CI View: Al-Naseem IPO plans could be key to Libya crisis, chairman says

TRIPOLI/WASHINGTON (CI MENA) — Al-Naseem for Food Industries, the Misurata, Libya-based privately held dairy group, is open to listing a minority stake on the Bourse de Tunis (Tunis Stock Exchange) to fund growth, company chairman Mohamed Raied said.

[Al-Naseem for Food Industries Chairman Mohamed Raied speaks with Capitol Intelligence/MENA using CI Glass at Al Waddan Hotel in Tripoli, Libya on March 3, 2015]

In an interview at the Al Waddan hotel Tripoli on March 3 2015, Raied said that he can consider floating a minority stake in the company to allow the group to expand its current operations and enter into new business segments such as fresh milk production and animal feed.

However, Raied said the family own company has no intention of selling the company and that it has already rejected a takeover offer by France’s Danone group in 2009.
Alnaseem – which produces ice cream, milk, edible oil, yogurt, mineral water – had a 2014 turnover of USD 150m with a profit margin of ten percent. He said sales should grow once more by double digits in 2015 as they did in 2014.

Raied said that notwithstanding the current instability in Libya, Al-Naseem was able to serve the national Libyan market and even increase sales.

Raied said that he formed a partnership with the Chiheb Slama — CEO and part owner of Tunisian food group Group Slama  that produces the Goldina margarine brand in 2009 after having acquired the Tunisian ice cream operations of Swiss listed food giant Nestle.

“Slama group distributes Al-Naseem products in Tunisia while Slama is a partner in Libya with in the edible oil business,” he said.

During a meeting in Tunis on the sidelines of Amcham Tunisia’s Investment & Entrepreneurship Conference keynoted by US Commerce Secretary Penny Pritzker, Raied said that he expects a stock market listing could value Al-Naseem up to USD 1bn when compared to the company’s multinational peers.

[US President Barack Obama and Italian Prime Minister Matteo Renzi joint news conference filmed by Capitol Intelligence/CI MENA using CI Glass at the East Room of the White House. April 17. 2015.]

Al-Naseem’s Raied has already met with US Overseas Private Investment Corporation (OPIC) and the managing directors of major European and US investment banks such as Citigroup, Barclays, Credit Suisse and Intesa Sanpaolo are already looking at the Al-Naseem IPO dossier.

The top project for Al-Naseem is to supply quality fresh milk importing and creating dairy farms in Libya for over 10,000 cows.  He said that he would need 10,000 cows to meet Al-Naseem’s production of 400 tons of milk a day and foresees a total investment of about USD 50m..

He said the company plans to initially begin with 1,000 cows to be located in Libya’s green areas in the south such as Sabha and in the areas close to The Green Mountains east of Benghazi. He said he would like to add about 1,000 cows a year until it reaches its objective of 10,000 dairy cows.

Raied said Al-Naseem envisions distributing herds of 40/50 cows to a single rancher and thus ultimately create some 700 to 800 new agriculture jobs in some of the most economically depressed areas of Libya.

He said that diary production in neighboring countries in Africa such as Chad and even Algeria are extremely rudimentary.

Raied said he decided to enter the dairy market in 1990s because “I knew that the Gadaffi regime and its cronies would have no interest in running a yogurt and milk business.”

Raied became a leader during the Libyan revolution and is currently the business leader of the Libya’ emerging business center of Misurata.

Raied, whose company employs 1,500 workers and pays double of the state sector salaries, said he strives for best practice in everything the company does from equipment, production and human resources.

In fact, Al-Naseem production facilities in Misurata are state-of-the-art and consists of the best machinery from the United States, Denmark, Sweden and Germany.

Notwithstanding the current fight between the two Libyan governments, some strategic investments are being made such as Libya Holdings decision to go ahead a acquire a majority stake in the Benghazi cement company Libya Cement Company from Ohlsdorf, Austria-based  investment fund QuadraCir.

