Exclusive: Agility partners with investment firm to bid for Abraaj business, CEO says

Kuwait-based logistics firm seeks to spend $2bn by 2020 to reach its earnings goal

“We have teamed up with a group that is US and UK regulated financial fund investing company and what we hope is that that limited partners that are in Abraaj portfolio would chose us,” Tarek Sultan told The National. Reuters

Kuwait’s Agility plans to invest at least $2 billion (Dh7.34bn) by 2020 in its business and has partnered with an investment firm to bid for a part of embattled Abraaj, the company’s chief executive said.

Abraaj, the private equity firm which is undergoing a provisional liquidation in the Cayman Islands, is looking to sell part of its fund management business Abraaj Investment Management. Agility expressed an interest in the company in July.

"We have teamed up with a group that is a US and UK regulated financial fund investing company and what we hope is that limited partners that are in the Abraaj portfolio would choose us," said Tarek Sultan, Agility's chief executive.

“Our strategy for Abraaj was to put together the best emerging markets team and story, and a winning sort of formula for anybody who wants his money managed along with the governance of a major UK and US regulated sort of partner.”

Mr Sultan, who declined to reveal the name of the partner, said the talks with Abraaj, which managed assets valued around $14bn at its peak, remain "fluid" and there is no timeline for concluding negotiations.

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Agility, which used to be the main food supplier to the US army in Iraq, is expanding into new areas and regions to diversify its revenue base and reach a target of $800 million (Dh2.9bn) earnings before interest, taxes, depreciation and amortisation by 2020.

Last year’s ebitda grew 17 per cent to 135m Kuwaiti dinars (Dh1.63bn).

The company, which is listed in Kuwait and Dubai, is also investing heavily in Africa, building a mall in the UAE and setting up a logistics parks in Saudi Arabia.

Agility reported a 20 per cent rise in second quarter net profit to 20m dinars,due to strong performance in its logistics and infrastructure businesses.

“We expect double digit ebitda growth [this year], and the primary driver is the strength in emerging markets,” he said.

To reach its 2020 goal, the company plans to invest at least $2bn in infrastructure, real estate and technology.

“We do not anticipate that the capital we will be raising will be used to finance any acquisitions,” he said.

The company could issue a bond this year to help finance its investments and the size of the issue may well exceed $500m, he said.

“We compare bonds to the cost of capital that you would get from banks and commercial financing terms and if we can find better and more flexible terms from a bond issue we don’t mind doing it completely by bond issue,” said Mr Sultan.

Most of the investments in infrastructure and real estate will be concentrated in emerging markets, particularly in Africa and Saudi Arabia, where the logistics park Agility is building could cater to its customers and the boom in e-commerce.

“These sectors are very attractive from a yield and growth perspective and we are also committing to our technology drive. We are very happy with the results of our initial investments,” he said.

The company has logistics parks under various stages of execution in Ghana, Nigeria, Mozambique, Ivory Coast and Kenya. In Saudi Arabia, Agility has projects in Riyadh, Jeddah and Dammam and expects to benefit from the kingdom’s Vision 2030, which aims to transform industries and develop the private sector to lower dependency on income from oil.

“Our focus is on obviously developing these projects to support e-commerce multinationals and SMEs in Africa,” he said.