March 19, 2007

Regional Perspective on the Impact of Private Equity and Future Outlook

Arif M. Naqvi

Vice Chairman & CEO

2

Global private equity firms have historically ignored the region with the MENA region only accounting for 0.1% of the US$ 2.3 trillion* PE industry

Private Equity Fund Distribution

Americas72.1%

Europe 22.2%

Asia4.3%

Oceana0.7%

South Asia 0.3%

MENA 0.1%

Africa 0.2%

Regional PE industry as a % of total PE industry of US$ 2.2 trillion

*US$ 400 billion of the global PE industry, including leverage represents a US$ 2 trillion in potential buying powerSource: Thomson One Banker, Fortune Magazine

3

With the influx of capital post 9/11 and high oil prices, the region is awash with liquidity which in turn has led to a rise in private equity

Total Funds Announced, Fund Raising, Investing and Rumored in MENA – 1994 onwards US$ million, 2002 – March 2007

Note: Includes VC Source: Zawya

Private Equity Growth

1,096

6,426

20,861

24,511

1,906

6,426

20,861

1,047

4,520

14,435

3,650

49

2002 2005 2006 March 2007

Cumulative By year

4

Macroeconomic Conditions

Stable political and economic environment with sustainable growth prospects

Exponential economic growth environment with the MENASA as a whole growing at over 6% p.a.

Sufficient liquidity to drive growth with GCC countries sitting on US$ 398 billion of excess oil revenues

Regional Perspective

Regulatory & Economic Restructuring

Improvement in regulatory infrastructure and shift in economic policies caused by privatizations, globalization and efficient deployment of capital

Implementation of WTO commitments

Economic liberalization under way in a number of countries (such as the emergence of numerous financial centres)

Family businesses undergoing generational change

Sectors such as retail, telecommunications, infrastructure opening up to foreign investment

Availability of Capital

HNWIs, financial institutions, and pension funds providing capital

Post 9/11 the appetite of local investors increasingly looking towards regional investment opportunities

Oil boom filtering throughout the MENASA region

Exit mechanism

Availability of exit routes either through trade sales or IPOs

Increasing IPO and M&A activity; regional stock market correction a healthy phenomenon

Governments moving into governance and out of management

New financial exchanges with global best practice standards such as DIFX emerging

Private Equity Growth Drivers

Confluence of factors driving the regional growth of private equity

Required conditions for growth

5

Note: Excludes Oman and Lebanon for which statistics were not available, as of October 2006Source: Council on Foreign Relations, Abraaj analysis

Overview

Fastest growing labor population in the world

Region accounts for 5% of global population

Private Equity Growth Drivers

Unemployment is the single largest challenge for the region with the bulk of reforms being implemented to address the issue

Current & future MENA employment (million)

Regional response

Education

Privatization

Deregulation & Liberalization

Transparency

100.0 143.4 – 163.4

143.4

20.0 20.0

80.0

63.4

CurrentEmployment

New JobsRequired

Total Jobs

6

Factors driving requirement for investment

Population growth

Direct correlation between infrastructure requirements and population size Need for additional job creation

Economic growth

Economic growth could be stunted if hard and industrial infrastructure is ignored

Economic diversification

GCC governments in process of gradually reducing dependence on oil and gas

Comparative industrial advantage

Intrinsic value stemming from low energy and feedstock costs, abundant natural resources and cheap labour

Demographic change

Leading to increasing demand for education and healthcare services

Chronic under-investment

Low starting point

Confluence of factors driving the regional sectoral growth

Private Equity Opportunities

Source: Abraaj analysis

7

155

13349

18

87 630

188

Power Water Healthcare Education Transportation Petrochemicals Total

Investment opportunities in the MENASA region cover the full spectrum of infrastructure sectors

Private Equity Opportunities

Source: Abraaj analysis

MENASA infrastructure investment requirementsUS$ billion

8

US$ 325 billion of private investment required over next 5 years

Even with large budget surpluses in the GCC for example, there is still a large deficit in required financing.

GCC projects (US$ billion)

The Saudi Arabian government requires investments of US$ 624 billion over the next 15 years

Total announced projects spend requirement for the region

Private Equity Opportunities

Source: Abraaj analysis

UAE SaudiArabia

Qatar Oman Kuwait Bahrain TotalProjects

ExcessOil Rev.

