JORDAN FUND LAUNCHED

UNCLAS AMMAN 006374 SIPDIS DEPT PASS USAID FOR ANE/MEA TREASURY FOR PIPATANAGUL TDA FOR SIGLER STATE PLEASE PASS TO USTR FOR SAUMS OPIC FOR JIM HANSLEY AND ABED TARBUSH PASS EXIM BANK USDOC 4520/ITA/MAC/ONE/COBERG E.O. 12958: N/A TAGS: EINV EFIN ECON KTDB KIDE JO OPIC SUBJECT: JORDAN FUND LAUNCHED REF: AMMAN 2706 -------------- SUMMARY -------------- ¶1. (U) Amid an enthusiastic reception, the Government of Jordan launched the Jordan Fund, a $50 million fund designed to attract foreign investment and provide capital to the local private sector. Deutsche Bank is acting as International Advisor for the Fund, with Jordanian investment banking firm Atlas Investment Group and Foursan Group, a Jordanian private equity and venture capital investment firm providing the management. The Fund will focus on opportunities with local, innovative companies, as well as companies that take advantage of global opportunities such as the U.S. - Jordan Free Trade Agreement. END SUMMARY -------------- A VOTE OF CONFIDENCE -------------- ¶2. (U) Minister of Finance Michel Marto, Deutsche Bank Vice President for Global Corporate Finance Jeffrey Culpepper, Atlas Investment Group Director General Omar Masri, and Foursan Group Partners Nashat Masri and Leith Masri presided over the launch of the Jordan Fund October 29 before a group of investors, diplomats, and government officials. ¶3. (U) The government has contributed $20 million, from privatization proceeds, toward the Fund's $50 million target capitalization. The remaining $30 million will come from private investors and local institutions. Minimum investments in the fund are set at $1 million for institutions and $500,000 for noninstitutional investors. Incorporated in the Cayman Islands, the Fund's stated objective is threefold: to generate attractive returns on investment, to provide capital to enable Jordanian businesses to modernize and expand, and to promote consolidation in business and industry through mergers and acquisitions. A Board of Directors, comprised of two members from Deutsche Bank, two from the Government of Jordan, and one from the investment management partnership of Atlas and Foursan, will make investment decisions based on recommendations by the Fund manager. ¶4. (U) The size of the Fund's investments will range from $3 million to $7 million, with The Fund's management receiving 2% per year of the subscribed amount of the Fund, a performance fee of 20% of the profits over 8% per year, and a placement fee of 2% of the subscription price of shares. ¶5. (U) Marto called formation of the Fund a "vote of confidence" in the direction the government was taking in progressive economic reform. Culpepper said the Fund was the "brainchild" of King Abdullah and stressed the Fund would support local, innovative companies, as well as firms that take advantage of opportunities generated via the U.S.- Jordan Free Trade Agreement and other international trade pacts. -------------- COMMENT -------------- ¶6. (U) Along with the Social Security Corporation's new $150 million investment fund, the Jordan Fund fills a void for local companies needing capital but unable to find it from risk-averse Jordanian and regional banking and lending institutions. The Fund is likely to pursue opportunities such as Microsoft's investment in Estarta (REFTEL),a successful merger of two local IT companies resulting in economies of scale, and, buoyed by Microsoft's support, a coming player in the regional IT market. GNEHM