Middle East buyout fund makes debut investment

The Dubai-based Rasmala Buyout Fund is acquiring Aramex International, a courier business servicing the Middle East and India, in a $61m deal.

Rasmala Buyout Fund LP has announced that it is commencing a cash tender offer for Aramex International Limited, a NASDAQ listed provider of courier and freight forwarding services within the Middle East and the Indian sub-continent.

Rasmala is using an offshore subsidiary for the deal, Rasmala Distribution (Cayman) Limited, which has itself set up as a Bermuda registered company to make the tender offer for Aramex.

Under the terms of the investment, Rasmala Distribution (Bermuda) will offer $12 per outstanding common Aramex share, valuing the company at around $61m. At the same time Aramex's CEO, Fadi Ghandour, will acquire a stake of around 28 per cent in Rasmala Distribution (Cayman) Limited. Rasmala was advised by Norton Rose.

In total Rasmala has invested $20m in the deal. Senior debt and mezzanine capital will be used to finance the transaction. It is the first investment made by the Rasmala Buyout Fund and is regarded by some as a significant early indication of private equity investment coming to the Middle East. Although the Middle East has already proved to be an important source of limited partners for private equity and venture capital funds when fund raising, it has not been regarded by many as a prime destination for private equity or VC investments.

The fund, managed by Rasmala Partners Ltd., says that it has been formed to make equity and equity-related investments in leveraged acquisitions in the Middle East, North Africa and the Indian sub-continent. Its sectoral coverage spans manufacturing, consumer distribution, banking and financial services, energy and media.

Launched in 2001, the Rasmala buyout fund has received $40m in commitments from institutional investors to date. A initial closing is scheduled for the end of February. The fund is looking to raise $150m in total.

Arif Masood Naqvi, one of the five principals at Rasmala Partners and Managing Partner, said: 'Companies looking to capitalise on the opportunities generated in the rapidly evolving regional economy will all require transitional capital. This emphasises the need for high skill-based private equity funds to bring to bear their deal-making and financial engineering skills on the region.'

Naqvi. a former CEO of the Cupola Group has been joined by Ali Samir al Shihabi, Imtiaz Hydari, Salman Mahdi and Shirish Saraf at Rasmala. The firm's origins date back to 1999, when it launched a $34m venture capital fund focused on start-up investments in the Middle East. Deutsche Bank owns a minority stake in the partnership.