272

200

11332

8125 723

398

UAE SaudiArabia

Qatar Oman Kuwait Bahrain TotalProjects

ExcessOil Rev.

272

200

11332

8125 723

398

9

Gradual liberalization of regulations are conducive to economic growth, yet more efforts are required to create a favorable environment

Unfavorable Favorable

Gradual liberalization of regulations and the impact on private equity firms

Foreign ownership

Customs duty

Intellectual property rights

Labour laws

Dispute settlement

Source: Abraaj analysis

Favourable Regulations

10

Sector Liberalization/ Privatization

Infrastructure

Family Groups /

Expatriate Business

Small/Medium Enterprises

(SMEs)

Investment Opportunities

Private Equity Outlook

Investment opportunities for private equity growth

Family Groups / Expatriate Business

Sector Liberalization/ Privatization

Small/Medium Enterprises

(SMEs)

Infrastructure

Finding gaps

Privatization

Sector liberalization

Divestments

Partnerships

Consolidation Management buyout

Source: Abraaj analysis

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Private Equity Outlook

Where the industry is headed

More transparency– Reporting and disclosing information have to be continually emphasized throughout the PE industry

– Better communication of how PE firms create value is in the best interests of the PE industry

Better Corporate Governance– Good governance of a private equity firm facilitates the long-term success of the partnership. However, the

inherent nature of the PE business tends to offer short-term temptations for less-than-good governance

– To avoid short-sighted and short term actions a private equity firm must do what it pushes its own portfolio companies to do – Plan strategically in advance of crisis; seeking outside advice from experts

Best Practices– Formation of a regional governing body comprising of representatives from PE firms, regulators and other

economic sectors across the region that will issue guidelines on best practices within the PE industry

Improved Legal Infrastructures– The private equity industry in the region has grown by leaps and bounds but still lacks depth due to

uncertainty about rules and regulations

– It is imperative that the legal platform be strengthened in order to serve as the backbone for the development of the industry for years to come; regulators need to focus on this industry

12

Oman

UAEKSA

India

PakistanKuwait

BahrainEgypt

Lebanon

Turkey

IranIraq

LibyaAlgeria

Tunisia

Morocco

Syria

Jordan

Sri Lanka

Bangladesh

Qatar

Lebanon:1. Bader Lebanon2. Byblos Bank3. Capital Trust Group4. Corporate Finance House5. Eagle Mngmnt6. Fransa Bank7. Lebanon Invest Asset

Mngmnt8. Middle East Capital Group9. MENA Advisors

UAE:1. Abraaj Capital2. CERT Capital3. Daman Securities4. Dubai International Capital5. Estithmar Ventures Ltd6. Evolvence Capital7. Injazat Capital8. Ithmar Capital9. Shuaa Capital10.Gulf Capital11.Millennium Capital12.The GCC Energy Fund Mngrs13.The Group14.The National Investor15.Abu Dhabi Future Energy Co.

Tunisia:1. Tuninvest2. Société Tunisienne

d'Investissement à Capital Risque

Egypt:1. Citadel Capital2. Concord

Investments3. EFG Hermes4. Gulf Arab

Investment Co.

5. Oasis Capital

Jordan:1. Atlas Investment

Group2. Catalyst Private

Equity3. Foursan Group4. The Jordan Fund

Kuwait:1. Boubyan Bank2. Global Investment House3. Kamco4. Kuwait Financial Center

(Markaz)5. Kuwait Petrochem Corp6. National Tech Enterprises Co7. NBK Capital8. Noor Financial Inv Co9. Ryada Capital

Bahrain:1. Emerging Markets

Partnership2. Gulf Finance House3. Kuwait Finance House4. Unicorn Inv Bank5. Venture Capital Bank

India:1. Over 100

foreign PE players operating

2. Abraaj Capital

Morocco:1. ATLAMED

SA

Pakistan:1. Abraaj

Capital2. Jahangir

Siddiqui

KSA:1. Al Rajhi Banking &

Invest Corp2. Amwal Al Khaleej3. Athar Al Majid Hold.4. BMG Financial Advisors5. Malaz Group6. Swicorp