According to a report in the Financial Times, Libya Holdings acquired the company for “tens of millions” of dollars alongside investors from Saudi Arabia, UAE and Kuwait.

Many GCC countries, but Kuwait in particular, have proved to be skilled investors in seemingly high-risk markets that have a better over-all return than late growth economies.

HE Dr. Meshaal Jaber Al-Ahmed Al-Sabah, the director general of Kuwait Direct Investment Authority, was In Washington, DC promoting Kuwait as a strategic market for US companies, from major corporation such as GE, Boeing and IBM to small-to-medium size innovative groups.

[Kuwait Direct Investment Promotion Authority Director General HE Dr. Meshaal Jaber Al-Ahmed Al-Sabah speaks with Capitol Intelligence/CI MENA at The National US-Arab of Chamber and US Commerce Department event at Ronald Reagan International Trade Center. Washington, DC. May 12, 2015]

Kuwaiti construction company Kharafi National has a proven track record of carrying out major construction projects in some of the world’s most difficult markets such as South Sudan, Iraq, Pakistan and even Libya.

Kharafi is also unusual as it not only carries out the construction and planning but also arranges the project financing much like a specialized bank or infrastructure fund.

Italy’s largest construction group, Salini Impregilo (BIT:SAL), has a EUR 936m highway construction contract to build 400km of planned 1,700km pan-Libyan coastal highway liking Tunisia and Egypt.

[Salini Impregilo Chairman Claudio Costamagna speaks with Capitol Intelligence/CI MENA using CI Glass at Forum Ambrosetti in Cernobbio, Italy. Sept. 2014.]

Salini Impregilo chairman Claudio Costamagna said the Italian company is very motivated to carry-out the large scale contract that it took over for ENI listed subsidiary SAIPEM (BIT:SPM).

The Agriculture Minister of Libya’s New General National Congress or Libya Dawn — , Abdelmounem Mawhoub, said all private sector efforts to bring investment and new jobs to the country.

[Libyan (GNC) Agriculture Minister Abdelmounem Mawhoub speaks to Capitol Intelligence/MENA using CI Glass at Libyan Ministry of Agriculture in Tripoli, Libya. March 3, 2015]

Mawhoub said that there is no disagreement between the GNC government in Tripoli and the internationally recognized government in Tobruk about facilitating private sector investment in the country.

Mawhoub said he would reach out to the private sector investment arm of Qatar and the neutral gulf state of Oman.

The situation on the ground in Tripoli and Misurata are also contradictory as the city continues to function while the country is split between two competing governments.  One Tripoli-based Libya Dawn (Halbous) militia has more than 1,600 members but the vast majority of its members would prefer a decent job, Halbous militia leader Mehdi Jatloui said.

[Libya Dawn (Halbous) militia leader Mehdi Jatloui speaks to Capitol Intelligence/MENA using CI Glass at United States Embassy in Tripoli, Libya on March 2, 2015.]

The Militia leader Jatloui said most of his men act as informal police guards — such as guarding the US Embassy compound in Tripoli and other local businesses — with many of the Halbous doing their work without arms.

In fact, we are able to go around Tripoli for business meetings — including a taste of excellent seafood at the city’s Barracuda restaurant –without the need of bodyguards or armed vehicles.

The key foreign investor in Libya today is Italian oil giant ENI SpA (NYSE:E) who continues to operate the strategically important Greenstream gas pipeline in Mellitah and a number of oil fields while most international oil and gas companies have pulled out of the country.

Much credit to Eni’s continued operations in Libya can be laid to the leadership of the company’s new chairman, Emma Marcegaglia, who continues the historically contrarian tradition of ENI of not following the actions of the Seven Sisters of the oil industry.

[ENI Chairman Emma Marcegaglia speaks with Capitol Intelligence/CI MENA using Google Glass at Bertelsmann Foundation forum Shifting Gears: Merging Growth and Prosperity at US Chamber of Commerce in Washington, DC. April 16, 2015.]

