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Abraaj Capital

Strictly Private & Confidential . Abraaj Capital. Middle East, North Africa & South Asia (MENASA) - Taking Stock in a Global Downturn International Insurance Society, Amman, June 2009. Abraaj Capital. Abraaj Capital.

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Abraaj Capital

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  1. Strictly Private & Confidential Abraaj Capital Middle East, North Africa & South Asia (MENASA) - Taking Stock in a Global Downturn International Insurance Society, Amman, June 2009

  2. Abraaj Capital

  3. Abraaj Capital Abraaj Capital (“Abraaj”) is a leading private equity firm in the rapidly growing economies of the Middle East, North Africa, South Asia (“MENASA”) region Abraaj was founded in 2002 and is headquartered in the Dubai International Financial Centre, where Abraaj Capital Limited is incorporated and regulated and licensed by the Dubai Financial Services Authority Abraaj’s network of shareholders, investors and intermediaries has exceptional influence in the financial and business communities across the region The Numbers US$ 5.9 bn funds under management as at 31st December 2008 US$ 6.9 bn cumulative funds raised US$ 2.9 bn cumulative distributions 35+ Investments | 11countries | 20exits to date 28 different nationalities US$ 1.6 bn of total distributions to investors in 2008 Note: Exits include those undertaken by Abraaj senior management during their time at Cupola

  4. Regional presence Turkey Saudi Arabia Pakistan Qatar UAE Turkey Denotes: 5 Abraaj offices located in Dubai, Cairo, Istanbul, Karachi, and Riyadh Pakistan Egypt UAE Saudi Arabia Egypt Jordan Lebanon India Oman 4 Note: Distribution of companies across different countries is based on the location of their headquarters. Many of the above companies have pan-regional operations.

  5. Where Are We & Where Are We Going?

  6. From sub-prime through the financial sector to real economy Total losses estimated at US$ 4.1 trillion(1), with nearly 3 million jobs lost in the US Real Economy Impact Financial Institutions (1) Source: IMF 6

  7. Socio-Political Impact Unprecedented circumstances pose a test of global leadership whose actions will determine the outcome of the current crisis …are they good enough? Is there a Churchill, FDR, Mandela in the making? 7

  8. Norms and Values Consumers The Next Crisis Climate Change Redefinition of Norms Regulation Corporate Social Responsibility Employees 8

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  11. Emerging markets vs. developed markets The economic crisis is leading to a rethinking of the traditional risk paradigm Developed Markets Risks Emerging Markets Risks Political instability Market fundamentals Pre-Crisis Thinking Low Risk Low Growth High risk High growth Legal / Regulatory Structural issues Developed Markets Emerging Markets Currency (F/X) Environmental High Risk Low Growth High Risk High growth Market fundamentals Legal / Regulatory Post-Crisis Thinking Counterparty ‘Black Swan’ moment; risk came from where traditionally it was least expected; the model needs to be re-thought 11

  12. Recession is upon us but how long will it last? Sharp and Staggered Diminishing Sine Wave Sharp and Shallow Paradigm Shift Long and Contracted 12

  13. MENASA

  14. 500 Introduction to MENASA MENASA has a combined GDP of US$ 3.7 trillion growing at 4.8% p.a., and a population of 1.6 billion The MENASA Region 2008 Population (million) Turkey Morocco Tunisia Lebanon Kuwait Jordan Qatar Pakistan Algeria Libya Bahrain Egypt UAE India Saudi Arabia Oman 2008 Nominal GDP (US$ billion) Significant cultural, political, and economic synergies have led to strong intra-regional trade links, labor mobility and investment opportunities Source: Economist Intelligence Unit (May 2009) Note: Middle East includes GCC states, Jordan, Lebanon and Turkey. North Africa includes Egypt, Libya, Algeria, Morocco, and Tunisia. South Asia includes India and Pakistan. 14

  15. Hydrocarbon Based Liquidity GCC Oil Revenues (US$ billion) 2,600 1,500 1,500 3,200 The GCC nations will receive c.$5 trillion of revenue even if oil stays at an average of $50 per barrel over the next ten years The ‘real’ economies within the MENASA region will continue to grow Three main factors will continue to drive growth in the MENASA region Favorable Demographics Creates demand, facilitates production growth, encourages reform MENASA Population 127 million 121 million Nominal GDP / Cap $976 $2,051 $2,715 Facilitates economic growth, and creates investor / business friendly environments Creates wealth, facilitates economic growth, and infrastructure expenditure Leading to Continued Growth 2008-2013 Real GDP CAGR Government Reforms & Diversification • Reform agenda is being used to establish sustainable growth • Thirteen MENASA countries are now part of the WTO • Governments across the region have emphasized non-oil sector diversification within their economies • Governments are looking to encourage greater private sector participation • The privatization pipeline in the region is expected to exceed US$ 900 billion in the next ten years 15 Source: Economist Intelligence Unit (May 2009), McKinsey *Excluding MENASA countries & China

