MENA PE Newsletter January 2016

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1 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan '11 Jan '1 Jan '13 Jan '1 Jan '15 Jan '16 MENA PE Newsletter January 16 MENA PE Deal Space January 16 MENA private equity (PE) activity remained subdued during the month of January 16, which can be attributed to the rising uncertainty in the global macroeconomic environment and oil prices dropping to a 1 year low. Given the current market environment, valuations might also be another factor that might have deterred PE investors from deploying capital as they continue to remain elevated despite the changing macroeconomic environment across the globe. As a result, the PE investors might have become more cautious and expect the situation to ease out in the coming months to continue making investments as the region remains an attractive destination for the long term. Three deals were announced in January 16 compared to four deals during the same month of 15 and five deals in 1. The deal values of the three deals announced during the month were not disclosed. The deals recorded during the month were struck in the Information Technology (IT), Retail and the Consumer Goods sectors. In the terms of region, one deal each was recorded in the UAE, Algeria and Saudi Arabia. UAE continues to remain the most preferred destination for PE investors, which can be attributed to its diversity, ease of doing business and favourable regulatory environment when compared to other regional countries. During the month of January 16, there were no exit deals recorded, mainly due to the factors mentioned earlier. Similarly, companies also decided to either postpone their plans or shelved plans to go public, hence there was no IPO activity recorded during the month. However, the decision is based on the current market sentiments, which is not very conducive and investor friendly, but the pipeline seems to be relatively healthy as they await the market to stabilize and investor sentiments to improve going forward. Exhibit 1: PE Deal Value (US$ M) & Volume - 15 Exhibit : PE Deal Value (US$ M) & Volume 3, 1 3, 1,5, 1,5 1, ,5, 1,5 1, Deal Value (US$ M) No. of deals Deal Value (US$ M) No. Of Deals MENA PE Deal Space January 16 On January 11, UAE - based Mumzworld successfully closed its Series B funding with multi-million dollar investments led by Wamda Capital, twofour5 and Endeavor Catalyst, while the other investors include Precinct Partners and WSB Holding and several existing investors have also increased their stake in the company. The new partnerships is not primarily for the financial investment, but offers important strategic collaborations for the e-commerce company. The company will utilize the funds received to expand into Saudi Arabia, Lebanon, USA and the UAE and will be instrumental in Mumzworld's aggressive growth plans for the GCC. The investment will also enable the expedition of planned customer focus initiatives, with emphasis on optimizing technology and logistics operations and increasing product offerings and line expansions to elevate the online consumer experience. On January 11, The Abraaj Group, announced the acquisition, through its second generation North Africa Fund (ANAF II), of a significant minority stake in Cellulose Processing (Cepro), a manufacturer and distributor of baby diapers and feminine sanitary pads in Algeria. Abraaj, in partnership with Cepro s founding Mehri family, will draw on its significant investment expertise to increase the production capacity and efficiency, diversify Cepro s product offering, enhance marketing efforts through a new branding strategy, and expand its network by developing new distribution channels in Algeria and sub-saharan Africa. The financials of the deal was not disclosed. On January, Investcorp announced the acquisition of a minority stake in Saudi Arabia s Bindawood Holding, which controls supermarket chains Bindawood and Danube in the kingdom. The pair manage around supermarkets and hypermarkets, with Bindawood focusing on mid-market customers and Danube targeting more affluent consumers. The investment will allow the company to pursue an aggressive expansion plan which will target opening more than 3 new stores in the coming years. While the value for the transaction or the size of the stake purchased was not disclosed, it is being termed as Investcorp s largest ever investment in the Middle East. Additionally, Bindawood Holding becomes Investcorp s sixth portfolio company in Saudi Arabia, as the Bahrain-based firm continues to make large investments as part of a new strategy to more than double its assets under management in the next seven years. 1

2 MENA PE Newsletter January 16 Company Name Date Exhibit 3: Deals in MENA PE Space January 16 Company Nation Deal Value (US$ Million) Mumzworld January 11, 16 UAE - IT Sector Firm/Fund Wamda Capital, twofour5, Endeavor Catalyst, Precinct Partners, WSB Holding CEPRO January 11, 16 Algeria - Consumer Goods Abraaj North Africa Fund II Bindawood Holding January, 16 Saudi Arabia - Retail Investcorp MENA PE Exit Deals January 16 During the month of January, there were no PE exit deals recorded, which can be attributed to the challenging macroeconomic environment. Trade sales might be difficult in the current environment as the investment will not be able to fetch the desired valuations for the PE investors. Similarly, the sharp sell-off seen in the equity markets have resulted in companies deferring their plans to go public. Going forward, the PE exit environment will continue to be challenging as investors remain cautious and turn selective in