About Us

Company History

BMA Capital's genesis - BMA Capital was established in 1992 with the intent of becoming the first professionally managed brokerage house and corporate finance and advisory firm in Pakistan. Although Pakistan's financial markets were still in the process of being liberalized, these were still early days for our capital markets. Indeed, BMA was formed at a time when much of the financial community was shy of even walking into the Stock Exchange.

BMA was conceived and created by unconventional people who refused to accept the "status quo" and had a vision and commitment to be market leaders.  The firm believes that the key to BMA's success and reputation has been driven by its philosophy of establishing long term relationships with clients and a focus on our core businesses. Through a strong belief in nurturing local talent, focusing on quality of service, and a customer-driven corporate culture, BMA has emerged as a leading firm in Pakistan's capital markets today and is poised for growth.

Existing Businesses - BMA currently has six core areas of business which include, Capital Markets, Corporate Finance & Advisory, Asset Management, BMA Trade, Private Equity and Research.  The firm offers its services to a large and diversified group of clients including top financial institutions, local business groups, multinationals, high net worth clients and the Government of Pakistan.  BMA has since inception ranked as one of the top three Pakistani brokers in equities, money markets and foreign exchange.

The firm has enjoyed a high degree of credibility with international fund managers investing in Pakistan from the outset as well.  The firm's corporate financing activities include financial and privatization advisory work, capital raising and M&A's (mergers and acquisitions).  In 1994, BMA reinforced its credentials through a technical collaboration agreement with Credit Suisse First Boston (CSFB), one of the world's top investment banks, to act as their domestic partner for all investment banking transactions in Pakistan. 

Following this significant milestone, BMA had the distinction of being  the  lead domestic advisor in landmark transactions in Pakistan's capital markets, including the sale of  10% of Pakistan Telecom Vouchers raising a total of US$898 million for the Government of Pakistan and Government's strategic stake sale of Kot Addu Power Company for a total valuation of nearly US$1.6 billion.

BMA Joint Venture and Pakistan - Under President Musharraf, Pakistan has made great strides in economic management. His leadership coupled with a strong team of economic managers, has resulted in support from the international community and strong GDP growth laying the foundations for sustained economic development in Pakistan.  In this backdrop. BMA Capital Management has recently concluded a joint venture with Abraaj Capital, the leading Private Equity firm in the Middle East. For Abraaj, the JV represented the first private equity investment in Pakistan. For BMA, this event marked the basis for its future growth in Pakistan as well as in the regional corporate financing environment.

The Joint Venture between BMA Capital and Abraaj Capital could not have come at a more favorable time given the kind of opportunities that are now available in Pakistan's market. While Abraaj's investment is strategically structured as a capital injection in BMA, what is equally important is the knowledge, expertise and strategic input of Abraaj Capital in BMA Capital's future growth plans in Pakistan and the region.

BMA Mission - Pakistan's corporate financing industry is fragmented currently, with no clear market leader. BMA Capital's mission is to be the Premier Corporate Finance Firm in Pakistan and to be a regional corporate financing player through its association with Abraaj Capital.

The firm plans to grow into new lines of business with the aim of reinforcing its corporate financing platform in Pakistan. These new lines of business include launching the asset management, private equity, real estate and BMA Trade businesses.  In particular, Abraaj's expertise in managing private equity, real estate and portfolio assets will allow BMA to exploit the tremendous investment opportunity that Pakistan represents today.

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BMA's 50/50 Joint Venture with Abraaj Capital

Abraaj Capital is the leading Private Equity firm in the Middle East through vehicles such as specialised funds, limited partnerships and special purpose investment vehicles in the Middle East and North Africa. Abraaj also pursues investment opportunities in South Asia, in businesses related to its core portfolio. Abraaj's investors are from prominent institutions and respected business groups in the Middle East region. Abraaj's interests are closely aligned with those of its investors through the commonality of a significant financial stake in the ownership of the firm, as well as in the funds they manage.

Abraaj's executive directors have a long history of working together. With four executive directors, Arif M. Naqvi, Shirish Saraf, Simon Davies and Humayun Shahryar, the team has a recognised reputation and a strong track record of success in leveraged acquisitions. Over the last 8 years, the team has completed close to US$ 500 million in regional private equity transactions generating an IRR in excess of 35 percent.

