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MerchantBridge to target UK for up to US$40m direct investment in Iraq
- UK Direct Investment in Iraq noticeably lacking according to MerchantBridge
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MerchantBridge to target UK for up to US$40m direct investment in Iraq
- UK Direct Investment in Iraq noticeably lacking according to MerchantBridge
London, 18 May 2010: London-based direct investment group MerchantBridge is embarking on a campaign to attract up to US$40 million of UK investment in a major rehabilitation project in Iraq.
MerchantBridge has been awarded an existing cement plant under a 15-year lease in the Kerbala Governate, 80 miles southwest of the capital Baghdad, by the Iraqi Ministry of Industry and Minerals. The plant has been damaged by years of underinvestment and lack of spare parts and is currently operating at 300,000 tons per year, well below capacity. The plant will go through a complete rehabilitation program with an investment of US$200 million to achieve a production in excess of 1.8 million tons per year. Lafarge, the world leader in cement, is joint partner and will be operating the plant.
The project has already attracted investment interest from other foreign direct investors, including the International Finance Corporation ("IFC"), the private arm of the World Bank, and France's Proparco, 67% owned by the French Development Agency ("AFD"). MerchantBridge is now embarking on a targeted campaign in the UK to highlight the opportunities Iraq offers and actively encourage investment in what it considers the first 'live' opportunity for UK investors to take advantage of in Iraq.
MerchantBridge's Chief Operating Officer Mr Eric le Blan explains: "Similar to Saudi Arabia and the rest of the GCC in the previous decade, Iraq represents a unique investment opportunity and despite appearances is definitely open for business. Whilst other European countries such as France and Italy have recognised its huge potential, the UK's limited presence is noticeable. We are going to change that."
MerchantBridge has extensive knowledge and experience of Iraq. Over the past five years it has invested and managed in excess of US$1.5 billion in debt and equity in the country and generated substantial returns for its investors. As well as establishing a number of partnerships with international companies in Iraq, in 2003 and 2004, it advised the Iraqi government on the leasing of 35 state-owned enterprises in several economic sectors.
Mr Basil Al-Rahim, MerchantBridge's Chief Executive Officer, confirms: "Our strategy is to engage UK and European investors and partner them on entering the Iraq market. The potential there is huge and as with the Kerbala project, we are at the forefront of creating unique investment opportunities, from their inception, to identifying the number one partner in the field to work with, right through to the end. This is why we are also launching our Mesopotamia Fund targeted at the UK and European market, which will invest in selected companies listed on the Iraq Stock Exchange. While the stock exchange is currently illiquid with a total market capitalisation of around US$3.3 billion, there is an incredible potential for early entrants in the market."
Mr le Blan continues: "The Iraqi government has estimated US$180 billion of investment is needed over the next four years to fulfil its reconstruction and infrastructure programme, targeting sectors that will create a heavy demand for cement. The Kerbala cement plant is strategically located to serve the needs of the entire south of Iraq and is the only plant which can produce specialised cement for dams, bridges, ports, airports, oil installations and any other construction where ordinary cement cannot be used. Our market potential is enormous, especially when you consider the needs of the international oil companies which have recently signed contracts with Iraq. The plant is already operating albeit at a much reduced rate due to lack of investments since the early 1990's. The qualified workforce is already present and the new capital will ensure that the plant is brought up to the latest standards."
Over the next two weeks, MerchantBridge is approaching hedge funds, private equity houses and other selected institutional investors in the United Kingdom. "Our approach is highly targeted", says le Blan. "We appreciate that Iraqi investment risk is difficult to assess for UK institutions, as there is a lack of reliable data and information. However, over the last six months, we have witnessed a greater awareness and appetite for investments in Iraq but have been told repetitively that tangible investment opportunities have remained inexistent. By offering a direct investment in a cement plant as well as the possibility to take exposure to Iraq via our new Iraq Listed Equity Mesopotamia Fund, we are providing clear investment paths into Iraq for UK and European investors."
ENDS
For more information please contact:
Abby Smith
Mobile: + 44 7825 336 933
Fax: +44 208 393 1389
email: abby.smith@allurentis.com
Notes to Editors
MerchantBridge in Iraq:
• MerchantBridge is amongst the largest private sector investor in Iraq, with the following track record:
o Mesopotamia Fund: launched a US$50 million fund, the first fund to invest in the Iraq Stock Exchange, which has a market capitalisation of US$3.3 billion.
o Mansour Bank: one of the largest capitalized bank in Iraq.
o Asiacell: 2nd largest GSM Operator with over 7.5 million subscribers.
o Oil and Petrochemical Sector: Formed a joint venture with Dalma Energy to provide drilling and other oil field services.
o Government: In 2003 and 2004, advised the Ministry of Industry and Minerals on the leasing of 35 factories in a number of economic sectors.
o Cement: Received a Greenfield license to build a 2 million tonnes cement factory in Kerbala (15km from the rehabilitation project). The project is currently in its inception phase.
Iraq the Big Picture:
• With an improved security situation and the high price of oil, Iraq's economy is quickly rebounding and is expected to have real GDP growth of 6.1% pa over the next five years. The positive outlook for Iraq is supported by:
o The second largest proved oil revisers with 115 million barrels of high quality and easily extractable oil and 220 billion of probable and possible reserves.
o The tenth largest gas reserves in the world.
o The country is water abundant with two major rivers and large arable land area.
o Tremendous tourism potential with major archaeological and religious sites throughout the country.
o A young well educated population of 31 million.
• All sectors of the economy are expected to benefit from government development programmes as well as private sector investment.
About MerchantBridge :
MerchantBridge is a direct investment and private equity group established over a decade ago by a group of industry veterans focused on the Middle East and Europe regions. It is authorised and regulated by the FSA in London and also has offices in Dubai, Geneva, Baghdad, Basra and Riyadh. MerchantBridge also offers corporate finance advisory services in select situations to multinational corporations and governments including having been the advisor to the UK Ministry of Defence on their offset program in Saudi Arabia. It specialises in identifying opportunities across the MENA region and Europe and executing on complex, cross-border opportunities. It completed eight private equity transactions in Europe and the Middle East over the past few years with US$400 million in committed capital and investments with Enterprise Value of over US$$3 billion. In Iraq, MerchantBridge is already engaged in telecommunications ("Asiacell"), commercial banking ("Mansour Bank") and oil and gas services. www.merchant-bridge.com
Contact Information
Abby Smith
MerchantBridge
173-176 Sloane Street
London
SW1X 9QG
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