Rising Middle East Stock Markets

Rising Middle East Stock Markets Index, January 2002 = 100 1400 1200 1000 800 600 400 200 Egypt Israel Jordan Kuwait Saudi Arabia U.A.E. 0 2003 2004 2005 2006 Source: Bloomberg

Capital Access Index 2006 Gauging Entrepreneurial Access to Capital Max = 10 9.0 8.0 7.0 6.0 5.0 Hong Kong Israel U.S. Kuwait U.A.E. Saudi Arabia Lebanon Oman Jordan Morocco Iran Egypt Yemen 4.0 Syria 3.0 2.0 1.0 00 Source: Milken Institute

Net Direct Investment Developing Countries, 1997-2006 US$ Billions 120 Africa Middle East 100 Developing Asia Western Hemisphere 80 60 40 20 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Source: World Economic Outlook

Private Equity Investments In the MENA Region 1998-2006 3Q, Cumulative Total = US$ 2.5 Billion Lebanon 5% Turkey 6% Others 7% U.A.E. 29% Saudi Arabia 12% Jordan 13% Egypt 28% Source: Zawya/KPMG

Geographic Distribution of MENA-Based Private Equity Funds Investments US$ Millions Country U.S. U.K. Total outside MENA region Egypt U.A.E. Saudi Arabia Others Total in MENA Region Total Private equity investments Source: Emerging Markets Private Equity Association, Zawya/KPMG 2005 705 288 993 25 412 146 609 1,192 2,185 2006 Q1-Q3 2,372 285 2,657 625 45 68 295 1,033 3,690

Emerging Market Private Equity Fund Raising By Regions, 2003-2006 US$ Billions 25.0 19.4 20.0 15.4 15.0 2003 2004 2005 2006 10.0 5.0 0.0 2.2 2.8 Asia (Ex- Japan) 2.7 3.3 1.8 2.7 0.4 0.4 0.7 1.3 0.8 CEE/Russia Latin America & Caribbean Sub-Saharan Africa 2.4 2.9 1.9 Middle East & North Africa Source: Emerging Markets Private Equity Association

MENA Region Private Equity Funds Raised 1997-2006 US$ Millions 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 3 76 0 132 78 1,047 685 321 4,379 7,075 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Source: Emerging Markets Private Equity Association

High Unemployment Among Youth, Especially Females Middle East & North Africa Latin America & Caribbean Eastern Europe & Central Asia Sub-Saharan Africa OECD high income South Asia East Asia & Pacific Female youth All youth 0 5 10 15 20 25 Source:ILO and World Bank

Cost of Starting a Business % of Income Per Capita 0 200 400 600 800 1000 1200 Israel Iran Tunisia Algeria 0 1.3 28.3 46 World median: 15.1 Lebanon Iraq Morocco 56.5 57.1 66.7 Oman Kuwait United Arab Emirates Egypt Jordan Saudi Arabia West Bank and Gaza Yemen 84.7 100.8 338.2 694.7 864.4 1057.5 Source: World Bank Doing Business Report 2006

Cost of Dealing with License % of Income Per Capita 0 200 400 600 800 1000 1200 Syria Iraq Jordan Kuwait Tunisia United Arab Emirates Oman Lebanon Israel Egypt West Bank and Gaza Iran Saudi Arabia Morocco Yemen 58.9 70.2 91.1 World median: 178.4 176.9 210 210.1 264.9 298 306.4 503.2 684.5 823.4 833.2 883.1 1002 Source: World Bank Doing Business Report 2006

Rigidity of Employment Index 0 10 20 30 40 50 60 70 Saudi Arabia 7 Kuwait United Arab Emirates Lebanon Jordan Israel Syria West Bank and Gaza Yemen Oman Algeria Tunisia Iran Egypt Iraq Source: World Bank Doing Business Report 2006 13 20 24 27 27 30 31 33 35 World median: 36 45 46 49 53 59 63

Total Tax Rate % of Income Profit 0 10 20 30 40 50 60 70 80 90 Saudi Arabia United Arab Emirates Oman West Bank and Gaza Jordan Syria Lebanon Iraq Israel Iran Yemen Egypt Morocco Kuwait Tunisia 14.9 15 20.2 World median:37.0 31.5 31.9 35.5 37.3 38.7 39.1 46.4 48 50.4 52.7 55.7 58.8 Source: World Bank Doing Business Report 2006