picking the right investment opportunities in an uncertain macroeconomic environment. MENA PE News Wrap-up Oman's biggest sovereign wealth fund, the State General Reserve Fund (SGRF), plans to cooperate with other state and private investors to establish a venture to buy into the mining industry. The venture, Mining Development Oman (MDO), will have OMR 1 million (USD 6 million) of capital and establish vehicles for its investments in various locations. Three other state bodies, the Oman Investment Fund, Oman Oil Co, and Oman National Investments Development Co, will combine with the SGRF to take a 6% stake in MDO. (January 5, 16) Gulf Capital raised USD 175 million (AED 6 million) for the first closing of its second credit and mezzanine fund, Gulf Credit Opportunities Fund II. The Fund targets a final close of USD 5 million (AED 95 million), with a hard cap of USD 3 million (AED 1.11 billion). The new Fund is expected to make 1 to 1 investments of USD 15 million to USD 3 million each throughout its ten-year life and to generate significant cash yield and overall returns. Gulf Capital is entering 16 particularly well-funded with ten funds and investments vehicles across its credit, PE and real estate divisions. Gulf Credit Opportunities Fund II will provide bespoke financing solutions to mid-market companies and private equity sponsors operating in the MENA, Turkey and Sub-Saharan Africa regions. Gulf Credit Partners, the managers of Gulf Capital 's credit funds, will be investing in companies that generate revenues between USD 5 million and USD 5 million and operate in growth sectors that are non-cyclical in nature, have experienced management teams, a good track record of financial performance and robust cash flow generation with strong corporate governance practices. Gulf Capital will be seeding this new credit fund and will become the largest limited partner, to align the interests of its shareholders and fund managers with those of its institutional investors which represent leading regional Sovereign Wealth Funds (SWFs), Insurance companies, Foundations and International Financial Institutions. (January 7, 16) Propertyfinder Group raised USD million in growth capital from the Sweden-listed investment company, Vostok New Ventures Ltd, a transaction that values Propertyfinder Group at USD million. The funding represents one of the largest investments in the region's emerging technology sector. The Group will continue to develop its innovative proprietary technology as well as bring in additional creative talent and intensify its marketing efforts to improve the offering to consumers, real estate agents and developers. The company is focused to become the number one online real estate destination in the MENA region and within a year it will be using this new capital to build and strengthen our sales and marketing teams on the ground in each of our key markets. Over the past ten years, Propertyfinder Group has become the leading real estate classified website in the UAE, Qatar, Bahrain and Lebanon and is growing in popularity in the KSA, Egypt and Morocco. Each month, over one million users visit the websites, generating over 3, leads for agents and developers. (January 11, 16) Shareholders of Saudi Arabia's Bodymasters received an initial interest from four potential buyers ahead of a potential SAR 5 million (USD 133 million) sale of the fitness chain later this year. The gym brand is currently owned through a 6%-% split by two funds run separately by Saudibased private equity firms Amwal Al Khaleej and MEFIC Capital. The four potential buyers are regional PE firms and deal could be concluded by the end of the year, depending on the progression of talks and market conditions. (January 13, 16)

3 MENA PE Newsletter January 16 MENA PE News Wrap-up The Abraaj Group announced that it has agreed to acquire, through one of its Funds, a majority stake in Quality CARE India Limited, one of the largest multi-specialty healthcare providers in India, from global private equity firm Advent International. Hyderabad-Based, CARE is the fifth largest healthcare provider in India, operating,6 beds across 16 hospitals in nine cities. Abraaj and CARE's management team will focus on expanding CARE's integrated healthcare delivery system, especially in the underpenetrated regions of India. The partnership will also bring CARE's high quality and proven delivery platform to other markets where Abraaj operates. The CARE Foundation, the company's education, training and rural community outreach program, will also be scaled up and expanded to develop and train high caliber nurses, technicians, physiotherapists and community health workers. The Abraaj Group has a strong track record of investing in healthcare, having deployed nearly USD 1 billion globally in 7 investments across the healthcare spectrum in growth markets. Accounting this new transaction marks Abraaj's 8th investment in healthcare across growth markets the transaction is subject to customary closing conditions and is expected to conclude in the first quarter of 16. (January 13, 16) Saudi Arabia plans to create a new sovereign fund to manage part of its oil wealth and diversify its investments, and has asked investment banks and consultancies to submit proposals for the project, according to news sources. The new fund could change the way tens of billions of dollars are invested and affect some of the world's leading asset managers, particularly in the US, where the bulk of Saudi Arabia's foreign assets are managed. Part of the new Saudi fund would operate much like a private equity investor, buying major stakes in foreign companies, similar