Abraaj Capital currently manages over US$1 billion worth of assets financed through debt and equity and invested in Private and Listed equity. Abraaj have a US$500 million Buyout Fund 2 in the pipeline that has commitments in place for US$200 million primarily from institutional investors, and another US$100 million from current LPs, subject to achievement of performance benchmarks which are already well within reach. The 2nd buyout Fund is expected to be closed in February 2005.

Currently Abraaj has the following funds under management:

• Buyout Fund 1
• Private Equity in Middle East and South Asia
• Special Opportunities Fund 1
• Listed Equity and Fixed Income
• Real Estate Fund 1
• Real Estate in Middle East and South Asia

Value Addition: BMA capital is reaping benefits from its Joint Venture ("JV") with Abraaj Capital, through:

• Enhanced capital base
• Increased investors reach due to Abraaj's relationships in Middle East
• Increased understanding of business needs of Middle East investors
• Transfer of expertise between BMA and Abraaj professionals

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BMA CAPITAL AND ABRAAJ CAPITAL SIGN JV PARTNERSHIP AGREEMENT

Dr. Ishrat Hussain, Governor, State Bank of Pakistan was the Chief Guest at a dinner where the joint venture between BMA Capital Management Limited, a leading securities and investment banking firm in Pakistan and Abraaj Capital, the largest Private Equity firm in the Middle East was announced. 

"New" BMA Capital's vision is to become the top securities & investment-banking firm in Pakistan and leverage the platform to grow in the region.  To this end, the firm will aggressively seek to grow in its existing business areas and target new business lines including retail brokerage, asset management, real estate and private equity.  The firm also announced that it intends to implement a wide-ranging Employee Share Option Plan (ESOP) of up to 10% of its equity.  This will be a pioneering initiative in Pakistan and reflects the firm's commitment to attract and retain the highest quality staff and share the firm's success with all stakeholders. 

Under President Musharraf, Pakistan has made great strides in economic management. His leadership coupled with a strong team of economic managers, has resulted in support from the international community and strong GDP growth laying the foundations for sustained economic development in Pakistan.  It is against this backdrop that BMA Capital has concluded a joint venture with Abraaj Capital.  For Abraaj, this represents the first private equity investment in Pakistan and for BMA, this event marks the basis for its future growth in Pakistan and in the regional investment-banking scene.

As part of this joint venture, Abraaj Capital will take a 50% strategic stake in BMA Capital.  The total equity of BMA Capital will be raised to approximately Rs.500 million, with both the shareholder groups committed to further raising the equity to Rs. 1 billion, as required by business growth. 

The joint venture will continue to use BMA Capital's well established and recognized brand name that is highly regarded in Pakistan's financial market and the existing management team will be responsible for the management and growth of BMA Capital.  Abraaj will be involved in strategic decision-making and its Chief Executive, Mr. Arif Naqvi, will become BMA Capital's Chairman.  Abraaj's expertise in private equity, real estate and portfolio investments will allow BMA to exploit the tremendous opportunity in these areas in Pakistan.

BMA Capital, founded in 1992, is a corporate member of the Karachi Stock Exchange and a leader in its selected business areas of brokerage and investment banking.  BMA currently has four core areas of business, which include, Capital Markets, Investment Banking, Asset Management and Research.  The firm offers its services to a large and diversified group of clients including top financial institutions, local business groups, multinationals, high net worth clients and the Government of Pakistan. 

BMA has since inception ranked as one of the top three Pakistani brokers in equities, money markets and foreign exchange. The firm has always enjoyed a high degree of credibility with international fund managers investing in Pakistan.  The firm's investment banking activities include financial and privatization advisory work, capital raising and mergers and acquisitions. 

In 1994, BMA reinforced its credentials through a technical collaboration agreement with Credit Suisse First Boston (CSFB), one of the world's top global investment banks, to act as their domestic partner for all investment banking transactions in Pakistan.   Following this significant milestone, BMA had the distinction of being  the  lead domestic advisor in landmark transactions in Pakistan's capital markets, including the sale of  10% of Pakistan Telecom Vouchers raising a total of US$898 million for the Government of Pakistan and a strategic stake sale of Kot Addu Power Company for a total valuation of US$1.5 billion for the GOP.

Abraaj Capital is based in Dubai and manages the largest private equity fund focused on this region.  They manage upwards of US$ 180 million on behalf of some of the leading institutions and families of the Middle East.  Their portfolio companies include some of the leading brands in the region like Aramex and Spinneys.  The Abraaj team has completed over US$350 million in MENA focused private equity transactions, generating an internal rate of return of over 35% annually over a nine-year period.

