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

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SUMMARY
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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

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A VOTE OF CONFIDENCE
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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.

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COMMENT
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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