Fine acquires 30% stake in Nai Arabia in wellness shift

The paper products company is now the largest single shareholder in the natural food and beverage brand in a deal valued over $10m

DUBAI, UNITED ARAB EMIRATES. 02 AUGUST 2018. Interview with CEO of Fine Hygienic Holding, James Michael Lafferty. (Photo: Antonie Robertson/The National) Journalist: Alkesh Sharma. Section: Business.
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Jordan's Fine Hygienic Holding, a paper products manufacturer, became the largest single shareholder in Dubai's natural food and beverage company Nai Arabia in a deal valued at over $10 million (Dh36.7m).

The signing between the two companies took place on Monday at FHH’s Dubai office in Jebel Ali, giving it a stake of more than 30 per cent.

"[Nai] is doing very well, but if you can bring a strategic investor that brings ground-to-market know-how, procurement synergy, other synergies … it will only increase the value of the total operation," James Lafferty, chief executive of FHH, told The National.

“We are extremely excited to be joining forces,” said Hisham El-Farouki, chief executive and founder of Nai Arabia, in a statement. “This is a merger of complementary strengths and will provide both parties with a mutually beneficial relationship. As FHH expands its reach into new markets, it will in turn assist Nai Arabia through its vast commercial capabilities.”

We want to diversify and not just solely be a paper products company.

Founded in 1958 in Amman, FHH exports its products to more than 75 countries and has operations in Jordan, the UAE, Saudi Arabia, Egypt and Morocco. The company has sought to set up a strong base in the UAE, where it opened its biggest paper mill, Al Nakheel in 2017, with an investment of $91m.

Its products include paper towels, tissues, toilet paper, nappies and business packaging. The company is “looking into multiple acquisitions in the wellness sector” in addition to Nai, Mr Lafferty said.

“FHH had already pivoted into wellness. We had repositioned all of our paper business on a platform of sterilised tissue … Our diapers have all been formulated to offer babies and adults skin health,” he said. “This was a logical extension. We wanted to have more categories that are in the wellness sector.”

Nai sells a range of Arabian-inspired iced teas. Courtesy Nai

Nai was founded in 2017 and makes a range of natural iced teas that “are proudly Arabian”, according to its website. Flavours include white peony tea with peach, mango and jasmine, and hibiscus flower tea with hibiscus, pomegranate and rose. It sells its products, which are sweetened with honey and evaporated cane juice, in the UAE, Saudi Arabia, Kuwait and Oman.

Mr Lafferty, a trained physiologist and Olympic coach, said his introduction to Nai “started with me buying one hibiscus and pomegranate drink in a gym in Dubai six months ago”. With a background in wellness and a desire to integrate it within FHH, he spurred on negotiations.

"The timing was actually very apt because we were talking [about] potentially bringing on a strategic partner that could help us scale up across the region," Fouad Dajani, co-founder of Nai Arabia, told The National. "This is a game-changer for us in terms of being able to scale up in geographical expansion and from a product point of view."

The new collaboration will allow Nai to expand to Egypt, Jordan, Lebanon, Iraq, the US and other potential markets, Mr Dajani said. In terms of product range, Nai is planning to introduce an assortment of lemonades in the coming months before expanding into food products.

FHH, which is majority-owned by Jordan’s Nuqul Group, also has grand ambitions with a potential initial public offering being considered. “It’s very much the plan. We are looking at the 2022 to 2023 window. But obviously the plan can move,” Mr Lafferty said.

In 2015, Standard Chartered Private Equity led a consortium of companies that bought a minority stake in FHH for $175m. Standard Chartered Private Equity has now been spun off into Affirma Capital. All shareholders sit on FHH’s board and approved the Nai deal.

As FHH expands into other products, it looks to emulate big consumer companies.

“The great companies in consumer goods are all diversified. Unilever sells laundry detergent and ice cream. P&G sells 15 different categories,” said Mr Lafferty, who spent 24 years working at Procter & Gamble. “We want to diversify and not just solely be a paper products company.”