Mr. Arif Naqvi, Chairman, BMA Capital and CEO, Abraaj Capital stated:

"We have been increasingly impressed with the progress Pakistan has made in the last few years under President Musharaf's government.

The strategic stake in BMA Capital is the first investment by Abraaj in Pakistan and we are extremely excited by this opportunity. A combination of several factors made this transaction very appealing: BMA is operating in a market where returns have recently been amongst the highest in the world; BMA has a well established and recognised brand name that is highly regarded in Pakistan's financial market; The firm has superior internal quality control and corporate governance standards and an exceptionally clean business track record; Also, more importantly, BMA has a solid and experienced management team of high caliber professionals, a critical aspect of our assessment when making investment decisions.  BMA.Capital provides us with the perfect platform to channel investment flows from the Middle East into attractive investment opportunities in Pakistan."

Mr. Farrukh Khan, CEO BMA Capital, added:

"BMA Capital is well positioned in Pakistan's capital markets.  We have outstanding people working with us and have an excellent client base across all business areas.  The joint venture with Abraaj, combined with the capital increase, will enable BMA to aggressively grow the platform and become the top securities and investment-banking firm in Pakistan, as well as start operating regionally. 

We are extremely excited about the relationship with Abraaj and believe that the "new" BMA will lead the way in customer satisfaction and market innovation in our industry.  We also hope to continue playing a meaningful role in Pakistan's economic growth and facilitate domestic and overseas investment."

Mr. Moazzam Malik and Mr. Muddassar Malik are co-founders and Directors of the firm.  Mr. Moazzam Malik added:

"Our JV brings BMA Capital closer to its vision of becoming the top securities & investment-banking firm in Pakistan and with Abraaj we hope to expand our firms scope into the Middle East."

Mr. Muddassar Malik stated:

This JV validates our decision to commit to Pakistan and invest our futures in this country 12 years ago; and further demonstrates to young Pakistanis around the world that they can also look to Pakistan for their futures." 

The formal announcement of the JV between BMA Capital and Abraaj was made on July 29, 2004 at a dinner in Pearl Continental Hotel, Karachi, with Dr. Ishrat Hussain, Governor, State Bank of Pakistan, as the Chief Guest.

For further detail, please visit www.bmacapital.com and www.abraaj.com

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By Mr. Arif M. Naqvi, Chairman, BMA Capital, and CEO, Abraaj Capital

Ladies and Gentlemen,

It is a pleasure to be here today in such distinguished company and to announce the partnership between Abraaj and BMA. The people in this gathering represent some of the most important economic decision makers of Pakistan who have been instrumental in shaping Pakistan's economic landscape and it is a privilege to be with you today.

I would like to take a few minutes of your time to introduce Abraaj and to share with you the tremendous potential that this partnership between BMA and Abraaj holds for the future.

Abraaj Capital was born on 1 January 2002 after a transition from Cupola Group occurred where the investment arm of the Group took a more focused approach and undertook a route of specializing in private equity investments in the Middle East and surrounding countries. We currently have two funds under management, the ABRAAJ buyout fund and the ABRAAJ special opportunities fund.

The buyout fund typically acquires controlling stakes in stable, mature companies with a strong growth potential. The special opportunities fund takes minority stakes in listed equities across the target region. The combined value of assets under management is in excess of US$180 million. Recently, we have launched a third fund, the ABRAAJ Real Estate Fund, with a target capitalization of US$ 100 million, which has been subscribed to the extent of 50% and we hope to close the fund by the fourth quarter of this year.

The team at Abraaj has vast and extensive experience in business, investing and banking in the Middle East and South Asia region and is, we believe, the strongest and most diversified private equity firm present in the region today. In addition, Abraaj is supported by a wide range of leading international and regional institutions and prestigious individuals.

Our philosophy at Abraaj is to identify and work closely with companies that have demonstrated the ability to compete and succeed in their industry, and that have the potential to develop and grow into regional leaders in their chosen field.

BMA operates in a market that has been doing exceptionally well during the last few years and the trend is expected to continue for the foreseeable future.

That means that Farrukh and his team have been lucky lately, however, they have survived and demonstrated outstanding performance over almost a decade without such luck. For that they deserve some credit.

Recently in the Middle East, Arab repatriated capital has been on the rise causing an increase in the funds available for investment. The current low international interest rate environment has not been very favorable for investors in search of attractive return generating investment opportunities.

