Abraaj acquires 80% stake in privatised Joramco

Joramco deal seen as important milestone in Jordanian privatisation programme

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By  Mark Johnson Published  January 13, 2005

Abraaj Capital, the Middle East and North Africa’s (Mena) largest private equity firm, today announced it had acquired 80% of Jordan Aircraft Maintenance Limited (Joramco) from Royal Jordanian Investment Limited for total consideration of $55.1 million. The Jordanian government owned airline will retain a 20% stake in the aircraft maintenance company following the buyout. The sale and purchase agreement was signed Wednesday at a ceremony at Jormaco following a transparent privatisation process in which five prospective bidders were short-listed. Dr Umayya Toukan, chairman of Royal Jordanian and governor of the Central Bank of Jordan (CBJ), and Adel Kodah, chairman of the Executive Privatisation Commission of Jordan, and Arif Naqvi, the chief executive officer of Abraaj Capital, were the signatories on the agreement. Dr Toukan said: “The privatisation of Joramco is in line with our government’s vision. We strongly believe that Joramco will greatly benefit from its privatisation and partnership with Abraaj Capital and we see a great future for the company.” Kodah added: “This transaction is a significant milestone in the privatisation program. It is in line with our government’s vision of boosting investments and public private partnership. Our partnership with Abraaj Capital, one of the largest equity firms in the region, shall yield positive social and economic results once the company’s immediate expansionary plans are implemented hence expanding Joramco’s business, diversifying its services and making Jordan a hub for aircraft maintenance in addition to creating new job opportunities.” Naqvi said: “Such public-private partnership initiatives can play a significant role in reinvigorating Mena’s emerging economies, expanding the capital markets, generating employment and boosting overall economic growth.” Humayun Shahryar, executive director and head of direct investments at Abraaj Capital, described the acquisition of Joramco as the icing on the cake of the Buyout Fund having largely closed out the Fund’s investment strategy. He said that the Middle East airline business is booming and expanding rapidly and the acquisition of every new aircraft in the region increases the maintenance, repair and overhaul (MRO) business potential and thus Joramco’s prospects also. “Jordan is positioned on the crossroads of Europe and Asia and we expect Joramco to gain market share in Europe, Middle East and North Africa in the very near future,” Shahryar pointed out. Joramco ceo, Bashir Abdel Hadi, said the privatisation was significant stage in the evolution of an already profitable and growth oriented company: “We are one of only three companies in the region in our industry. In the very near future we expect to see a dramatic surge in the business by focusing our resources and heavily investing in IT, infrastructure and marketing. We are also going to build a new hanger of 16,000 to 20,000 square metres to satisfy the market demand” Naqvi said that the Mena region was about to witness large chunks of public companies being offered to private businesses. He also added that Jordan, along with certain Gulf countries, had taken a lead in this regard and have seen significant benefits, including in the shrinking of fiscal deficits and enhancement of corporate efficiencies and profitability. The Abraaj Buyout Fund’s current portfolio, includes, Aramex International Limited, Amwal Capital, BMA Capital Management, Spinneys Holding Lebanon and Septech Emirates LLC apart from Joramco. The Fund exited last year from ONIC Holding on the Muscat Securities Market with an internal rate of return (IRR) of 84% and now plans to list Aramex International Limited on the regional stock markets.

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