Press Release

Jordanian Business, Jordan's premier corporate magazine, interviews Amwal Advisory Co.'s CEO, Mr. Nazem Ibrahim Basha

Sep, 2008: The rapid growth of Arab markets in recent years has seen companies expanding regionally through various mergers and acquisitions, generating some of the most prominent business deals in the Middle East’s history. Naseem Tarawnah of Jordanian Business talks to Nazem Ibrahim Basha, chief executive officer of the Bahraini-based company Amwal Advisory Corporation, on his organization’s role in facilitating these large-scale deals.

With a specialized MBA in finance, Nazem Ibrahim Basha has spent the better part of his career in the region’s financial world. Having worked in over five banks throughout the past two decades, including his lofty position as the Bahraini-branch director of the Merrill Lynch International Bank, Basha wielded his extensive experience in the field to found the Amwal Advisory Corporation in 2006. Specializing in Financial Consultancy services, the Amwal Advisory Corporation has been rapidly leaving its mark on the region’s financial scene, closing some of the most notable financial deals in the market. Jordan Business recently sat down with Basha to talk about just where his organization fits into the scheme of financial advice, and to gauge his reaction on the changing nature of the region’s financial arena.

Jordanian Business: As Arab companies continue to grow in size and expand regionally, mergers and acquisitions have experienced a parallel growth. What role does the Amwal Advisory Corporation specifically play with regards to facilitating such deals?
Nazem Basha: Amwal’s main focus is to identify suitable strategic partners for the deal. After this is set and done, Amwal plays the role of facilitator and lead negotiator. Very often, the acquiring entity relies on an intermediary, such as Amwal, to investigate and sound out the other party. Then, as discussions progress, we seek to establish the parameters for the upcoming negotiations. Many factors come into play, such as confidentiality, which is very important. Of equal, if not greater importance, is the need to discuss hard and sensitive matters, where strong emotions are inextricably involved. More and more, we see that the parties clearly prefer to involve an objective intermediary so that the process is smoother and the chances of success higher.

Jordanian Business: Across the region, which sectors, in your opinion, have witnessed the most activity?
Nazem Basha: The most prominent sectors, in my opinion, are the financial, retail, services and construction. Amwal has been involved in several deals in the financial sector, including identifying strategic partners for a bank in Saudi Arabia, negotiating an acquisition of a Lebanese bank and arranging financing for an acquisition of a Jordanian bank. Due to the shortage of construction companies in Saudi Arabia, Amwal is currently in the process of finalizing an alliance between a large Saudi conglomerate and a prominent Lebanese construction company. This is an example of a cross-border alliance brought about by the current real-estate boom in Saudi Arabia.
It is also worth noting that Amwal is planning to expand its services to cover the fields of telecom, large-scale development projects and, increasingly, real estate.

Jordanian Business: What have been some of the most significant large-scale transactions in the region that the Amwal Advisory Corporation has been involved in?
Nazem Basha: Amwal helped arrange the Blom Invest-Saudi Arabia deal, essentially introducing BLOM Bank and the Saudi partners to each other and facilitating the formation of the joint venture. The Capital Market Authority license was obtained in January 2008, and the company registered with the Saudi Ministry of Commerce this past July. The bank will start its operations in Saudi Arabia in the coming weeks.
Another transaction made public took place recently in Jordan. Amwal assisted two Jordanian firms, United Arab Investors Company and Arab Corp., to obtain substantial financing in order to acquire about 40% of Union Bank.
There are also various other private transactions on record such as purchasing a part of a Lebanese bank (one of the top ten in Lebanon) on behalf of a Saudi group in August 2007. Amwal has also arranged several financing packages on behalf of private borrowers, with loan amounts in the range of $30 to $75 million. Our company is now in the process of finalizing several, large financing-loan packages, and we expect that at least one will be made public in the next few weeks.

Jordanian Business: Many homegrown companies have been attempting to expand regionally through mergers and acquisitions, as a way of market entry. Do you think this is the most sustainable form of breaking into a regional market? In your opinion, will it create an environment where companies form regional identities rather than national or local identities?
Nazem Basha: Yes, mergers and acquisitions have become a major form of entering the Middle East market. Yet, you have to make sure the price paid is adequate and that the synergy works as expected in favor of the acquiring party. In certain recent deals, the transaction price seemed to be excessive and the effects of synergy were below expectations. Moreover, the formation of entities with regional or international dimensions is certainly likely. It can also be expected to favorably impact the way in which business is conducted within these entities, and should enhance staff experience as well as quality due to the increased exposure.

Jordanian Business: Much of your work, whether as a facilitator or negotiator, is based on bringing various players in the region together for mutual benefit. Do you believe this is something that is easier to do in this day and age, where market size demands that companies branch out?
Nazem Basha: In many ways it is easier. The parties of the deal are normally experienced and they have benefited from their past mistakes. There is more transparency nowadays in doing business and there is also better disclosure of financial results.
The due-diligence work is normally done in a very organized and professional manner. Also, I have seen great talent and skill from parties in identifying and assessing risk.

Jordanian Business: As most of the large-scale transactions you help broker require a great deal of financing, are you finding a greater supply of such financing available these days? To what extent is this, in your opinion, a function of Gulf countries being awash with oil money?
Nazem Basha: Obviously, this is an important factor. In a major way, it depends on the liquidity of the lending bank and its appetite for a specific large project. Often times, more than one bank participates in the process. Moreover, issues such as the single borrower and country limits come into play.
Recently, we have witnessed a situation where Gulf banks had a shortage of US dollars, and large loan packages were being proposed in local Gulf currencies. The impact of the sub-prime crisis in the US on local and regional markets is also noteworthy. Some banks have retrenched from real-estate lending.

Jordanian Business: When it comes to obtaining non-standard financing, such as real estate and stocks, what is the ease of such access these days? How popular have such means of “alternative” financing become in the region?
Nazem Basha: These are niche-type situations and a great deal of this depends on the quality and liquidity of the collateral. Additionally, the specific timing of these deals is very important, with the reaction and appetite varying from one bank to another. Assuming reasonable parameters, access to financing for such deals is possible and, in a way, gaining some ground. However, we have noticed that this type of non-standard financing tends to be very sensitive to related rumors and hearsays, which could suddenly make the transaction much harder to execute. Generally, I would say that banks have now become more open to these non-standard situations.