to the sovereign wealth funds of Qatar and Abu Dhabi, but it would also use other forms of investment. The government is trying to execute a range of reforms and the plan for a new sovereign fund is part of this drive. (January 17, 16) Ibdar Bank (Ibdar), the Bahrain based wholesale Islamic investment bank, announced the successful exit from four Bahrain-based real estate investments for a total value of USD 1.7 million. The first two exits consist of the sale of two 11-story buildings acquired by the bank for total consideration of USD 1.1 million. The first is a 6-apartment fully furnished building located in Manama and the other consists of 38-fully furnished apartments in Busaiteen. The other two exits consist of the sale of the Bank's affiliate company's 11-story and 1-story properties located in the popular Juffair area. The properties consist of 83 fully furnished apartments in total and supporting convenience, leisure and parking facilities, which were sold for a total consideration of USD 9.6 million. (January 17, 16) The Abraaj Group announced the acquisition, through its second generation North Africa Fund (ANAF II), of a stake in Société d'articles Hygiéniques (SAH), a leading producer of disposable household and personal care products for babies, women and adults in Tunisia. Abraaj acquired a 9% stake in JM Holding. SAH is listed on the Tunisian Stock Exchange. Abraaj and SAH are partnering to consolidate the company's market position and expand its footprint across Sub-Saharan Africa by enhancing its distribution models, improving production efficiency and focusing on product innovation. From a health, environmental and governance perspective, Abraaj will work with SAH to enhance safety standards and environmental performance in the production plants, and further institutionalize the business by enhancing its management processes and reporting mechanisms. The target markets for SAH's expansion include the Central African Economic and Monetary Community (CEMAC) and the West African Economic and Monetary Union (UEMOA), representing a total addressable market of USD 8 million with a projected average annual growth of 1% and 11% respectively. (January 18, 16) UAE-based Bayut.com closed a USD million Series C venture round, a mere four months after its Series B funding that added USD 9 million to the popular property website's coffers. The funding comes from one of Bayut's current investors, a fund which focuses on frontier and emerging markets with over USD 1 billion in assets under management. The investment has gone into Bayut's parent company Emerging Markets Property Group (EMPG), formerly Zamzama Property Group, which also controls Pakistan's market leader Zameen.com. The new investment would be instrumental as it moved towards the market leader position in the UAE, as well as establishing a firm presence across the Middle East. (January 1, 16) Abu Dhabi-based Twofour5 announced that it acquired a stake in Silkroad Images, a start-up stock photography and audio-video content library. Twofour5 led the investment with 5 Startups, a global venture capital seed fund based in Silicon Valley, with the investment expected to help boost the development of the media and film industry. Silkroad Images plans to shift its operations to grow out of the UAE, which is a core market for the start-up. (January, 16) 3

4 MENA PE Newsletter January 16 MENA IPO News The Saudi stock exchange (Tadawul) plans to issue part of the shares in trading for public subscription in 18 after completing the requirements and obtaining the necessary approval. Tadawul occupies an advanced position in emerging markets, as the Saudi stock market is strong in liquidity, value traded and the rate of stock turnover. It also represents 51% of the total market value of the GCC Capital Market and 79% of the total traded value. It intends to launch a special campaign to promote awareness among the public in general and the community of investors in the Saudi stock market and the opportunities provided by investors within and outside the Kingdom. (January 3, 16) Saudi Arabia is considering to list shares of Saudi Aramco, the state-owned company that is the world's biggest oil producer. JPMorgan, HSBC and Deutsche Bank AG are seen among banks likely to be hired for the Saudi Aramco IPO. Saudi Arabia is considering selling shares in refining ventures with foreign oil firms but would not offer a stake in Aramco s crude oil exploration and production operations. Saudi Aramco IPO of the world's largest oil firm could be on the local or international markets but would not include Saudi oil reserves. (January 7, 16) Five firms are expected to be listed on Egypt's bourse for the small and medium-sized enterprises (NILEX) within the first half of this year. Economic Group's firm plans to help listing of five firms, with a total capitalization of EGP 6 million (USD 3.3 million) during the first half of 16. Meanwhile, Economic Group is also negotiating with a real estate developer firm to list its share on NILEX before the end of the first quarter of 16. The developer's capitalization is worth EGP 8 million (USD 1 million). There are also negotiations with three industrial firms to be listed on NILEX before the first half of 16, with total capitals worth EGP 17 million (USD. million). (January 1, 16) As many as five Omani companies, including three owned by the government, are expected to list on the local bourse in 16. Mining Development Oman and Falcon Insurance would list as well as three state-owned firms. Oman is looking to privatize a number of state companies as part of measures to close budget deficits