  16. Favorable demographics Young and growing population increasingly focused on realizing their full economic potential The demographic shift in population … has unleashed consumption-led growth Private consumption to grow by US$ 0.8 trillion by 2013 • Mobile low cost workforce • Young and Growing Population • More than 50% of the region’s population is under the age of 25 • Immense Wealth Creation • GCC GDP per capita to increase to over $28,000 by 2013 • Burgeoning Middle-Class • c. 31 million households are expected to join the middle class between 2006 and 2010 in India alone • Urbanization • Rapidly growing urban populations across the region Nominal Private consumption growth (trillions) 7.2% Main sectors: • Energy • Food • Infrastructure • Healthcare • Education • Housing ...matched by a growth in working population 2005 Est. total population: 1,562 million 2015 Est. total population: 1,800 million Males Females 65+ 55-64 45-54 Working Population 43% Working Population 47% 35-44 25-34 15-24 0-14 Almost 175 million people expected to join the workforce in MENASA over the next decade 16 16 Source: Economist Intelligence Unit (May 2009), McKinsey, Morgan Stanley (September 2008), Abraaj analysis, United Nations

  17. Hydrocarbon-based liquidity will support growth (1/4) Highest reserves to production ratio in the world… Reserves and production as a % of global total 1.6x 0.3x 0.5x 1.1x Reserves / Production Ratio Source: McKinsey, BP Statistical Review of World Energy 2008 17

  18. Hydrocarbon-based liquidity will support growth (2/4) …with budgets balancing at US$60 per barrel or less… GCC breakeven budget* oil price *based on official 2009 budget targets Source: Merrill Lynch (April 2008) 18

  19. Hydrocarbon-based liquidity will support growth (3/4) …and consensus oil price forecasts above US$ 60 per barrel… Consensus Oil (Brent) Price Forecast (US$ per barrel) 19 Source: Bloomberg consensus of analysts (May 2009)

  20. Hydrocarbon-based liquidity will support growth (4/4) …resulting in continuing hydrocarbon driven liquidity at several price points Cumulative GCC Oil Revenues (US$ trillions) Source: McKinsey 20

  21. Government reform & diversification Government action has played an important role in supporting regional growth Significant governmental investment and reform efforts • High levels of infrastructure investment and government spending in attempt to diversify economies and facilitate job creation • More than US$ 2.6 trillion worth of projects planned in the GCC alone • King Abdullah Economic City in Saudi Arabia to create 800,000 jobs with seaport, light industries, tourism and financial services Move to knowledge-based economies • Monetary and structural support for knowledge economy sectors (healthcare, information technology, media, telecommunications etc.) • Set up of specialized infrastructure: Dubai’s Knowledge City, Jordan’s Education initiative, and over 400 SEZs in India primarily catering to IT and related sectors • High level of investment in primary and secondary education (e.g. 25% of UAE budget allocated to education spending) Reform agenda has spurred continued regional growth • A generational change in the leadership of GCC countries has set the stage for the modernization of local economies • Significant liberalization and privatization efforts in the banking, telecom and real-estate sectors have taken place • Independent capital market regulators have been established and formal partnerships with leading global exchanges have been developed • The Jordanian government plans to implement the ‘National Investment Strategy’ to ease bureaucratic restrictions and overhaul the tax system • The Egyptian government has launched a series of reforms including a new taxation law lowering corporate taxes and the establishment of numerous economic free-zones, causing FDI flows to grow 20x between 2002 and 2007 21 Source: McKinsey, MEED Projects

  22. Structural demand-driven opportunities – Infrastructure MENASA has experienced historic under-development in key sectors creating pent up demand and high growth potential Low Cost Carrier Market Share of Short-haul Market Oil & Gas (Global Production % vs. Global Reserve %) Gap 16% Gap 22% Gap 13% Power Generation Capacity (Gigawatts) Petrochemicals (MENA % of world Ethylene Capacity) 2005-2010 CAGR – 14% Investment requirement US$ 50bn Investment requirement US$ 90bn (by 2017) (by 2015) (by 2030) 22 Source: McKinsey, Economist Intelligence Unit, Citi Research, Abraaj Capital Analysis