Cost of Enforcing Contracts % of Debt 0 5 10 15 20 25 30 Algeria Yemen Iran Oman Kuwait Iraq Jordan Morocco Tunisia Egypt United Arab Emirates Saudi Arabia West Bank and Gaza Syria Israel Source: World Bank Doing Business Report 2006 10.3 10.5 12 12.9 13.3 15.3 16.2 16.5 17.3 18.4 18.5 World median: 18.7 20 20.2 21.9 22.1 27 8

There Are Approximately 27 PE Firms in the Middle East, Primarily Concentrated in the UAE Tunisia: 1. Tuninvest Morocco: 1. ATLAMED SA Lebanon: 1. Middle East Capital Group 2. Capital Trust Group 3. Byblos Bank Bahrain: 1. Emerging Markets Partnership 2. Gulf Finance House UAE: 1. Abraaj Capital 2. HSBC Private Equity 3. Injazat Tech. Fund 4. Ithmar Capital 5. Shuaa Capital 6. The GCC Energy Fund Managers 7. The Group 8. The National Investor Egypt: 1. Citadel Capital 2. EFG Hermes 3. Gulf Arab Investment Co. 4. Oasis Capital Jordan: 1. Foursan Group 2. The Jordan Fund Saudi: 1. Amwal Al Khaleej 2. Athar Al Majid Hold. 3. Swicorp Kuwait: 1. Kamco 2. Global Investment House 3. Kuwait Financial Note: Excludes all VC and real estate funds Center Source: Gulf Venture Capital Association, Zawya, Company websites, AltAssets, Industry Interviews India: 1. Over 100 foreign PE players operating

With Over 24 Traditional Private Equity Funds Note: Excludes all VC and real estate funds Source: Gulf Venture Capital Association, Zawya, Company websites, Private Equity Online, Industry interviews

With Over US$ 2.3 Billion in Total Fund Size Note: Excludes all VC and real estate funds Source: Gulf Venture Capital Association, Zawya, Company websites, AltAssets, Industry Interviews

There Are Another 17 Funds Currently Being Raised for Over US$ 2.6 Billion Note: Excludes all VC and real estate funds Source: Gulf Venture Capital Association, Zawya, Company websites, AltAssets, Industry Interviews

The Majority of Funds Currently in the Investing Stage Primarily Do Not Have A Sector Focus And Invest Across the MENA Region Sector Focus of Funds Currently Investing Geographic Focus of Funds Currently Investing Technology Worldwide 20% MENA 19% Diversified 32% Real Estate 9% 38% Egypt 19% Infrastructure 33% GCC 6% Other 14% Kuwait 10% Source: Private Equity Monitor (Zawya)

Total PE Industry Have US$ 5 Billion of Funds under Management End of 2005 Middle East PE Total Fund Size (US$ million) $280 $1,400 CAGR 49% $5,000 1998 2002 2005 CAGR 53% Comments Funds under management were estimated to be approximately US$ 280 million in 1998 Consisted of a number of relatively small funds from Capital Trust, EFG Hermes, Tunisvest, etc. Between 1998 2002, funds increased with additional firms entering including Emerging Markets Partnership (Bahrain), Atlas Group, Foursan Group, Injazat, Rasmala, etc. Note: Does not include VC and real estate funds Source: Gulf Venture Capital Association, Zawya, Company websites, Private Equity Online, Industry interviews The last couple of years have seen a number of new entrants including Global Investment House, Ithmar Capital, Shuaa Partners, etc. If all announced funds reach their targets within 2005, there will be US$ 5.0 billion of PE funds in the region

Majority of Countries in the Region Are Growing at above 5% Per Year Nominal GDP US$ million, 2005E 300,000 250,000 200,000 150,000 100,000 50,000 Source: Economist Intelligence Unit 0 Kuwait Lebanon Morocco Saudi Arabia Pakistan 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5 6.0 6.5 7.0 7.5 8.0 8.5 9.0 9.5 Note: Bubble size not to scale Real GDP Growth Average 2005 2006, % Population Size Oman Egypt UAE Tunisia Bahrain Jordan India GDP: 750,000 With real GDP growth in most countries exceeding 5%, the regional economies are amongst the fastest growing in the world Real GDP growth is expected to increase faster than the rate of population growth leading to an accelerated growth in living standards across the region Qatar

