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Thursday, 15 April 2010

Agility Says U.S. Appoints New Firm for Iraq, Kuwait

Agility, the Middle East’s largest storage and logistics company, said the U.S. Defense Logistics Agency appointed a new company to supply food for troops in Kuwait and Iraq.

Agility will continue to supply the U.S. military for six months to ensure a smooth transfer to the new supplier, according to a company statement on the Web site of the Kuwaiti bourse today. It didn’t identify the new company.

Agility, formerly known as Public Warehousing Co., was indicted in November on allegations it overcharged the U.S. government on a multibillion dollar contract to supply food for troops in Kuwait and Iraq. The company at the time said it was negotiating a possible settlement with the U.S. Justice Department. On April 12 the indictment was extended to two subsidiaries, Agility DGS Holdings and Agility DGS Logistics.

OPEC would mull oil output boost at $100: Kuwait

OPEC would make a decision on whether to boost output to calm oil prices if the market passed $100 a barrel, Kuwait's oil minister said on Thursday.

U.S. crude traded around $85 a barrel on Thursday, a little above the $70 to $80 range that OPEC's largest producer Saudi Arabia has said was fair for both consumers and producers.

"Above $100... we would take a decision in this regard," Sheikh Ahmad al-Abdullah al-Sabah told reporters at Kuwait's parliament, when asked how high the producer group would allow prices to rise before acting.

Qatar Shares Fall Most in 2 Months on Qatar Islamic Bank Report

Qatar’s benchmark stock index declined the most in more than two months after Qatar Islamic Bank SAQ posted lower-than-expected first-quarter earnings.

Qatar Islamic Bank, the Gulf state’s biggest lender complying with Muslim banking rules, retreated the most since February as profit fell 14 percent. Competitor Masraf Al Rayan slumped the most since December and the Qatar Exchange Banking Sector Index lost 1.8 percent. The DSM 20 Index lost 1.2 percent, the biggest drop since Feb. 7, to 7,627. The measure had gained 4.5 percent in the first nine trading days of the month, its longest winning streak in two years.

“Speculators were waiting for a cue to cash out, the Qatar Islamic results gave them the opportunity to do so,” said Vyas Jayabhanu, head of Al Dhafra Financial Brokerage LLC in Abu Dhabi.

Nakheel to pay $8.2 bln to creditors in June

Nakheel aims to pay about $8.2 billion to its creditors in June, but the Dubai developer needs approval for its March debt proposal before making the payment, a source familiar with the matter said.

The source also said Nakheel's creditors did not unanimously approve a restructuring plan at a meeting held earlier this week.

Earlier on Thursday, Arabic daily al-Ittihad reported that Nakheel would repay creditors $8.2 billion in June, citing a source attending the creditors meeting.

FOCUS: Private Equity In Search Of Foothold In Saudi Arabia -

FOCUS: Private Equity In Search Of Foothold In Saudi Arabia -

Private equity firms argue that Saudi Arabia is where the deal making action is in the oil-rich Persian Gulf, but corporate raiders arriving in Riyadh face a very different reality on the ground.

Delegates attending a private equity conference in Riyadh this week were given few reasons for optimism, with bankers exchanging small talk amongst themselves instead of pitching deals to wealthy Saudis.

"There aren't many big investors around," said one disgruntled investment banker attending the event held in a swanky Riyadh hotel.

Executives from Egypt's Citadel Capital, the founding partner of the conference, which was sponsored by a government agency tasked with increasing foreign investment in Saudi, were visibly absent. They couldn't get their visas in time for the event, illustrating the challenges facing the industry in the kingdom.

Only three private equity transactions were completed in the Middle East's largest economy last year, compared with 10 in the United Arab Emirates, according to data from's Private Equity Monitor.

Publicly, the private equity industry is upbeat on Saudi Arabia, and for good reason. The kingdom has the largest consumer and stock markets in the region, a large and growing population, and a government that is fiscally sound and willing to spend heavily to transform its economy.

"Saudi Arabia has long been overlooked as a destination for investment funds," Citadel Capital's managing director Hisham El-Khazindar said in an emailed statement.

Private equity giants like Kohlberg Kravis & Roberts and the Carlyle Group have expressed keen interest in acquiring companies in Saudi Arabia. One of the few bright spots is Carlyle's acquisition of a 30% stake in Saudi's largest lighting fixtures manufacturer and supplier for an undisclosed figure.

But a mixture of poor regulation, a shortage of deals and stubborn sellers with unrealistic valuations is making it tough for many private equity players to gain a foothold in the kingdom.

"There's too much capital chasing too few deals," says Tarek Kabrit, a principle at the Dubai-based Siraj Capital which has three portfolio companies in Saudi Arabia.

Kabrit said the private equity funds, while small compared to their global peers, are too big for the potential investments in the region.

A $500 million fund typically looks to buy a minority stake for a $100 million, he explained, which means the target company needs to be worth $600 million. "How many private companies are there here that are not government-owned, or a family business and willing to sell a stake?" Kabrit asked.