  23. Structural demand-driven opportunities – Healthcare & Insurance The healthcare and insurance industries in the region have suffered from similar underinvestment, lagging behind western counterparts Medical Labs (Lab Tests per Capita) Healthcare (Total Hospitals Required) Gap 400 M Tests Gap 1.5 B Tests Gap 39,000Hospitals Insurance Penetration: Total Premiums % of GDP (2007) MENA Life Insurance Penetration 2007 (% of Population) Gap 3.7% Gap 5.7% Source: World Bank, World Health Organization, McKinsey, Swiss Re Sigma Note: Hospital calculation based on 1.2 & 4.1 beds / 1000 population in MENASA and OECD, respectively, as well as current MENASA beds / hospital ratio 23

  24. Outlook on Jordan Despite a recent slowdown due to decreased tourism and trade, Jordan’s long-term growth prospects remain strong Macro Economic Data Outlook • Economy has recently achieved strong real GDP growth rates hovering around 6% • According to EIU, 2009 real GDP is forecast to grow at 2.6% as the prospects for the services sector, including tourism, continue to worsen • 5 year growth however projected at 3.7%, well above western countries, driven partly by successful reform agenda • Foreign direct investment is also expected to decline in the short term given the lack of oil wealth being generated in the Gulf states • The sharp falls in commodity prices as well as the country’s expansionary fiscal policy should support consumer demand • Recent strengthening of the dollar, coupled with fall in commodity prices will also lessen inflation, with 2009 inflation expected to be 4% compared to 15% in 2008 • The Central Bank is committed to maintaining the Dinar / USD peg as it has instilled monetary confidence and has not harmed competitiveness (mostly due to US’ role as largest export partner) • Current account deficit expected to decrease sharply as commodity prices decrease and re-export trade in Iraq grows • Expected to decrease from US$9 billion in 2008 to ~US$2.5 billion in 2009/10 • Long term recovery depends heavily on recovery in the US given that it is Jordan’s largest export partner % GDP Contribution* Source: Economist Intelligence Unit, Department of Statistics *2007 data 24

  25. Outlook on Egypt Egypt has witnessed significant growth in the past and is expected to continue growing at an accelerated pace given favorable demographics and increased government reform Macro Economic Data Outlook • GDP/capita of US$ 2,093 grown at 18% pa over past 3 years • The banking sector remains strong in the face of the global credit crisis • The economy is underleveraged, with private sector credit at 41% of GDP • Egypt has built up significant net foreign assets since 2003 that will be drawn down as the current account deteriorates • Recent reform initiatives have allowed government policy to be much more liberal than in the past • Egypt is a consumer led economy, stimulated by investments, with its long term prospects assured by demographics and strategic location • c.75% of economic growth driven by local demand • The domestic consumer is largely un-levered with low penetration rates of consumer finance products, credit cards and mortgages (1% of GDP) • Declining inflation will enhance purchasing power and drive up domestic demand • Favorable factors of production will allow Egypt to attract FDI in the long-term • Revised GDP growth of ’08-’13 CAGR 6% still well above global and regional average Demographics as a key growth driver Egypt Population Breakdown by Age (millions) % of Total 2005 2025 0-19 44% 36% 36% 38% 20-44 18% 45-64 15% 65+ 5% 8% Source: Economist Intelligence Unit (May 2009), EFG Hermes (Jan 2009), United Nations 25

  26. Outlook on Algeria & Morocco Outlook dependent on global recovery although natural resources will provide a strong buffer, particularly for Algeria Morocco Macro Economic Data Algeria Macro Economic Data Morocco Outlook Algeria Outlook • Algeria’s growth will slow down to just over 2% in 2009 • Fundamentals however remain strong with close to $140bn in reserves, keeping domestic demand afloat even as hydrocarbon income shrinks due to OPEC cuts and lower prices. • Expect continued expansion of public works and construction. • The business environment has deteriorated further on both investment and sales fronts. New restrictions are making a protectionist market even more complicated to manage. • Economic growth is expected to accelerate in 2010, to 4.5%, on the back of a modest recovery in export markets and stronger hydrocarbons output as many large-scale projects begin to come on stream, including a gas pipeline to Spain • Morocco will record 2%growth this year officially, with risks on the downside given its dependence on the global economy. • The poor outlook for European growth poses significant risks to Morocco’s economy, since the euro zone is its main export market and employs some 2.5m Moroccan expatriates. • A number of factors are pushing the market down including: lower FDI, lower remittances (9% of GDP), lower tourism inflows and lower exports. • Further to this the economy will continue to face risks associated with its dependence on rain-fed agriculture, which typically accounts for some 14% of GDP but employs 42% of the workforce • Over the longer term the non-agricultural sector's role will gradually increase as manufacturing develops and construction expands on the back of government housing and infrastructure projects, partly offsetting contraction in private-sector tourism developments. Source: Economist Intelligence Unit (May 2009) 26

