TMCnet News

Roundup [Business Benchmark Middle East]
[April 20, 2014]

Roundup [Business Benchmark Middle East]


(Business Benchmark Middle East Via Acquire Media NewsEdge) REGION Etisalat signs infrastructure sharing MoU with global operator UAE Etisalat Group has signed a network infrastructure sharing Memorandum of Understanding (MoU) with seven of the largest mobile network groups operating in the Middle East and Africa. The MoU will facilitate an initiative to proactively explore greater cooperation with respect to infrastructure sharing.As part of the MoU, Etisalat Group will actively explore commercially negotiated agreements on passive infrastructure sharing, and where feasible from both technical and regulatory perspectives, active infrastructure sharing with Bharti Airtel, MTN Group, Ooredoo Group, STC Group, Orange, Vodafone Group and Zain Group. The MoU is intended to form a platform for other initiatives with operators outside this initial group.The multi-operator cooperation is an out- come of discussions finalised during the recent GSMA Mobile World Congress in Barcelona, Spain. It recognises the need for telecom operators to further optimise capital and operational expenditures as well as increase the penetration of mo- bile voice and data services to a wider spectrum of customers.



Through this understanding, Etisalat Group aims to reduce its expenditure and environmental impact while improving its network coverage in Middle East, Asia and Africa.

Emirates Reit public issue subscribed 3.5 times UAE Emirates Reit, the UAE's first real estate investment trust, announced that its initial public offering was subscribed 3.5 times. Emirates Reit increased its base offer from $150 million to $175 million (exclusing the exercise of the over-allotment arrangements) to meet demand from investors. The offer was 128,676,471 new shares at $1.36 per share (excluding the exercise of the over-allotment arrangements of up to 19,301,470 additional shares). Shares have been placed with a broad base of institutional investors in the UAE, the wider GCC and the UK.


Shuaa Capital PSC and Emirates NBD Capital acted as joint bookrunners on the deal. Emirates Reit, the first Shari'a com- pliant real estate investment trust incorporated in the DIFC, is a closed-ended investment company with a mandate to invest in a diversified portfolio of Shari'a compliant real estate properties. Emirates Reit wants to capitalize on resurgent interest in real estate in Dubai, where economic growth and property prices have rebounded since 2009. Home prices may jump as much as 40 per cent this year, according to the emirate's Land De- partment and the economy may expand 4.7 per cent after recording the fastest growth in six years in 2013.

Thuraya seeks partners for satellite expansion in US UAE Thuraya Telecommunications Co., the Dubai-based provider of mobile-satellite services in Europe, Australia and Asia, is looking to expand to the US, Chief Executive Officer Samer Halawi said.

Thuraya is talking with financial backers and may consider buying spectrum or satellites to start a service in the US, he said. The company may also seek agreements to attach its equipment to satellites owned by providers that already have US coverage, Halawi said. Shareholders of Thuraya, a private joint-stock company, include Boeing Co., Third Point LLC and Jefferies Group LLC. A US expansion would help Thuraya increase its customer base, boosting profit margins. The company, which serves clients in the government, oil and gas and other industries, booked $122 million in sales last year, and expects to reach $200 million in revenue by 2018, he said. It should become profitable within two years, he said.

Goldman Sachs to restart equity sales in Dubai UAE Goldman Sachs Group Inc., which generated one-third of its profit from trading last year, is restarting Middle East and North Africa equity sales in Dubai. Goldman Sachs is joining banks from Renaissance Capital to Arqaam Capital Ltd. in expanding coverage in the Middle East and Africa as local markets rally and economic growth surges. Dubai's benchmark index has advanced the most among 50 of the world's largest equity gauges this year with a gain of 23 per cent as the UAE's real estate and banking industries recover from a property crash. The UAE was raised to emerging-market status from frontier by index provider MSCI Inc. in 2013, potentially paving the way for greater foreign investment in the nation.

