The Arab Petroleum Investments Corporation (APICORP), the multilateral development bank of the Organization of Arab Petroleum Exporting Countries (OAPEC), has signed an agreement to shed its 12% stake in the Egypt-based Alexandria Carbon Black Company (ACBC) to the Aditya Birla Group, the majority shareholder of the company.
The proceeds, according the statement, will help to support APICORP’s efforts to further diversify into mid-stream sector.
The divestment, APICORP’s first ever, was approved by APICORP’s board at its fourth and final meeting for 2010 held in Cairo.
The Government of Bahrain owns a 3% stake in APICORP.
“The agreement is further evidence of the rapid divestment potential of our investments. Hence, this sale is part of an investment strategy to redeploy funds for diversification into new midstream sectors, particularly oil refining, storage, transport and shipping,” said Ahmad Bin Hamad Al-Nuaimi, Chief Executive and General Manager of APICORP.
“The goal of each of our investments is to support our investee company in reaching a level of business stability and operational maturity from which it can sustainably accelerate its development. Since we invested in ACBC 17 years ago, we have seen the company evolve into the world’s largest production line in the carbon black industry and we now feel it is the right time to monetize the investment. We wish ACBC every success in continuing its exceptional growth story,” he added.
Alexandria Carbon Black Company (ACBC) was established in January 1993 in Egypt with a paid-up capital of LE 99.5 million. APICORP has been a 12% equity stakeholder with a board representation in ACBC since its establishment. The company produces various grades of Carbon Black (CB); the basic material used in the manufacture of tires and other rubber-based products like hoses and inks. Since commissioning its first CB production line in late 1994 with a production capacity of 20,000 tons per year, the Company sought to maximize its exports, and has reached a production capacity of 285,000 tons per year. The remarkable success of its exports to Western Europe led to a ten-fold expansion in its production capacity. ACBC’s total shareholder equity reached $181.5 million by the end of 2009.
“APICORP has played an important role in the growth of ACBC since investing in the company 17 years ago,” said Dr. Santrupt B Misra, CEO, Carbon Black Business and Director, Group HR, Aditya Birla Group.
“We are sad that APICORP will no longer be part of ACBC’s investment family, but at the same time we are pleased that we will continue our partnership with APICORP in Alexandria Fiber Company (AFCO) in which we are both equity partners. We also look forward to exploring new investment partnerships with APICORP in the future.”
“In the last few years, ably steered by its leadership, ACBC has consolidated its position as one of the world’s most productive carbon black manufacturers and we are confident that the company is positioned to achieve even greater successes. Our divestment in ACBC is in line with our efforts to constantly create new spirals of investment and value in the oil and gas industry. We are also looking at exiting a few more mature investments like ACBC in order to bring the fresh capital for a more diverse investment portfolio,” Al-Nuaimi added.
As part of its 2010 – 2014 five-year plan objective, APICORP is seeking to broaden its investments across the MENA oil and gas industry spectrum, especially in midstream projects. According to recent APICORP research, the region’s oil and gas industry offers an investment potential of around $615 billion and many attractive opportunities that match APICORP’s strategic priorities.