Emirates NBD Operating Costs and Efficiency Highlights
Network International
Strategic Partnership with Abraaj Capital
■
Transaction Summary & Strategic Rational
On 22 December 2010, Network International (NI) entered into a strategic
partnership with Abraaj Capital (Abraaj) to accelerate expansion of the
company
Abraaj acquired a 49% stake in NI for a price of around AED 2 billion which
included a sum contingent upon attainment of profitability targets and a portion
financed by Emirates NBD
All relevant regulatory approvals were obtained during Q1 2011 and the
transaction closed on 31 March 2011
■ NI is at a strategic junction where significant growth opportunities are
available both organically and inorganically and has developed a focused
strategy to expand into other high-growth geographies in the Middle East and
Africa and the Indian Subcontinent
In this context, the strategic partnership with Abraaj will bring significant
expertise and value to the business
-
Accelerate the growth trajectory of NI through leveraging Abraaj's
industry expertise and access to their portfolio companies
Extend NI's geographic presence (e.g. Pakistan, India, Turkey and
Levant)
Financial Impact on Emirates NBD
In 2010, the assets and liabilities were disclosed as assets held for sale
In H1 2011:
Profit of AED 957 million on sale of 49% stake recognised
Due to effective joint control post-closing NI ceased to be a subsidiary
of the Group and was accounted for as a jointly controlled entity
The remaining 51% retained was fair valued at 31 March 2011,
resulting in an unrealised profit of AED 856 million
Contingent earn-out will be recognised as income once receipt is
virtually certain
Calculation of Initial Profit on the Transaction (AED million)
1
Develop global distribution and strategic alliances
-
Advance and execute successful acquisition strategies
Work with CEOs and CTOs to optimise technology strategy and
processes
Emirates NBD
2,029
433
Contingent
1,414
(48)
707
525
Loan
Loan
889
889
Cash
Cash
Gross
Consideration
Fair Value (FV)
Consideration
Costs &
adjmnts
(409)
1,366
957
Net FV
Consideration
NBV
(49%)
Profit on
Sale (49%)
25
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