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updated: 1/18/2013 11:59 AM

Bill Gates-led group invests $1 billion in Orascom Construction

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Bloomberg News

Bill Gates is leading a group of U.S. investors committing $1 billion for a stake in construction and fertilizer company OCI NV in one of Egypt's largest foreign currency inflows since the 2011.

OCI will absorb all local stock and global depositary receipts of Orascom Construction Industries under a share exchange offer that has attracted more than $2 billion in commitments, said the company, which is relocating from Cairo to Amsterdam. Its shares will be traded in both locations.

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Microsoft Corp. co-founder Gates' Cascade Investment LLC joins Southeastern Asset Management and Davis Selected Advisers in helping fund expansion in Egyptian infrastructure projects as well as other activities. The Sawiris family and Dubai-based buyout firm Abraaj Group, which together owned 60 percent of Orascom, will take part in the tender.

"The transaction underpins genuine investor appetite to invest in Egypt," said Nassef Sawiris, who was chief executive of Orascom and will be an executive director of OCI. "Unlike local shareholders who monitor events on a daily basis, sophisticated investors see the evolution of democracy having a long-term positive impact on the economy."

Third-quarter net income declined 31 percent to $126.8 million after booking provisions on several projects.

Economic Plight

The Egyptian economy has struggled to recover from the chaos that followed the ouster of President Hosni Mubarak Mubarak, as foreign direct investments tumbled. The government is in talks with the International Monetary Fund for a $4.8 billion loan to help stem the decline in foreign-currency reserves.

Gross domestic product may expand 3 percent in the fiscal year that ends in June 2013, according to the median estimate of 11 economists on Bloomberg. The economy expanded about 5 percent in the year preceding the uprising.

Orascom is Egypt's biggest publicly traded company. After exchanging their GDRs for OCI shares, the Sawiris family and Abraaj Group expect to at least maintain their holdings relative to their Orascom stakes, according to a statement today.

The deal includes a mandatory offer to exchange all Orascom Construction's Cairo-listed shares for OCI stock or 280 Egyptian pounds each, according to the filing.

Orascom shares dropped 0.6 percent yesterday in Cairo to 267.17 pounds, valuing the company at 56 billion pounds ($8.5 billion.) The GDRs jumped 5.1 percent to $42 at 1:16 p.m. in London.

New York Trading

OCI plans to trade on NYSE Euronext in Amsterdam and will follow with a U.S. depository receipts program in New York. The company is "committed to an active listing in Egypt, either directly or through Egyptian depository receipts," Sawiris said in a telephone interview today.

Allen & Co, Barclays Bank Plc, Citigroup Inc., Rabobank International acted as international advisers, while Cairo-based CI Capital Investment Banking was the exclusive local financial adviser, according to the filing.

Michael Bennett, former CEO of Terra Industries, will serve as chairman of OCI. Jan Alberts Ter Wisch, former partner at Allen & Overy LLP, and Abraaj founder Arif Naqvi will act as non-executive independent directors. Sawiris and Salman Butt, Orascom's chief finance officer, will be executive directors.

"As you can see from the number of bankers and advisers, this has been a process that took quite a few months," Sawiris said.

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