired all shares in the Egyptian Fertilizers Company in a $1.41 billion ($1.05 billion) deal to set a record for the largest deal in the Middle East and North Africa.

An Abraaj spokesman said the company had taken out a record $1.25 billion of leverage to refinance $460 million of existing loans at the company and to provide $735 million towards the financing of the acquisition.

According to Zawya Private Equity Monitor, which tracks private equity deals and developments across MENA, the biggest regional deal to date was the $501 million, 25 percent acquisition of Egypt’s EFG-Hermes by Abraaj in late 2006. Abraaj is also one of the largest foreign investors in Egypt.

To do the deal, Abraaj is deploying capital from both its Infrastructure and Growth Capital Fund and its second buyout fund in tandem with the Dubai Capital Group, Saudi-based Rashed Al Rashed & Sons Group and other co-investors.

Frederick Sicre, executive director, Abraaj, said: “Egypt is a good target for private equity because it is pursuing an aggressive privatisation programme.”

It was a smooth deal because most of the previous shareholders rolled back in, while the Saudi Savola group sold their stake to the consortium, he added.

The fertiliser company operates two factories and employs approximately 600 staff producing nitrogen-based products for the agricultural industry in Egypt and abroad. In the US and Europe expanded production of biofuels such as ethanol has increased demand for the fertiliser.

Sicre said: “We’re not only going to be building the company organically but we will be pursuing a buy-and-build strategy in the entire Middle East, North Africa and South Asia region.” Because of the close proximity of gas providers, the region is well-placed to meet the increased fertiliser needs of the booming biofuel industry, he added.

Mustafa Farid, chief executive of Dubai Capital Group, will join Abraaj representatives on the board of the Egyptian Fertilizers Company.

Deutsche Bank acted as advisors and provided the acquisition finance for the fertiliser transaction.