Dubai to ‘boom’ on Iran sanctions relief, says Aramex boss

The lifting of international sanctions on Iran will lead to a regional trading boom, with Dubai as one of the main benefactors, according to the CEO of logistics giant Aramex.

An agreement to relieve sanctions was struck in November between Iran and six world powers, including the US, China, Russia and Britain, and came into effect on January 20. The accord saw the Islamic Republic curb parts of its nuclear programme in exchange for access to $4.2bn in foreign exchange and some relief from sanctions on gold, petrochemicals and vehicles.

In an interview with Arabian Business, Aramex chief Hussein Hachem said that he expected trade between the UAE, a key regional logistics hub, and historic Middle Eastern power Iran to rebound in the event of further sanctions relief.

“The platform for Iran, when the sanctions are over, is going to be Dubai,” Hachem said. “The logistics companies are here, the transport companies are here. Iran by boat is a couple of hours, and there is good capacity going from Iran. Once the sanctions are lifted you will see a big boom and the region will benefit.”

Dubai bourse-listed Aramex, which on Sunday posted an 8 percent rise in full-year revenue to AED3,325bn ($905.25m), said it would be willing to expand its own operations in the Islamic Republic.  “We are in Iran, but mostly our operations are domestic, because we’ve locked all our shipping going into Iran. We’re hoping and looking for Iran to change,” Hachem said.

The company is also eager to accelerate its expansion into Sub Saharan Africa, as it plots up to $200m in acquisitions in the continent this year.

“We’re very bullish in our acquisitions. You will see us in 2014 scaling up a bit more and we’re raising debt to facilitate those acquisitions,” he said in an interview in Dubai.

Hachem said that Aramex was targeting companies that broadly fit in with its strategy of facilitating trade between the African continent, which he described as “underserved”, and regions such as the Middle East, China, and India.

“We have a big appetite for big acquisitions if it makes sense. The price of that acquisition it might cross $100m or $200m. We have an appetite to go and do those if it fits our strategy and allows us to go into new territories.”

Aramex could either tap the Islamic debt market by issuing a sukuk or via a syndicate bank loan, Hachem said.

“Syndication from banks is available, the technical process of going through a sukuk is available,” said Hachem. “What we’re saying is that once we’ve focused on a target then we will engage in raising debt.”

“The window is within a year and a year-and-a-half, we’ll be deploying all of our energy to have successful acquisitions. The cost of debt is cheap, and it’s available from the banks, we’re not leveraged on the balance sheet. It’s time to scale up more,” he added.

Aramex already has a strong presence on the African continent following its acquisition of South Africa’s Berco Express and Kenya’s Oneworld Courier and In-Time Couriers. The company is currently also present in Tanzania, Uganda, Namibia, Botswana and Zambia, and has franchising agreements that cover countries including Nigeria and Ghana.

In its most recent fourth financial quarter, profits rose 16 percent in Q4 profit to $20.8m, fuelled by growth outside of the company’s traditional GCC markets.

By Arabian Business


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