Credit Quality and Financial Performance
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 USD 550
million which includes 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
Financial Impact on Emirates NBD
■ In 2010, the assets and liabilities were disclosed as assets held for
sale
■ In Q1 2011:
Profit of USD 267 million on sale of 49% stake recognised
Due to effective joint control post-closing NI ceases to be a
subsidiary of the Group and is accounted for as a jointly
controlled entity
The remaining 51% retained was fair valued at 31 March 2011,
resulting in an unrealised profit of USD 233 million
Contingent earn-out will be recognised as income once
receipt is virtually certain
Calculation of Initial Profit on the Transaction (USD million)
-
Accelerating 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)
552
118
385
(7)
193
143
Development of global distribution and strategic alliances
Advancing and executing successful acquisition strategies
Loan
Loan
-
Working with CEOs and CTOs to optimise technology strategy and
processes
242
Cash
242
Cash
Emirates NBD
Gross
Consideration
Fair Value (FV)
Consideration
Costs &
adjmnts
378
Net FV
Consideration
(111)
267
NBV
(49%)
Profit on
Sale (49%)
22
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