Emirates Islamic launches 'financing against shares' UAE Emirates Islamic, one of the lead- ing Islamic financial institutions in the UAE, has launched 'Financing Against Shares.' With the launch of the new product, customers, who invest in Shari'a compliant equities through Emirates Islamic Financial Brokerage (EIFB), or any other financial brokerage company in the UAE, can access financing secured against their equity investments with easy repayment plans. The repayments are either on a monthly or quarterly basis, with principal recovery at the maturity of the finance.

'Financing Against Shares' enables customers to secure finance of up to 50 per cent of the value of their Shari'a compliant shares portfolio, with profit rates starting from 3.5 per cent flat per annum. Processing and Takaful fees are nominal and customers have the flexibility to reinvest the liquidity or utilise it as per their requirement. The product allows trading of under lien shares to maximise the portfolio's performance, and customers have access to free current or savings account without monthly minimum balance. In order to be eligible for the scheme, customers must have a minimum investment of AED 200,000.

Ducab acquires UK's AEI Cables to enter European markets UAE Ducab, a leading UAE-based cables manufacturer, has acquired UK's AEI Cables, one of the oldest cable makers in the world. AEI, a specialist cable manufacturer, will immediately expand Du- cab's cables and wires product range, give Ducab access to specialised expertise, and also provide a point of entry into the European market with a broader range of certified and type-approved products. The deal size has not been revealed.

Ducab is jointly owned by the Investment Corporation of Dubai and the Senaat (General Holding Corporation), Abu Dhabi. The acquisition of the company, which is based near Newcastle in North-Eastern England, includes all the manufacturing assets of the business as well as 200 employees. AEI currently serves a number of industrial market sectors including defence ship-building, mining, rubber industrial, rail (over and underground), tunnels, air-field lighting, shipping and offshore.

First part of Omantel share sale subscribed 1.99 times OMAN The first part of the Oman government's sale of a 19 per cent stake in telecommunications operator Omantel, part of efforts to revive its privatisation programme, was 1.99 times subscribed, the company said. The sale, which will cut the government's holding in Omantel to 51 per cent, is expected to raise about $570 million as the Gulf state seeks to boost its non-oil income and fund rising public spending. In February, state news agency ONA reported that Oman would sell 142.5 million Omantel shares in two equal-sized parts, with the first - a private placement - aimed at wealthy individual investors and institutions; it required minimum orders of 2 million shares each. That phase was completed on March 12. Bids ranged from 1.500 to 1.900 rials per share, while the cut-off price at which the placement was fully subscribed was 1.511 rials per share. The government owns more than 60 companies across the economy, and Minister for Financial Affairs Darwish Al Balushi has said some will be privatised.

Qatar to sign projects worth up to $50 billion QATAR Qatar's government is expected to sign contracts for construction projects worth as much as $50 billion this year as it builds infrastructure needed to host the soccer World Cup in 2022, the Central Bank governor was quoted as saying. The projects will be in trans- port, energy and other sectors, Sheikh Abdullah bin Saud Al Thani said at a conference held by regional media group MEED, according to the official news agency QNA.

Sheikh Abdullah did not give details of the contracts, but his comments appeared to confirm that Qatar would be- gin stepping up infrastructure spending sharply this year. After it won the right to host the World Cup in 2010, Qatar announced plans to spend some $140 bil- lion on projects including a new airport, port facilities, railways, stadiums and other infrastructure. But many projects have been slower to get started than the business community expected, apparently because of bureaucratic and planning problems.

Mesaieed Petro rallies on Qatar exchange after IPO QATAR Shares in Qatar's Mesaieed Petrochemical Holding Co. soared 450 per cent in the country's first stock market listing since 2010, far exceeding analysts' estimates of fair value. The spectacular debut reflected bullish investor sentiment toward Qatar, but was also the result of lavish government efforts to make the stock attractive to local citizens.

