Abraaj eyes auto parts industry

Abraaj Capital has acquired a controlling industry in MS Forgings, Pakistan’s largest steel forging house.

The acquisition of an 80% stake in MS Forgings, which specialises in steel components for the automotive industry domestically and abroad, marks the first investment by the Abraaj BMA Pakistan Buyout Fund LP, which was announced earlier in the year and had its first closing in June.

Over the past five years, Pakistan’s market for domestically-assembled vehicles has grown at 30% per annum.

“The automobile component industry in Pakistan represents one of the most attractive growth sectors in the economy,” said Arif Naqvi, CEO and vice chairman, Abraaj Capital. “We believe that MS Forgings through its leadership position and existing export base is especially well-positioned to become one of the top players globally in this high-growth segment.”

Tom Speechly, Executive Director at Abraaj Capital, added: “One of the key mandates of our Fund is to create globally competitive businesses through the numerous consolidation opportunities available in fragmented industries in Pakistan. MS Forgings is the ideal platform on which to help consolidate the automobile component industry.”

MS Forgings is currently considering strategic acquisitions within Pakistan as well as in established markets such as Europe and the US as a means to widen its customer base and to capture additional market share internationally.

“We are extremely excited about this partnership with Abraaj,” said Shahid Khan, CEO of MS Forgings. “Their regional experience with businesses within Pakistan and the Middle East will add enormous value to the existing base at MS Forgings and help take us to the next level of growth.”

BMA, one of the largest investment firms in Pakistan, is also a shareholder in the domestic investment manager to the fund.

“The Abraaj BMA Pakistan Fund is the largest private equity fund ever to target investments in the country,” said Farrukh Khan, CEO of BMA.

“While there are clearly multiple opportunities for consolidation across Pakistan, the fund is focused on quality transactions like MS Forgings where we can build on strong, existing assets, and add value for both partner companies and shareholders.”

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