24 September 2016

Global concludes the exit from Jordan Trade Facilities Company for USD 29 million

Global Capital Management (GCM), the alternative asset management arm of Global, concluded a successful exit from the controlling 93.27% stake in Jordan Trade Facilities Company (JOTF) owned by Global MENA Financial Assets Limited (GMFA), an investment fund managed by GCM, and associated companies. The transaction was completed on the 6th of September 2016, generating a net amount of USD 29 million and a new board was elected on Thursday 22 September 2016 to represent the new shareholder.

GMFA acquired a majority stake in JOTF in 2008, just a few months before the international financial crisis, which had a severe impact on the Company’s performance and value as the Company businesses were strategically shrunk to avoid being exposed to delinquent loans.


However, in the beginning of 2011, the management team of GCM implemented a restructuring program of JOTF operations. This program was focused on growth initiatives such as expanding the branch network, diversifying the product base, enhancing the quality of lending, strengthening the balance sheet position, diversifying finance sources from banks and capital markets, improving the corporate governance and implementing adequate ERP systems to be the leading consumer finance company in the Jordanian market. As a result, the loan portfolio, revenues, and profit before taxes grew substantially.


At the beginning of 2015, a new management team was hired to implement the growth strategy bringing with them extensive experience in retail banking. Consequently, results were crystalized instantly, with 160% growth in net profit, 16% growth of the loans portfolio and the distribution of 10% cash dividends in one of the most challenging periods for the sector in Jordan and the region in general.


Mohammed Zaki Al Masri, Senior Director at GCM commented: “We are proud to have successfully prepared the foundation for the new growth stage, developed a transparent and professionally run organization with proper governance systems and structures in a competitive sector and creating an extremely capable management team that can continue to grow and take this company forward.”


He added: “As the chairman of the JOTF board during the restructuring phase, I would like to thank all board members, the management team and employees for their support and contribution to these achievements.”


On the exit route taken, Al Masri noted: "Given the subdued capital market volumes, especially at the Amman Stock Exchange, the sale to a financial investor would not have yielded as attractive an exit as a sale to a respected and strategic buyer. It was also very important for the fund management team to choose a buyer who can create the synergies that will enhance the value of the company and will unlock hidden value. In the case of JOTF, the strategic merger with a financial institution such as Invest Bank was an ideal strategy wherein the purchaser was willing to pay a premium for the share. This premium was justified as Invest Bank targets to expand its client base by servicing an untapped segment while being able to provide cheaper cost of finance."


Sulaiman Mohammed Al Rubaie, Managing Partner of GCM commented on this exit by saying "We are extremely delighted to have completed this exit, and providing our investors with liquidity in such challenging geopolitical and economic environment".


He added: "With an implied price to book value and price to earnings multiple that exceeds the other consumer finance sectors by far, we cannot be prouder of this achievement and we are confident of replicating this successful story with the other portfolio companies which we manage and operate in this sector all across the region".


He continued, "Our new adopted strategy has paid back. Through more active involvement and value creation strategies within our portfolio companies, we were able to grow our portfolio companies’ operational profitability during such tough times the markets are witnessing".


Al Rubaie concluded by thanking his Majesty King Abdullah Bin Al Hussein and the Jordanian Government for its openness and high standards of regulating legislations for the flow of foreign direct investment, which has made the environment conducive for international investors to invest directly and for recognizing its contribution to the growth of the Jordanian economy.


It is worth noting that Global has completed 25 exits within their private equity divisions since 2010, which is the highest among all private equity firms in the region.

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