We believe that channeling funds from oil rich GCC countries into emerging markets like Pakistan will provide Middle Eastern investors alternative investment opportunities. This process provides the opportunity to create and enhance value at both ends of the spectrum: Access to capital for private enterprises in Pakistan and attractive return generating opportunities for Middle East investors.

Currently Pakistan is the most attractively priced market in the region based on PE multiple comparison with some companies having very attractive valuations in a broad range of industries like telecommunications, insurance, retail, financial services, media, construction, pharmaceuticals and real estate.

If we consider the recent phenomenal performance of the Karachi Stock Exchange, one would expect or contemplate a bubble in the making but such is not the case in Pakistan because of the low relative valuation and moderate inflation.

Things look very promising on the private equity front. The macroeconomic environment is very positive and improving. Regulatory developments and initiatives towards privatization have caused a major rally in the markets. The recent successful IPOs of OGDC, SSG and currently PPL have all shown increasing investor interest. In each case, heavy oversubscription has occurred which means that investor confidence is on the rise, liquidity has increased and much further growth in the equity market is expected.

In terms of opportunity, Pakistan is rich with well-established private companies that have immense regional potential, practice good corporate governance and have no issues with financial transparency but are constrained due to lack of expansion capital.

On the political side, Pakistan has been through a series of transitions in the past but the current government has set the country on a path towards future political stability and economic development. Relations with India are at their best level in the last fifteen years giving a considerable boost to local and international investor confidence.  The true gauge of lasting nature of this détente is the fact that we beat India in the Asia cup without any rise in border hostilities.

Let me take a few minutes and talk about financial institutions in Pakistan and how the forward looking strategy of the BMA and Abraaj partnership ties up. Traditionally, with a few exceptions in the commercial banking system, financial institutions in Pakistan have been inward looking and domestically focused.

Multinational financial institutions have traditionally taken the role of being the window to the international market for foreign investors and for the international investors into Pakistan. We hope to change that in Partnership with BMA by enabling Middle East investors to participate in the listed equity, asset management and private equity markets of Pakistan, and by enabling Pakistani investors access to investment opportunities in the Middle East which will give them an alternative investment opportunity and a chance to further diversify their existing portfolios.

Our partnership is unique. BMA has the necessary local contact base, networking clout and ability, and market expertise to form an ideal funnel for investment fund flows from the Middle East into Pakistan.

Adding to this, Abraaj has the necessary specialized expertise in structuring and executing private equity transactions. Abraaj also has exceptional deal sourcing ability through its well established and recognized brand name in the Middle East.

We are excited about the future and hope that we can all work together for our mutual interest, for the interest of Pakistan and for interest of foreign investors in Pakistan.

Thank you

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Keynote Speech Delivered at the Joint Venture Announcement between BMA Capital and Abraaj Capital - July 29, 2004

Dr. Ishrat Husain - Governor, State Bank of Pakistan

I am extremely happy to be present here this evening on the occasion of the signing of the joint venture partnership agreement between BMA Capital and Abraaj Capital. This partnership will raise the capital of the company to a level where it can get into new areas of business. I would like to congratulate the sponsors, management and staff of both these companies on their successful transaction and hope they will use this expanded platform to launch new products and services which will be focus of my remarks this evening.

Securities and investment banking by its nature is more risky than the traditional retail banking. Large firms are protected by the diversity of their income streams and are more able to withstand exogenous shocks and unanticipated disturbances than small firms in this field. To that extent this transformation of BMA into a large firm provides us, the regulators, a little bit of comfort.

My vision for Pakistan's financial sector envisages a continuum on the domestic front with well functioning capital markets at one end, the banking system in the middle and Microfinance institutions at the other end. I stress the word 'continuum' in which all constituents are interlinked and a lot of flexibility exists throughout the value chain rather than vertical silos or compartments which stand in isolation with each other.

Capital markets cater to the need of well-established, highly reputed, credit worthy large issuers of capital who are trusted by both the retail and institutional investors and to whom they are willing to provide their savings at competitive prices. Banks are then left to meet the demand of the bulk of the population in the middle market i.e., the whole host of medium and small enterprises, firms, farmers, individual businesses, partnerships, unlisted companies on one hand and millions of households seeking different kind of consumer financing on the other.

They will be fed by millions of small and medium depositors who have neither the inclination nor the appetite to do anything else with their savings but to entrust them to the vast network of banks with which they are quite familiar and comfortable with. At the other extreme of the spectrum are small microfinance institutions that can be set up even at the district level with very little capital to serve the poor, the landless, the small artisans, the semi-skilled who can use small amounts of capital to transform their labour into marketable products and earn a decent living.