Mesaieed shares closed at 55 riyals, up from their initial public offer price of 10 riyals, after hitting a peak of 73.90 riyals. The company became the exchange's third biggest stock by market capitalization.

Mesaieed, a unit of state-owned Qatar Petroleum (QP), raised 3.2 billion riyals ($880 million) in an IPO of about 26 per cent of its shares. The offer, which authorities said was heavily oversub- scribed, was open only to Qatari investors; foreigners can buy up to 15 per cent of the firm from the market.

Bahrain fund targets foreign deals for first time since McLaren BAHRAIN Bahrain's sovereign wealth fund expects this year to make its first international acquisition since buying a 30 per cent stake in carmaker McLaren Automotive Ltd in 2007. Mumtalakat, as the fund is called, is looking at more than one foreign company, Chief Executive Officer Mahmood Al Kooheji said. "We have more than one deal in the pipeline and they are at various stages of development," he said. Mumtalakat is targeting companies in the US, Europe and Far East where it can act as a co- investor with other firms, he said. The fund is not looking at property, aviation or infrastructure companies, Al Kooheji said. Late last year Mumtalakat made an unsuccessful bid to acquire US talent agency IMG Worldwide in a group with CVC Capital Partners. McLaren is the only foreign asset owned by Mumtalakat. Last year the sovereign fund focused on investing $150 million in Bahrain and trying to turnaround the country's loss- making national carrier Gulf Air..

Saudi Airlines unit to seek $800 million in public issue SAUDI ARABIA Saudi Ground Services, a unit of Saudi Arabian Airlines, plans to raise $600 million to $800 million through the sale of a 30 per cent stake in an initial public offering. The IPO of the business, formed in 2011 through a combination of the kingdom's three main ground-service providers, will probably take place in the fourth quarter. HSBC Holdings is advising Saudi Ground Ser- vices on the sale. IPO activity in Saudi Arabia, home to the Gulf region's largest stock market, is quickening as markets rebound and valuations improve. The kingdom is also selling a 15 per cent stake in National Commercial Bank, the coun- try's biggest lender by assets, Chairman Mansoor Al Maiman said last month. The kingdom decided in 2006 to privatise six units of its national carrier. Saudi Airlines Catering, the first such business to be sold publicly, raised $347 million af- ter the sale of a 30-percent stake in 2012.

Carlyle targets new deal in Mena after Saudi sale SAUDI ARABIA Carlyle Group LP, the US buyout firm, said it's targeting new in- vestments in the Middle East, North Africa and Turkey after agreeing to sell a 30 per cent stake in a Saudi Arabian lighting company to Royal Philips NV.

"Our investment strategy has been to identify market leaders with a strong brand name which are easy to exit either through an IPO or an outright sale like that of GLC.," Firas Nasir, Managing Director and Co-head of Carlyle's Mena operations, said, referring to the Saudi company. Philips, the world's largest lighting company, agreed to buy a 51 per cent stake in Saudi Arabia's General Lighting Co. for $235 million from a group of shareholders including Carlyle, Hejailan Group and Alliance Holding Ltd. Carlyle's $500 million Middle East and North Africa fund has investments in companies ranging from a franchise operator for Domino's Pizza in Saudi Arabia to a Turkish lingerie maker.

World New York replaces London as top financial centre LONDON New York replaced London as the world's leading financial centre for the first time, after the City was rocked by a series of scandals and questions over the UK's place in the European Union. New York holds the top spot in the latest Global Fi- nancial Centres Index with a "shaky, statistically insignificant" two- point lead, ac- cording to Michael Mainelli, chairman of Z/Yen Group Ltd., which compiles the index. Hong Kong and Singapore, the two leading Asian centers, have narrowed the gap between them and the top two to fewer than 30 points on a scale of 1,000, the index shows.