Siraj is eyeing smaller deals, as little as $5 million. But this business model has its risks because private equity firms will have trouble generating fees, which typically is a 2% annual charge on the fund and at least 20% of the profit when a portfolio company is sold.

"Deals we're seeing around in the market have been around for some time, and they are not the good deals," said Hadi Al Hakim, the director of private equity at the Bahrain-based Unicorn Investment Bank.

Al Hakim is working on a healthcare investment in Saudi Arabia worth around $20 million. His firm is now sourcing deals and offering it to small groups of investors rather than using a fund to acquire companies.

The shift is due to demand from wealthy investors who want to invest directly in companies rather than let the managers decide, Al Hakim said.

A call to tinker with the regional private equity sector's business model was also mentioned by one of the few Saudi investors at the conference this week. Muhammed Al Agil, the chief executive of Jarir Investment, was concerned that firms are generating fees comparable to their global peers but don't have the talent or track record needed to justify them.

"The investor is paying the cost of their learning curve," he said.END

Invest AD realigns business to suit market demand

Invest AD, an Abu Dhabi Government-owned investment company, has disbanded its investment banking team and cancelled plans to offer a property fund to outside investors as it realigns its business to suit market demand.

The move reflects a wider trend in which financial companies have streamlined their business models to cope with reduced investor appetite, a dearth of financing from banks and declines in prices of stocks and property brought on by the global downturn. The government-owned conglomerates Dubai Holding and Dubai World have made sweeping structural changes in their businesses to save money and improve efficiency. Smaller, more nimble firms such as Invest AD have made more modest changes of their own.

Invest AD’s investment banking arm was set up about a year and a half ago and headed by Alexandre Carre de Malberg, a veteran of the UK investment bank Rothschild. With few debt issuances, stock listings and merger and acquisition deals to advise on in the region, however, the company decided to rethink the move.

Abu Dhabi MAR sails into Europe with major deals

Abu Dhabi MAR, the new shipbuilding group, has sailed into the front ranks of Europe’s maritime sector after reaching a wide-ranging agreement with ThyssenKrupp of Germany.

The Musaffah-based shipbuilder will acquire ThyssenKrupp’s Blohm+Voss Shipyards yacht-building division, employees and production facilities for non-military vessels, as well as 80 per cent of two units that repair ships and make components, the two companies said yesterday.

Abu Dhabi MAR has 2,000 employees and an order book worth €1 billion (Dh5 bn). The transaction, which needs antitrust approval, may close by the end of June, the two companies said.

OPEC Holds Oil-Demand Forecast Steady

The Organization of Petroleum Exporting Countries maintained a cautious view about world oil demand and gave no indication it might pump more crude to damp the recent rise in oil prices.

Since early March, oil has closed above $80 a barrel for all but a handful of days, leading analysts to question whether OPEC is getting more comfortable with a higher oil-price plateau. That view has gained traction following comments from some OPEC ministers in recent days that the group may stand pat even if crude-oil prices move north of $90 a barrel.

Since last year, most OPEC ministers have had an informal preference for prices between $70 and $80 a barrel, a level seen as helpful for promoting energy investment but without hitting consumers' pockets too hard.

Turkey finds a gateway to Iraq

In the lobby of the Erbil hotel that serves as the makeshift location of Turkey’s first diplomatic presence in the semi-autonomous Kurdish region of Iraq, Aydin Selcen, the new consul, describes the warm reception he has received since arriving a few days earlier.

“I don’t think a diplomat could be happier,” he says, sipping tea. The installation last month of Mr Selcen, who previously served as deputy chief of mission in Baghdad, marks a high point of two years of rapprochement between the Kurdish Regional Government and Ankara.

Relations hit a low at the end of 2007, when Ankara mounted a military offensive inside KRG territory against the Kurdistan Workers party, known as the PKK, a militant group fighting for greater rights for Turkey’s Kurds.

Gulf keeps project finance flowing

A credit drought may still be discernible in many parts of the Arab world, potentially hindering economic resurgence, but bankable development projects are finding lenders willing to do business.

Last year, projects in the Middle East and Africa raised $39.7bn, making it the world’s third-largest market for project finance, after western Europe and Asia, according to Dealogic.

The six states of the Gulf, excluding Yemen, accounted for nearly half this amount, about $15bn. Though this was down from $16.4bn in 2008 and $22.7bn in 2007, and large swathes of property developments have been cancelled, low-key but essential projects are proceeding.

Abu Dhabi appoints new head of fund

A senior member of Abu Dhabi's ruling family was yesterday named as managing director of the Abu Dhabi Investment Authority, one of the world's largest sovereign wealth funds.

Sheikh Hamid bin Zayed Al-Nahyan replaces his brother, Sheikh Ahmed, who died when his glider crashed into a lake in Morocco.

Sheikh Hamid holds several government positions, including membership of Abu Dhabi's Executive Council, or cabinet. He is chairman of Etihad Airways, deputy chairman of the Abu Dhabi Council for Economic Development and chairman of the court of Sheikh Mohammed bin Zayed Al-Nahyan, the crown prince.