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| EastNets |
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| Summary of Proposed Investment |
| This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. |
| Project number | 26696 |
| Company name | Eastern Networks -(IT) Solution Provider Corp |
| Country | MENA Region |
| Sector | Information |
| Environmental category | C |
| Department | Global Inform. & Comm. Tech. |
| Status | Pending Disbursement |
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| Date SPI disclosed | February 19, 2008 |
| Projected board date | March 20, 2008 |
| Previous Events | Signed: September 25, 2008
Approved: September 8, 2008 |
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| Overview |
Sponsor/Cost/Location |
Development Impact |
Contacts |
Attachments |
| Project description |
Founded in Jordan in 1984, EastNets is a leading provider of payment, security, and anti money-laundry (AML) solutions for financial institutions, multinational companies and governments in the Middle East and North Africa. It is the largest certified partner for Society for Worldwide Interbank Financial Telecommunication (SWIFT) for the Middle East, Turkey and Benelux and it currently services over 600 banks across the Middle East, Southern Balkans and North Africa.
EastNets plans to grow its software and process outsourcing businesses and use Jordan as a base to develop further payment and security solutions including new SWIFT connectivity versions as well as anti-money laundering solutions. In the outsourcing sector, EastNets plans to further expand its team in Egypt to support its operations and grow its outsourcing business on the back of its financial solutions portfolio. In this context, EastNets is looking to raise about $12 million equity to support the above activities. |
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| Project sponsor and major shareholders of project company |
Hazem Mulhim – Founder, Chairman & CEO. Mr. Mulhim, a Jordanian, owns 48% of the company. Prior to founding EastNets, he held several executive positions at T.I.C in the USA. Mr. Mulhim holds a MS degree in Electronics Engineering and Medical Electronics from the Higher Institute for Mechanical & Electronic Engineering in Sofia, Bulgaria. He also holds a Certificate of Advanced Management from INSEAD in France and has attended a management program at IMD in Lausanne, Switzerland.
Industrial and Financial Investments Company (IFIC) - IFIC owns 33% of the company. IFIC was established in 1983 as a Kuwaiti government owned investment fund which became a publicly traded company in July 1996.
EastNets Employees: Employees own about 10% of the company and the balance of 9% is owned by other small shareholders. |
| Total project cost and amount and nature of IFC's investment |
| The total project cost is estimated at $12 million and IFC has been approached to invest up to $12 million in the equity of EastNets. The net proceeds from the capital raising exercise will primarily be used to expand EastNets operations in Jordan and Egypt. |
| Location of project and description of site |
| EastNets has presence in Jordan, Egypt, Dubai (for GCC and Pakistan), Turkey and Europe. The proceeds of the current round of financing will be used mainly to fund its operations in Jordan and Egypt. |
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| Anticipated development impact of the project |
Creation of high value employment: EastNets would generate local employment in the Middle East, contribute to stopping brain drain and help create export revenue streams for Egypt, Jordan and Turkey. It uses Dubai as the largest regional market for its products and services and as a logistics hub for deploying service personnel to client sites across MENA, but uses the low cost and highly skilled labor of Egypt, Jordan and Turkey to produce world-class solutions that can compete in the Gulf, Europe and North America.
Diversity and women empowerment: Currently, around 25% of the 203 employees of EastNets are women and it is likely that this percentage will increase. Three of the most senior executives in the management team are also women. EastNets will either maintain or further increase the percentage of women it employs going forward as it extends its business support operations in Egypt and Jordan.
Anti-Money Laundering Solutions: EastNets provides Anti-Money Laundering tools effectively employed by hundreds of financial institutions in the region. This project will allow smaller financial institutions to be able to deploy such tools on an outsourced basis when incurring capital expenditure is not an option.
Catalyzing South-South investments: This project will help catalyze the emergence of a strong regional player that is poised for significant regional growth. Based on the evolution of its relationship with SWIFT, EastNets is not becoming just a regional leader, but is being recognized by as a worldwide efficient and sophisticated provider of solutions that integrate money transfer protocols into corporate systems, making money transfer an integrated and fully auditable corporate function. |
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| IFC's expected development contribution |
IFC’s stamp of approval: EastNets is positioned to grow significantly, especially in Jordan and Egypt. IFC's funding and involvement will give it more credibility and the financial muscle to set up operations in smaller markets in North Africa, the Balkans and Central Asia.
Access to IFC’s network of financial institutions: EastNets wants to benefit from IFC’s network of financial institutions across the region and in markets where it currently does not operate.
Access to IFC’s expertise: IFC has accumulated a lot of expertise in financial markets and IT Services, an expertise that is unmatched in emerging markets and that EastNets appreciates and wants to tap.
Help in an IPO: And lastly, EastNets wants to IPO in the region or in Europe in the next few years and believes IFC will help strengthen governance which will, in turn, boost its credibility in the public eye. It also believes that IFC’s presence would give comfort to potential investors in the IPO. |
| Environmental and social issues - Category C |
| The company has made public commitments to meeting international standards including in areas of corporate social responsibility. During appraisal, it was confirmed that all buildings in this project, including the disaster recovery site, would involve only minimal alterations to leased buildings already constructed; and new cables would be installed only in the short distance from existing main cables to the company's buildings. As a result, environmental and social impacts would be minimal, and this has been classified as a Category C project according to IFC's Environmental and Social Review Procedure. |
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| For inquiries about the project, contact: |
Mr Hazem Mulhim
Chief Executive Officer
Building 2, Office G02/G03
Dubai Internet City
Dubai, UAE
P.O. Box: 500135
Phone: +971 4 391-2888
Fax: +971 4 391-8652 |
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| For inquiries and comments about IFC, contact: |
General IFC Inquiries
IFC Corporate Relations
2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384
E Mail: Webmaster |
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