Scandals including banks abusing their clients by selling unneeded insurance, manipulation of financial benchmarks and trading losses, have combined to dam- age the City's reputation for probity, just as plans for a referendum on EU member- ship cast doubt on the terms of its access to that market. While New York has challenged London for the pedestal since the inception of the index, a seven-point rise in its rating gained it the top spot after the UK capital suffered a 10-point decline, the largest of any center in the top 50.

51 PER CENT Philips agreed to buy stake in General Lighting Co. from Carlyle and others Alibaba poised for biggest IPO since 2012 US Alibaba Group Holding Ltd., poised for the biggest initial public offering since 2012, could take a definitive step toward that goal by filing to go public in the US. Alibaba may disclose its prospectus for an IPO in New York as soon as April. The company is opting for a US listing as it struggles to persuade Hong Kong regulators to approve a proposed governance structure. The online store's market value is estimated at $153 billion, bigger than 95 per cent of the Standard & Poor's 500 Index. Ever since Alibaba founder Jack Ma said in 2012 that the company may sell shares within five years, the deal has been one of the most highly anticipated offerings since Facebook Inc.'s $16 billion IPO in May of that year. Investors are salivating for a peek at Alibaba's finances, said Eric Jackson, president of hedge-fund Ironfire Capital LLC.

US to give up control of Internet address system US The US said it plans to hand over control of the system for assigning website addresses to a non-government entity, the final phase in an effort to fully privatize and globalize management of the Inter- net's backbone. The Internet Corporation for Assigned Names and Numbers (ICANN), which has managed the system since 1998 under a US government con- tract that expires next year, is being asked to convene interested groups to develop a proposal to transition the system. ICANN said it plans to begin a consultation at a meeting in Singapore. Pressure has been building internationally for the US to give up the last vestiges of control over a system that gives websites the unique identifiers essential for users to find what they're looking for online. Nations in the European Union have called for more global supervision of the system, a topic that has grown in importance amid an increase in cyber-attacks and censorship and government spying.

Iran thaw seen opening $6 bn market for steel IRAN As economic sanctions eased in February 2014 under a temporary accord, Iran is shaping up as a hot, untapped op- portunity for Western steel exporters, particularly high-grade varieties. Global steel- makers have Iran in their sights. Even after seven years of international sanctions and the economic pain they've inflicted, the Islamic Republic still consumes more steel than France or the UK. It's a major carmaker and needs massive infrastructure for its oil and gas industry, consuming about 20 million tons a year of the metal, most of it homemade. ArcelorMittal and Russia's OAO Novolipetsk Steel have mills in central Asia that supplied Iran before sanctions in 2007, when it imported 12.2 million tonnes a year of the metal, valued at $6 billion today. Other steelmakers are quietly testing the waters.

About 45 producers sent representatives to a steel conference last month in Tehran to study export opportunities and investing in Iran's domestic industry.

$153 bn ESTIMATED MARKET VALUE OF ONLINE STORE ALIBABA Norway recalculates $850 bn wealth fund's return NORWAY Norway is examining new ways to calculate returns generated by the world's biggest sovereign wealth fund in a move that could affect how much oil revenue the government uses in its budgets.

The Finance Ministry has ordered Statistics Norway to find out how different deflators, which adjust returns for inflation, will affect returns. The government is scheduled to release a white paper assessing the fund's strategy and performance.

Norway's government, which took office in October, is reviewing the wealth fund's mandates, including which as- sets it can buy.

The potential overhaul of Europe's biggest equity investor follows a decade during which the fund failed to live up to a return target of 4 per cent, a level that also represents a cap on how much petroleum cash the government can use to prop up its budget.

The current deflator model shows that in order to reach its return goal in real terms, the fund needs to deliver a 6 percent nominal return. The fund now uses a deflator based on a weighted average of inflation in countries in its benchmark indexes for equities and fixed income. BB (c) 2014 Solus Globus Media Solutions FZ LLC. All rights reserved. Provided by Syndigate.info, an Albawaba.com company

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