  27. Outlook on Saudi Arabia Reform led growth continues to drive the largest GCC economy Macro Economic Data Outlook • Saudi is the largest economy in the GCC, both in terms of GDP and population • Rapidly growing population of c. 25 million, growing at 2.5% pa (median age 22) • GDP base of US$ 469 billion with real GDP growth of 4% in 2008 • Saudi is well positioned to weather the current financial crisis • Has saved 76% of the oil windfall between 2002 and 2008 • Low public debt at 13.5% of GDP • Strong and growing domestic market accounting for a large portion of GDP • Saudi has initiated a significant reform campaign to attract foreign investment and increase the country’s global competitiveness • 2008 “World Investment Report” highlighted Saudi as the region’s most attractive destination for investment • Increase in net FDI inflows from US$ 2 billion in 2004 to estimated at US$ 16 billion in 2008 • Despite potential slowdown, Saudi still seen as attractive market • Revised GDP growth of ’08-’13 CAGR 2.8% still well above global average % GDP Contribution Source: Economist Intelligence Unit (May 2009), CIA Factbook, Saudi Arabian Monetary Agency, Merrill Lynch (Feb 2009) 27

  28. Outlook on the UAE A push towards diversification has resulted in the UAE’s growth increasingly being driven by the services sector with the non-oil sector accounting for over 65% of GDP Macro Economic Data Outlook • The UAE has emerged as the 2nd largest economy in the GCC and one of the most important in the region • Diversified economic base with non-oil sector contributing greater than 75% of total GDP, with growth driven by services sector • The UAE has become a regional hub for finance, tourism and logistics • The UAE is positioned to weather the current crisis, however the main risk continues to be weakness in oil price • Current account surplus of 5% of GDP is projected if oil averages $50 / bbl, while a deficit of 14% projected if oil averages $35 / bbl • However, the UAE sovereign wealth funds had accumulated c. US$ 600-900 billion in assets before the credit crisis • Banking sector vulnerable in the short term given lack of liquidity, real estate exposure and capital markets decline • Rebound is possible given continued government intervention, correction in real estate market and rebound in capital markets • Historically, high inflation was driven by increases in the prices of food and commodities and most importantly sharp rises in real estate prices. It is estimated that in 2007 housing expenditures contributed to 65% of inflation • Impact of correction in real-estate prices and strengthening US$ expected to ease inflationary pressure • Inflation expected to decrease from 20% in 2008 to 5% in 2009 • Revised GDP growth of ’08-’13 CAGR 4% still well above global average % GDP Contribution Source: Economist Intelligence Unit (May 2009), HSBC, Merrill Lynch (Feb 2009), Global Research (November 2008), HC Brokerage (March 2009) 28

  29. 500 Dubai Overview & Highlights Dubai is considered the region’s commercial, financial services and tourism hub as it continues to build landmark developments such as the Burj Dubai and Dubai Metro GDP Breakdown by Sector (20061) Primary Growth Drivers Jebel Ali Port • Infrastructure development • Dubai International Airport – 10th busiest in the world • Light Rail Line - Phase 1 to begin operation in 2009 • Special Economic Zones • Allows foreign companies to establish operations in Dubai, less regulations and reduced bureaucracy • The most important being Jebel Ali Free Zone, one of the largest container ports in the world • Hydrocarbon Revenues • Indirect beneficiary of increased oil prices as GCC investors continue to bring oil revenues to the city • Real-Estate • Free-hold concept allowing foreign equity ownership in Dubai, drives increased liquidity Downtown Burj Dubai 29 Source: TRI Consulting 1 Latest available data

  30. Outlook on Turkey Underlying fundamentals ensure a strong long term outlook for Turkey, which is on track to become the 9th largest economy in the world by 2050 Macro Economic Data Outlook • Short Term Outlook: Turkey’s high current account deficit gives it a high beta to global economic downturns. Accordingly, the currency has substantially depreciated since September of last year but somewhat recovered in the past 2 months • However, relative to 2001 the fundamentals are stronger with a healthy banking system and manageable public debt position • Demographics: Turkey benefits from one of the youngest populations of any emerging market • Productivity: 25% of Turkey’s labor force is still employed in the agricultural sector; however, a period of increasing urbanization (from 25% in mid-1900s to 70% today) will lead to further increases in productivity and employment • Reform: Turkey’s economy is well positioned long-term due to a range of successful economic policies enacted after the 2001 crisis and political reforms executed in pursuit of EU membership Turkey expected to emerge as the ninth-largest economy in the world by 2050 GDP In 2050 (US$ trillions at 2007 prices) 30 Source: Goldman Sachs (October 2008), Economist Intelligence Unit (May 2009)