The Regional Equity Markets have Added Significant Depth and Liquidity since 2002, Creating a Viable Exit Mechanism for PE Players Market Capitalization* (US$ billion) 4,676 Market Capitalization/GDP* (Percentage) 923 606 1,941 352 206 811 234 2002 2003 2004 July 2005 Average Daily Volume Traded** (million) 363 2002 2003 2004 July 2005 Average Daily Value Traded* (US$ million) 137% 101% 238 207 65% 126 41% 2002 2003 2004 July 2005 2002 2003 2004 July 2005 *Excludes Tunisia ; **Excludes Morocco and Tunisia Source: Shuaa Capital, Relevant stock exchanges

Post 9/11 There Has Been A Reversal of Capital Flight and Increased Amounts of FDI FDI Inflows US$ million, 1999-2003 20,000 1999 2003 CAGR 34% 15,000 CAGR 35% 10,000 CAGR 33% 5,000 CAGR 15% 0 GCC Middle East North Africa South Asia MENA MENASA -5,000 Source: UNCTAD

Rising Oil Prices Created a Tremendous Amount of Excess Liquidity Looking for Investment Historical and Projected Oil Prices 1980-2015, Brent Crude US$ per barrel 80 70 Peak Price - $68.00 Aug 2005 Current Price - $60.10 60 50 40 30 20 10 OPEC raises production triggering a price war Iran/Iraq tensions Gulf war Iraq war Asian financial crisis Comments Due to high oil prices, the GCC economies (especially Saudi Arabia and Kuwait) have recorded large budget surpluses for FY 2004 and FY 2005 Oil prices are expected to come down to US$ 25 30 per barrel over the next five years 0 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 May-05 uly-05 ep-05 2015E Source: Energy Information Administration, Bloomberg

Increased Regional Deal Flow 2002-2005 Value of Deals vs. Number of Deals Announced (2002 May 2005, US$ million) 922 940 875 $25.1 $15.5 $17.0 $20.8 626 There have been 626 deals Comments announced in the first 5 months of 2005 or 67% of the 2004 total The value of deals has increased at a CAGR of 16% from 2002 2004 The total value of deals announced in the first 5 months of 2005 has already exceeded the 2004 total by 21% 2002 2003 2004 May 2005 Source: Dealogic, Thomson Financial

MENA Economic & Market Profile GDP $ 619Bn Market Cap (28.Oct.05) Egypt 12% Morocco 9% Oman 4% Bahrain 2% Qatar 4% Jordan 2% Tunisia 5% Lebanon 3% Kuwait 8% Palestine 1% UAE 13% Saudi Arabia 37% Tunisia Lebanon Oman Bahrain Morocco Jordan Egypt Qatar Kuwait UAE Saudi Arabia 10% 3 34% 6 59% 14 184% 18 50% 27 318% 35 70% 54 417% 250% 255% 249% 98 122 218 US$ Bn Market Cap/GDP 589 Roughly that of Spain Market Cap $ 1,183Bn (192% of GDP) Source: EFG Hermes

MENA Stock Market Trends Significant growth in Regional Indices GCC Countries Market Trends Non-GCC Countries Market Trends Drivers: oil prices & market deregulation Drivers: economic reform and corporate profits Abbreviations: ADI (Abu Dhabi), QSI (Qatar), MSI (Oman), SSI (Saudi Arabia), BAX (Bahrain), KUSI (Kuwait), MASI (Morocco), AMMAN (Jordan), HRMS (Egypt) and BLSI (Lebanon) Source: EFG Hermes, Zawya, 29 October 2005

MENA Private Equity Regional PE 2005 40.00 35.00 Saudi Arabia, 36.40 Qatar, 34.30 30.00 25.00 Emirates, 26.00 20.00 15.00 Bahrain, 17.80 Kuwait, 21.73 Oman, 18.87 Egypt, 17.19 10.00 5.00 000 Source: Private Equity Monitor, EHPE

MENA Private Equity PE Industry Size $ 3.4Bn (< 1% of GDP) MENA Funds Raised 3,500 3,000 2,500 US$ Million 2,000 1,500 1,000 500 0 1994 1997 1998 2000 2001 2002 2003 2004 2005 Fund Inception Year Industry grew at 41% CAGR over past 5 years and projected to grow at 25% in next 3 years $ 2.2Bn raised up to 2004 with > $ 3.4Bn raised or being raised in 2005 Source: Private Equity Monitor, EHPE

Profiles of MENA PE Funds 60 Funds (1/3rd Buyouts by value and volume) 2,500 25 2,190 2,000 20 20 17 Value US$ Mn 1,500 1,000 1,281 757 12 601 9 1,123 15 10 Volume 500 5 0 2 Buyouts Infrastructure Technology Real Estate Others Funds by investment focus 0 Source: EHPE, Zawya, October 2005