caused by lower oil prices. Mining Development Oman was expected to list by the end of the second quarter. Falcon Insurance is 51% owned by Al Anwar Holding, which disclosed in June 15 that it was planning an IPO of the insurer, subject to approvals. Four state-owned agencies, the State General Reserve Fund (SGRF), the Oman Investment Fund (OIF), the Oman Oil Company and Oman National Investments Development Company (Tanmia) have jointly promoted the Mining Development Oman, which will have a capital of OMR 1 million (USD 59.7 million). Of this, OMR 6 million (USD million) will be contributed by the promoters, while the remaining OMR million (USD 13.9 million) will be raised from IPO in the second quarter of 16. (January 1, 16) Egypt-based real estate leader developer, Tabarak Holding plans to sell shares of its four affiliates on Cairo bourse in the first quarter of 16. Going forward, Tabarak's affiliates set to launch IPO on Cairo bourse are: Al Ofoq for Investments and Touristic Development, Tabarak for Housing and Development, Maadi Heights and Maadi for Investment and Development. Tabarak also aims to later sell shares of other affiliates, namely New Maadi and Delight Tour on the local bourse. (January 18, 16) Saudi Arabia's Capital Market Authority announced that the flotation for Middle East Healthcare Company has been postponed at the company's request. The company must determine the new date for its public share offering within six weeks and must finalize the share-sale by March 31, 16 or its regulatory approval to float will be considered cancelled, according to the CMA. Middle East Healthcare Co. was to offer 3% of itself in its initial share sale, first to initial investors and then to the public. The latter phase was supposed to run between February 3-9, 16 according to a December 3, 15 bourse statement. (January 18, 16) Egyptian investment bank, CI Capital is working on four IPOs on Cairo bourse that are expected to complete this year. During CI Capital's investment conference in Cairo, it announced that the planned IPOs are in contracting, tourism, and food industries. CI Capital is the premier investment bank in Egypt with market-leading investment banking, securities brokerage, asset management and research franchises. (January 19, 16) Egypt's central bank is considering listing shares in two major banks on Cairo bourse, but did not specify which banks would be offered. The two banks aim to increase their capitals by %, in a move aimed at jump-starting investment and boosting economic growth. The coming period will witness offerings of parts of the capital of successful Egyptian companies and banks on the bourse. Egypt owns vast swathes of the economy, including three of its largest banks, National Bank of Egypt, Banque Du Caire, the United Bank of Egypt along with much of its oil industry and huge parts of its real estate. National Bank of Egypt and Banque Misr are not included in the presidency's plan to list shares in state-run banks on bourse, according to the news sources. (January 19, 16) Egypt's leading construction firm, Arab Contractors is likely to offer shares in IPO on the local stock market. The company's IPO shall be part of the Egyptian government's scheme to list shares in state banks and companies on the stock market. The Arab Contractors (AC) is one of the leading construction companies in the Middle East and Africa. (January 3, 16)

5 MENA PE Newsletter January 16 Al Masah Capital Management Limited Level 9, Suite 96 & 97 ETA Star - Liberty House Dubai International Financial Centre Dubai-UAE P.O. Box Tel: Fax: Research@almasahcapital.com Website : Disclaimer: This report is prepared by Al Masah Capital (Asia) Pte Ltd ( AMCA ). AMCA is a company incorporated in Singapore and is regulated by the Monetary Authority of Singapore ( MAS ). The information contained in this report does not constitute an offer to sell securities or the solicitation of an offer to buy, or recommendation for investment in, any securities in any jurisdiction. The information in this report is not intended as financial advice and is only intended for professionals with appropriate investment knowledge and ones that AMCA is satisfied meet the regulatory criteria to be classified as a Professional Client as defined under the Rules & Regulations of the appropriate financial authority. Moreover, none of the report is intended as a prospectus within the meaning of the applicable laws of any jurisdiction and none of the report is directed to any person in any country in which the distribution of such report is unlawful. This report provides general information only. The information and opinions in the report constitute a judgment as at the date indicated and are subject to change without notice. The information may therefore not be accurate or current. The information and opinions contained in this report have been compiled or arrived at from sources believed to be reliable in good faith, but no representation or warranty, express, or implied, is made by AMCA, as to their accuracy, completeness or correctness and AMCA does also not warrant that the information is up to date. Moreover, you should be aware of the fact that investments in undertakings, securities or other financial instruments involve risks. Past results do not guarantee future performance. We accept no liability for any loss arising from the use of material presented in this report. This document has not been reviewed by, approved by or filed with the MAS. This report or any portion hereof may not be reprinted, sold or redistributed without our prior written consent. Copyright 15 Al Masah Capital (Asia) Pte Ltd 5