Arab Petroleum Investment Corporation (Apicorp), the multilateral development bank of the OAPEC (Organisation of Arab Petroleum Exporting Countries) nations, will sell its entire 12% stake in Egypt-based Alexandria Carbon Black Company (ACBC) to major shareholder Aditya Birla Group, for an undisclosed amount.

Alexandria Carbon Black Company SAE (ACB), an Indo-Egyptian joint venture of the Aditya Birla Group, is the only producer of carbon black in the Middle East and North African region (MENA).

Following the deal, the stake of Aditya Birla Group in ACBC will increase to a little above 60% in the company, a spokewoman of the group told VCCircle, while declining to divulge the size of the deal.

“As a matter of policy we can’t give the details of the valuation. The company is not planning to rope in any other strategic investors at this point of time,” she said.

Since its establishment in January 1993 in Egypt, Apicorp has been a 12% equity stakeholder with a board representation in ACBC. The UAE government owns 17% stake in Apicorp.

The company produces various grades of carbon black, the basic material used in the manufacture of tires and other rubber-based products like hoses and inks.  Since commissioning its first production line in late 1994 with a capacity of 20,000 tonne per year, the company sought to maximise its exports, and has reached a capacity of 285,000 tonne per year. The remarkable success of its exports to Western Europe led to a 10-fold expansion in its production capacity. The company exports 95% of its produce to over 30 countries including the US, UK, France, Germany, Italy and Spain. 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 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," he said.

Apicorp has kicked off a divestment plan aimed at mobilising funds for a new phase of investments and this stake sale is a part of that, the firm said in a statement. The proceeds will help to support APICORP's efforts to further diversify into mid-stream sector, the statement said.

"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.

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, he 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.

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