Trends in MENA PE Funds More focused on Buyouts Fund focus (All funds before 2005) Fund focus 2005 Value $ Mn 1,600 $ Mn 1,200 12 1,000 10 10 9 9 800 8 600 6 5 400 4 200 2 1 0 0 Buyouts Real Estate Technology Infrastructure Others Investment Focus Volume Value 1,400 10 1,200 8 1,000 800 600 4 400 3 200 1 0 Buyouts Real Estate Technology Infrastructure Others Investment Focus 12 10 8 6 4 2 0 Volume Source: EHPE, Zawya, October 2005

Geographic Focus of Fund 2005 and 2006 PE Funds PE Country Focus Levant, 4 Egypt, 3 Kuwait, 2 Jordan, 1 Lebanon, 1 U.A.E., 1 GCC, 9 MENA, 10 Shift in the geographic focus of funds. Prior to 2005, many funds were chasing opportunities in Levant and Egypt. Today, the GCC and MENA, with its buyouts economies, is the focus of close to half of the funds being raised. Source: EFG Hermes

MENA Private Equity Trends Wave of Funds being raised is different Median fund sizes increased from US$ 55Mn to US$ 150Mn Evolution of Mega funds NTEC US$ 330Mn, GCC Energy Fund US$ 300Mn Investment range increased to attract bigger deal sizes More focus on funds with buyout profiles More focus on growth and late stage rather than seed, start ups, and SMEs Targeting Pre-IPO and trade sale Adopting int l industry reporting & valuation standards Technology funds are quickly losing attraction, while energy is gaining momentum Shift in the geographic focus of funds Source: EFG Hermes

Challenges Facing PE Industry Lack of PE financing for SMEs and Startups Int l institutions not interested & local institutions will participate only if they do Difficult to exit Regulatory Environment Setting up local funds Enforcing shareholder agreements Codification of law Foreign Ownership Due-diligence Law firms and Auditors are catching up to develop Human Capital PE requires a special reservoir of high caliber human capital Investment Support Lack of strong management to implement investment strategy Exit Mechanisms Volatile Capital Market in the region Source: EFG Hermes

More Than $11 Billion Private Equity Funds Are Targeting MENA Region Growth will continue in the short term fueled by access liquidity and economic restructuring $M 6000 5000 4000 3000 2000 PRIVATE EQUITY FUND RAISING & INVESTMENTS FUND RAISING INVESTMENT 3163 91% 1668 4811 2184 ESTIMATE 1000 0 685 432 321 200 71% 2003 2004 2005 2006 Includes only funds from the region investing in the region, and excludes funds raised from the region to invest outside the region Source: GVCA/KPMG 2006 Report, Zawya

UAE Is The Center of PE Activity in MENA Buy Investments by PE Firm Country sinc Bahrain, $623, 1 Egypt, $74, MOROCCO TUNISIA LEB. SYRIA IRAQ Jordan, $73, Kuwait, $196, Lebanon, $176, 3 Saudi Arabia, $23 4% KUWAIT ALGERIA LIBYA EGYPT SAUDI BAHRAIN QATAR UAE, $5,090, 78 U.A.E. ARABIA PE ACTIVITY LEVEL SUDAN OMAN High Low Moderate No 40+ PE FIRMS IN MENA Too many firms chasing few deals? Source: Gulf Capital

2006 Witnessed Some Important Success Stories in Technology Sector $37m SUCCESS STORIES Started in 2000 2000: EFG-Hermes Jordan Tech Fund (20%) 2005: Abraaj Capital bought (40%) 2006: Tiger Capital bought (28%) Started in 1993 $29m 2005: HSBC PE (51%) 2006: Sell whole company to EMap $72m Started in 1995 2002: AT&T 2006: QTel (38%) Source: GC Research

PE Funds Raised US18billion raised since 1997 with additional US$7billion announced US$ 5.7billion raised in 2005 (32%) US$9.8billion in PE Funds raised in 2006 (55%) US$10billion estimated to have been invested since 1998 US$2.2billion invested in 2005 US$3.7billion invested in 2006 Source: Al Malaz Group Saudi Arabia

Amounts Raised & Invested in Venture Capital 46 established private equity funds in the GCC. Only 2-5 operate in the venture capital domain It is estimated that less than 1% of the total amount raised since 1997 has been invested as venture capital Source: Al Malaz Group Saudi Arabia

Key Funding Stages for Commercializing R&D Results and Launching Start-Up Businesses Increasing Risk Source: Al Malaz Group Saudi Arabia