Dubai's Aramex to spend up to $200m on acquisitions

Logistics giant may turn to Islamic debt market to fund expansion.
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By Daniel Shane

 

Dubai-headquartered logistics giant Aramex will spend up to $200m on acquisitions over the next year to 18 months as part of a major strategic push into Sub Saharan Africa, its CEO told Arabian Business.

The Dubai bourse-listed company, which on Sunday posted a 16 per cent rise in Q4 profit to $20.8m, could either tap the Islamic debt market by issuing a sukuk or via a syndicate bank loan, Hussein Hachem said.

“We’re very bullish in our acquisitions. You will see us in 2014 scaling up a bit more and we’re raising debt to facilitate those acquisitions,” he said in an interview in Dubai.

Hachem said that Aramex was targeting companies that broadly fit in with its strategy of facilitating trade between the African continent, which he described as “underserved”, and regions such as the Middle East, China, and India.

“We have a big appetite for big acquisitions if it makes sense. The price of that acquisition it might cross $100m or $200m. We have an appetite to go and do those if it fits our strategy and allows us to go into new territories.”

Aramex already has a strong presence on the African continent following its acquisition of South Africa’s Berco Express and Kenya's Oneworld Courier and In-Time Couriers. The company is currently also present in Tanzania, Uganda, Namibia, Botswana and Zambia, and has franchising agreements that cover countries including Nigeria and Ghana.

Hachem said that the company, which was founded in Jordan 30 years ago, was currently in talks for franchising deals with partners in Dijibouti, Somalia and Ethiopia.

In terms of acquisitions, Hachem said that Aramex’s unleveraged balance sheet would assist it in securing financing, which could either be through the debt market or bank lending.

“Syndication from banks is available, the technical process of going through a sukuk is available,” said Hachem. “What we’re saying is that once we've focused on a target then we will engage in raising debt.”

“The window is within a year and a year-and-a-half, we’ll be deploying all of our energy to have successful acquisitions. The cost of debt is cheap, and it’s available from the banks, we’re not leveraged on the balance sheet. It’s time to scale up more,” he added.

Hachem said that he expected revenues at the company to reach $1bn in the next financial year and $2bn in the next four to five years.

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