Abraaj Capital, a leading private equity group in the region, has signed an agreement to acquire a 49 per cent stake in Network International, a leading independent payment solutions provider in the Middle East and Africa region, for Dh2 billion ($539 million).

The transaction, done through its unit, Abraaj Financial Technologies Holdings Limited, includes a sum contingent upon attainment of profitability targets and a portion financed by Emirates NBD as is normal in such transactions.

The acquisition is expected to be finalized in the first quarter of 2011, Abraaj said in a statement.

The move comes as part of a partnership agreement Abraaj signed on Wednesday to enhance Network International’s growth and accelerate the geographic expansion of the company’s market-leading payments processing platform.

Network International, a wholly-owned subsidiary of Emirates NBD, currently serves around 70 banks and financial institutions in the region and more than 17,000 individual merchants represented in over 28,000 outlets using around 45,000 point of sale machines in the region.

The company offers its customers products and services in both the issuing and acquiring segment of the payments industry in the Middle East and Africa. The company also manages one of the region’s most extensive ATM networks, currently exceeding 700 ATMs.

“Led by an experienced management team and benefiting from the strength of its founding shareholder, Emirates NBD, Network International is a regional leader in its industry and is well-positioned as a platform for sustained future growth,” said Mustafa Abdel-Wadood, managing director and CEO, Abraaj Investment Management.

The NI stake deal will be the inaugural transaction made through Abraaj’s flagship fund, Abraaj Buyout Fund IV, which seeks to generate medium to long-term capital appreciation by acquiring control-themed interests in established businesses with a primary focus on the GCC, North Africa, Turkey, South Asia, and the Levant region, he noted.

“Given its wide footprint across the entire value chain of transaction processing services, NI is ideally positioned to take advantage of the continuing shift from cash-based to electronic transactions and to capitalize on the massive growth potential of the region in light of the current under-penetration of payment cards,” Abdel-Wadood added.

Abdulla Qassem, chairman of Network International, said "Today, NI is at the forefront of the regional trend towards electronic payments.”

“We believe that through its continued investment in technology, people and customer relationships, Network International will build on its history of innovation and industry leadership, expanding into new markets and consolidating its status in existing ones,” he added.

Network International, he said, has also established merchant acquiring and processing partnerships with leading global networks, such as American Express, China UnionPay, Diners Club and JCB. In addition, it provides extensive consultancy services, including planning, designing and developing new software and services for the payment industry.

“NI provides a unique platform opportunity to consolidate the highly fragmented payment processing sector at a regional level as well as to offer outsourcing services to financial institutions at a world-class standard,” said Matteo Stefanel, partner, Abraaj Investment Management.

Stefanel said Network International had demonstrated a track record of innovation through products such as the iVestor card and continues to deliver leading-edge solutions, cementing its extremely strong position in the region.

Ramkumar Chari, CEO of Network International said: "We are delighted to welcome Abraaj Capital as a strategic partner and shareholder in Network International. Abraaj’s track record of helping to bring regional leaders to a truly global level, and NI's domain expertise will together assure continued success into the next level of its growth.”

Emirates NBD was advised by Morgan Stanley & Co. International (DIFC Branch) and Dewey & LeBoeuf, and Abraaj Capital by FT Advisors and Allen & Overy.-TradeArabia News Service