Abraaj buys stake in Network International

Dubai: Private equity Abraaj Capital yesterday acquired a 49 per cent stake in Network International LLC, an independent payment solutions provider in the Middle East and Africa region, a wholly owned subsidiary of the Emirates NBD.

Abraaj Capital through Abraaj Financial Technologies Holdings Limited will acquire a 49 per cent stake in Network International for a price of about Dh2 billion. The agreements are subject to relevant regulatory approvals. The acquisition is expected to be finalised in the first quarter of 2011.

Emirates NBD was advised by Morgan Stanley and Co. International (DIFC branch) and Dewey and LeBoeuf, and Abraaj Capital by FT Advisors and Allen and Overy. The investment in Network International will be the inaugural transaction made through Abraaj's flagship fund, Abraaj Buyout Fund IV.

The fund seeks to generate medium to long-term capital appreciation by acquiring control-themed interests in established businesses across the region, with a primary focus on the Gulf Cooperation Council states, North Africa, Turkey, South Asia and the Levant.

"Led by an experienced management team and benefiting from the strength of its founding shareholder, Emirates NBD, Network International is a regional leader in its industry and is well-positioned as a platform for sustained future growth," said Mustafa Abdul Wadood, Managing Director and CEO, Abraaj Investment Management.

Through this transaction both Emirates NBD and Abraaj expects to speed up the regional expansion plans of Network International. "Today, Network International is at the forefront of the regional trend towards electronic payments," said Abdullah Qasim, chairman of Network International.

Unique platform

"We look forward to leveraging Abraaj Capital's significant M and A and domain expertise and deep regional network to grow the franchise in the years ahead."

"Network International provides a unique platform opportunity to consolidate the highly fragmented payment processing sector in MENASA at a regional level as well as to offer outsourcing services to financial institutions at a world-class standard," said Matteo Stefanel, Partner, Abraaj Investment Management.

For the first nine months of the year Network International reported 3 per cent increase in revenues from Dh281 million compared to Dh274 million in the same period last year.

Although it is not clear whether the income from the sale of Network Intenational will be reflected in Emirates NBD's income statement for 2010, analysts said it will ease the bank's long-term funding requirements. The bank recently announced full settlement of $750 million (Dh2.76 billion) tier 1 notes (bonds) due to mature this year.

The full payment to the bondholders meant that the bank has met most of its Dh3.017 billion debt obligations maturing this year.

Network International serves around 70 banks and financial institutions in the region and more than 17,000 individual merchants in over 28,000 outlets.