US embassy cable - 02AMMAN6374

UNCLAS AMMAN 006374 
 
SIPDIS 
 
DEPT PASS USAID FOR ANE/MEA 
TREASURY FOR PIPATANAGUL 
TDA FOR SIGLER 
STATE PLEASE PASS TO USTR FOR SAUMS 
OPIC FOR JIM HANSLEY AND ABED TARBUSH 
PASS EXIM BANK 
USDOC 4520/ITA/MAC/ONE/COBERG 
 
E.O. 12958: N/A 
TAGS: EINV, EFIN, ECON, KTDB, KIDE, JO, OPIC 
SUBJECT: JORDAN FUND LAUNCHED 
 
REF: AMMAN 2706 
 
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SUMMARY 
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1.  (U) Amid an enthusiastic reception, the Government of 
Jordan launched the Jordan Fund, a $50 million fund designed 
to attract foreign investment and provide capital to the 
local private sector.  Deutsche Bank is acting as 
International Advisor for the Fund, with Jordanian investment 
banking firm Atlas Investment Group and Foursan Group, a 
Jordanian private equity and venture capital investment firm 
providing the management.  The Fund will focus on 
opportunities with local, innovative companies, as well as 
companies that take advantage of global opportunities such as 
the U.S. - Jordan Free Trade Agreement.  END SUMMARY 
 
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A VOTE OF CONFIDENCE 
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2.  (U) Minister of Finance Michel Marto, Deutsche Bank Vice 
President for Global Corporate Finance Jeffrey Culpepper, 
Atlas Investment Group Director General Omar Masri, and 
Foursan Group Partners Nashat Masri and Leith Masri presided 
over the launch of the Jordan Fund October 29 before a group 
of investors, diplomats, and government officials. 
 
3.  (U) The government has contributed $20 million, from 
privatization proceeds, toward the Fund's $50 million target 
capitalization.  The remaining $30 million will come from 
private investors and local institutions.  Minimum 
investments in the fund are set at $1 million for 
institutions and $500,000 for noninstitutional investors. 
Incorporated in the Cayman Islands, the Fund's stated 
objective is threefold: to generate attractive returns on 
investment, to provide capital to enable Jordanian businesses 
to modernize and expand, and to promote consolidation in 
business and industry through mergers and acquisitions.  A 
Board of Directors, comprised of two members from Deutsche 
Bank, two  from the Government of Jordan, and one from the 
investment management partnership of Atlas and Foursan, will 
make investment decisions based on recommendations by the 
Fund manager. 
 
4.  (U) The size of the Fund's investments will range from $3 
million to $7 million, with   The Fund's management receiving 
2% per year of the subscribed amount of the Fund, a 
performance fee of 20% of the profits over 8% per year, and a 
placement fee of 2% of the subscription price of shares. 
 
5.  (U) Marto called formation of the Fund a "vote of 
confidence" in the direction the government was taking in 
progressive economic reform.  Culpepper said the Fund was the 
"brainchild" of King Abdullah and stressed the Fund would 
support local, innovative companies, as well as firms that 
take advantage of opportunities generated via the U.S.- 
Jordan Free Trade Agreement and other international trade 
pacts. 
 
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COMMENT 
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6.  (U) Along with the Social Security Corporation's new $150 
million investment fund, the Jordan Fund fills a void for 
local companies needing capital but unable to find it from 
risk-averse Jordanian and regional banking and lending 
institutions.  The Fund is likely to pursue opportunities 
such as Microsoft's investment in Estarta (REFTEL), a 
successful merger of two local IT companies resulting in 
economies of scale, and, buoyed by Microsoft's support, a 
coming player in the regional IT market. 
 
 
GNEHM