Globally, I envision that Pakistan's financial services industry will be integrated with the international financial markets and will remain an active participant in mobilizing and raising resources at highly fine prices in adequate volumes for the sovereigns, agencies and corporates. At the same time it is my endeavour that Pakistan becomes an exporter of financial services first to the Middle East, Central Asia and North Africa and then to the rest of the world.

How can this vision be translated into reality? We have to work together on an action plan to achieve both these objectives in a time bound manner with specific milestones and deadlines.

To achieve the first objective the financial service industry and the Government have to take a number of actions:

(a) Broaden retail investor base in equity and debt markets. The present policy of the Government to privatize the large public enterprises through IPOs on the stock market has done wonders to expand and attract several hundreds of thousands of retail investors. The industry has to consolidate this trend and make future private floatations on a continuing basis making it possible to retain the attraction of retail investors.

(b) The contractual savings institutions in Pakistan are highly segmented, narrowly focused and making sub-optimal returns on the assets they manage. It is the joint responsibility of the Government, regulators and the industry to mobilize and manage these savings in an optimal and professional manner. As we develop and manage private pension funds, provident funds and endowment finds the overall domestic savings rate in the country will rise.

(c) There are billions of rupees worth of distressed loans lying with the commercial banks. Investment banks can acquire these loans at a discount, restructure the underlying assets by creating sustainable debt capacity and make the units operational. This will help the revival of the industry and clean up the balance sheets of the banks.

(d) A large number of corporations and listed companies in Pakistan are not realizing their full potential and unearthing the value for the shareholders. Financial service providers should advise them as to how these hidden values can be realized.

(e) The economies of scale and scope dictate that many corporate entities will improve their financial performance if mergers and acquisitions take place. This is a neglected area in Pakistan which begs the attention of every one of us present here today.

(f) The financial service industry has to design and introduce long-term infrastructure and municipal bonds to supplement Government's efforts in upgrading the basic infrastructure facilities and encourage participation of private sector and in some cases public-private partnership in these projects.

(g) High standards and practices of corporate governance should be observed by all players in the industry so that the confidence of small and minority shareholders is restored and maintained, integrity and ethics become the hallmark of our financial sector.

(h) Private equity funds have played an extremely useful role in several developing countries in efficiently mobilizing private funds, placing them in undercapitalized companies making them highly profitable and either taking them public or exiting from the scene after reaping handsome returns. Pakistan does not have such vehicles which need to be nurtured. I am confident that Abraaj being the largest private entity firm in the Middle East would disseminate this experience in Pakistan through their new JV.

(i)As mortgage loans assume a significant proportions of the banks' portfolios they will need to offload them from their balance sheets to make headroom for new originations. Mortgage based securities will be needed to enable this to happen through active assistance of financial service providers.

(j) We have not seen many transactions so far which involve structured finance, acquisition finance, takeout finance and multilevel finance. As corporate treasuries acquire more sophistication there will be demand for such products.

(k) Derivatives markets are just beginning to take hold but they are integral to risk management and risk mitigation strategies of the borrowers. Banks will have to play a key role in educating their counter parties in all the intricacies of derivatives.

(l) Cross selling services have not been popular in Pakistan's financial industry so far. We seem to have an obsession with properitory and own managed and controlled products and services. We are losing sight of the enormous synergies which are being missed by pursuing the current business model.

To achieve the second objective i.e., export of financial services from Pakistan there are a number of steps we have to take. These are:

(a)Develop, attract, retain and motivate high quality skills who can carryout world-class professional work relating to technical, marketing and management of these institutions in third countries. 

(b)Acquire core competencies which are needed to compete in an integrated and globalized financial market.

(c)Focus on business areas and niches which allow a competitive edge to our exporters of financial services.

(d)Concentrate on innovation, speed, responsiveness and tailoring to meet the specific customer needs in credit delivery.

(e)Use technology as an enabler to digitally secure product access and service delivery, reduce transaction costs and provide convenience to customers.

(f)Introduce control mechanism for cost structure and operational efficiency.

(g)Build High quality research, market information gathering and analysis capacity to keep in continuous touch with the changing trends and demand patterns.

Let me conclude by submitting that the agenda I have sketched out above is quite demanding but it is doable and not implausible. The road ahead of us is long and arduous but it seems to me that this joint venture that has been established today is the first step in that direction. We all have to work hard and long to achieve these goals.

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