Qatar:1. Qatar Capital

Partners

Private Equity Landscape

With c.59 firms in the Middle East there is more room for growth

Source: Abraaj analysis, Zawya

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Abraaj Capital

Private Equity

Real EstateSpecial

Opportunities

Infrastructure & Growth Capital

Corporate Finance

Research & Brokerage

Asset Management

ABOF

US$116m

MENA

2002

ABOF II

US$500m

MENASA

2005

ASOF

US$33m

MENASA

2003

25% Stake in EFG-HermesUS$ 500m

MENA

US$ 3.9 billion under management*

SAIBF

US$250m

India

2006

ABPBF

US$250m

Pakistan

2006

Alternative Asset Management Investment Banking Commercial Banking

AREF

US$114m

MENASA

2004

ASOF II

US$128m

MENASA

2005

IGCF

US$ 2b

MENASA

2006

* Includes co-investments of US$ 156 million

Retail Banking

Corporate Banking

Mortgage

Integrated Financial Services Provider

14

25 2361

95

212

776

2002 2003 2004 2005 2006 1Q 2007

Abraaj Capital

Aramex ONIC

Amwal

BMA

Septech

Spinneys

Arabtec

Dead Sea Conf.

JorAMCo

Maktoob

Abanar

Art Marine

Emirates Heights Dev.

Emirates Intl. Holding

Twin Islands

Investments

Funds Invested

Enshaa

Signature Clubs

MSF

NAS

Serai

Ramky

EFG-Hermes

FMCG Manufacturing sector investment

Oil & Gas Services sector investment

(in $ millions)

Air Arabia

Education sector investment

Note: Includes co-investments and excludes ASOF investments

Investment Track Record

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Abraaj Capital

Abraaj and its affiliate companies currently employ 12,931 employees across the MENASA region (excludes Arabtec employees)

Egypt

EFG-Hermes Spinneys Egypt FMCG Manufacturing sector

investment 599 employees

Spinneys Lebanon 1,300 employees

Lebanon UAE

Abraaj Capital Septech Arabtec* Art Marine Emirates Heights

Development Emirates International

Holding Enshaa Signature Clubs Serai Air Arabia Oil & Gas Services sector

investment Education sector investment 7,285 employees

Sabre Capital Ramky 1,104 employees

India

BMA Pakistan MSF Twin Islands 1,059 employees

Pakistan

*Arabtec employees not included as over 28,000-30,000 at present

Note: Distribution of companies across different countries is based on the location of their headquarters. Many of the above companies have pan-regional operations, and the employees across different countries have been included in the country where they are headquartered.

Jordan

JorAMCo Maktoob Dead Sea Conference &

Resort 884 employees

Saudi Arabia

NAS 700 employees

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Abraaj Capital

InvestmentsAnnounced / closed 11 new investments totaling US$ 988 million (2006-Present)

2006

8% Stake in

$17 million

2006

80% Stake in

$3.6 (of 20) million

2006

Follow-on investment

$5 million

2006

25% Stake in

$500 million

2006

30% Stake in

$177 million

NAS

2007

17% Stake in

$101 million

Air Arabia

2006

40% Stake in

N/A

2006

80% Stake in

$13 million

MS Forgings

Note: Amounts include co-investments

Asset management update

Announced - 2007

25% Stake in

$111 million

Education

2006

70% Stake in

$21 million

Oil & Gas Services

2006

37% Stake in

$39 million

FMCG Manufacturing

17

KSAIndia

Pakistan

Oman

UAE

Kuwait

BahrainEgypt

Lebanon

Turkey

IranIraq

LibyaAlgeria

Tunisia

Morocco

Syria

Jordan

Sri Lanka

Bangladesh

Qatar

Almost US$ 4 billion under management with a footprint across the MENASA region, Abraaj in the last year has launched its country and sector specific funds

Abraaj Capital

Middle East Private Equity: Investing in Foresight

www.abraaj.comTELEPHONE +9714 3191500 FACSIMILE +9714 3191600 E-MAIL info@abraaj.com

ABRAAJ CAPITAL, LEVEL 7, EMIRATES TOWER OFFICES, P.O.BOX 504905, DUBAI, UNITED ARAB EMIRATES,

Middle East Private Equity: Investing in Foresight