  31. Concluding Thoughts

  32. Part of a pattern? Paradigm shifts continue to alter the global economic landscape and have resulted in Asia regaining its position as the world’s dominant growth engine Agricultural Productivity Industrial Productivity Information Age Distribution of Global GDP Human Resources *Includes: USA, Canada, Australia and New Zealand Source: Sir Paul Judge 32

  33. MENA MENASA The outlook MENASA will be the 2nd fastest growing region in the world over the next 5 years 2008-2013 Real GDP CAGR Source: Economist Intelligence Unit (May 2009) *Excluding MENASA countries & China 33

  34. MENASA in the long term The MENASA region is projected to overtake the US as the world’s 2nd largest economy by 2050… GDP (US$ trillions at 2007 prices) The world in 2050 GDP (US$ trillions) …however, challenges lie ahead • Demographics – a double edged sword • Continuing reform – balance between political, economic & social • Conflict and geo-political instability • Oil dependence / economic diversification • Climate change The world in 2007 Source: Goldman Sachs (November 2008)* MENASA excludes Jordan, Lebanon, Libya, Algeria & Tunisia. Latin America includes Argentina, Brazil, Chile, Colombia, Mexico, Peru, Paraguay, Uruguay & Venezuela 34

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  36. Disclaimer The information contained in this presentation is given without any liability whatsoever to Abraaj Capital Limited, any of its affiliates or related entities or their respective members, directors, officers or employees (collectively "Abraaj") for any loss whatsoever arising from any use of this presentation or its contents or otherwise. No representation or warranty, express or implied, is made or given by Abraaj as to the accuracy, completeness or fairness of the information or opinions contained in this presentation. In particular, no representation or warranty is made that any projection, forecast, calculation, forward-looking statement, assumption or estimate contained in this presentation should or will be achieved. There is a substantial likelihood that at least some, if not all, of the forward-looking statements included in this presentation will prove to be inaccurate, possibly to a significant degree. The information contained in this presentation does not constitute investment, legal, tax or accounting advice. Recipients of this presentation should conduct their own due diligence and other enquiries in relation to such information and consult with their own professional advisors as to the accuracy and application of the information contained in this presentation and for advice relating to any legal, tax or accounting issues relating to a potential investment in the MENASA region, including in respect of a fund managed or sponsored by Abraaj. This presentation does not constitute a recommendation to invest in the MENASA region, or in any such fund. Certain information contained in this presentation concerning economic trends and performance are based on or derived from information provided by independent third party sources. Abraaj cannot guarantee the accuracy of such information and has not independently verified the assumptions on which such information is based. Abraaj disclaims any responsibility for any errors or omissions in such information, including the financial calculations, projection, and forecasts in this presentation. This presentation does not constitute or form part of, and should not be construed as, or relied upon in respect of, any offer for sale or subscription of, or solicitation of any offer to purchase or subscribe for, any interests in any of the funds managed or sponsored by Abraaj. Any such offer, subscription or solicitation will be made by means of an offering document to be issued by Abraaj in connection with any such offering and any decision to purchase or subscribe for such funds should be made solely on the basis of the information contained in such offering document. This presentation is being made on a confidential basis and is intended for discussion purposes only and is solely for your information and may not be reproduced or further distributed to any other person or published, in whole or in part, for any purpose. If you were provided with a copy of this presentation by a person other than Abraaj, then it is not intended to be read by you and you should destroy the copy. By viewing this presentation you agree to be bound by the foregoing limitations and restrictions and, in particular, will be taken to have represented, warranted and undertaken that: (i) you have read and agree to comply with the contents of this notice including, without limitation, the obligation to keep this presentation and its contents confidential; and (ii) you will not subscribe for or purchase any interests in any fund managed or sponsored by Abraaj except on the basis of information in the private placement memorandum for such fund. 36

  37. Investing in Foresight ABRAAJ CAPITAL, DUBAI INTERNATIONAL FINANCIAL CENTRE, GATE VILLAGE, BUILDING 8, 3rd FLOOR, P.O.BOX 504905, DUBAI, UNITED ARAB EMIRATES TELEPHONE +971 4 506 4400 FACSIMILE +971 4 506 4600 E-MAIL info@abraaj.com www.abraaj.com

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