The Melitah Greenstream gas pipeline, which delivers a lion share of Italy’s energy through a sub-Mediterranean pipeline, is of vital economic and geopolitical interest to Europe.

Located about thirty minutes from the Tunisian-Libyan border at Ben Gardane, Melitah is operating normally and manned by local staff and a small number of expatriates.

[ENI’s Melitah Greenstream gas pipeline complex near Zwara, Libya filmed by Capitol Intelligence/MENA using CI Glass on March 5, 2015]

More importantly, the Melitah complex is guarded by special forces of the Libyan military police and not local militia as in other parts of Libya.  One Libyan commander told this news service that the facility is being heavily protected not only for its strategic importance but also for the simple fact that the giant complex remains the only source of well paying jobs in the entire region.

Unlike all major foreign companies who have either pulled out or drastically reduced their presence in  Libya, Peoria, Illinois-based Caterpillar (NYSE:CAT) has re-opened their offices in Tripoli, Caterpillar Tunis-based dealer FL Tractors CAT General Manager Raouf Ben Ltaifa said.

[Caterpillar Chief Executive Doug Oberhelman speaks to Capitol Intelligence/CI MENA using CI Glass at Export-Import Bank of the United States Annual Conference. Washington, DC. April 24, 2015]

Ltaifa said FL Tractors re-opened their offices in Tripoli in August and September after closing their main offices in Benghazi in May. Ltaifa said the company’s Libyan business brings around USD 50m in annual sales.

The growing presence of the Islamic State (ISIS) — whose terrorists have exploited the lack of a central government in Libya and the highly lucrative human trafficking and drug trade — now poses the greatest security and economic threat to Italy since World War II.

Italy’s 40-year-old Prime Minister, Matteo Renzi, arrived to Washington ahead of his meeting with President Barack Obama on April 17 with the hope that the United States would directly intervene in combating ISIS in Libya and at the same time help stem the tide of a massive influx of illegal immigrants from Libyan shores.

 

[Italian Prime Minister Matteo Renzi filmed by Capitol Intelligence/CI MENA using CI Glass discussing Libya ahead of Oval Office meeting with President Barack Obama. Georgetown University, April 16, 2015]

To highlight the importance of Italy for the world’s pressing issues of Libya, Ukraine and Iraq –President Obama and the US administration purposely combined a meeting in the Oval Office with a joint news conference in the East Room of the White House.

Except for a commitment by President Obama to intervene with Qatar and United Arab Emirates who have been waging a war by proxy in Libya, Renzi left Washington with little to bring greater urgency for the UN-lead reconciliation or better defend Europe’s southern border continued onslaught of migrants and the humanitarian tragedies they entail.

On May 13, President Obama held a historic meeting at Camp David with the leaders of of Gulf Cooperation Council to discuss Iran, combating ISIS in Iraq and Syria, and almost certainly, Libya.

Only a few days after Renzi’s White House visit, Italy witnessed the worst humanitarian disaster in its history with nearly a thousand people losing their lives when their “ghost ship” capsized near the Italian island of Lampedusa.

The human traffickers, who earn some USD 400,000 a day from the business, now use barely seaworthy vessels called ghost ships to transport migrants near Italian or Maltese shores and then purposely scuttle the boats to force EU flagged ships to rescue the passengers.

Unlike Syria and Iraq, ISIS main strength in Libya is their ability to efficiently exploit the lack of law enforcement in the country to fund themselves and become paymaster to a growing group of disaffected and unemployed youth from the Maghreb and conflict states in Africa.

However, corporate leadership by privately-held, Cuneo, Italy-based logistic group Germanetti Trasporti Internazionali is helping to alleviate suffering in Libya by delivering much needed food and medical supplies to the Libyan population. 

[Germanetti Trasporti Internazionali Commercial Director Giuseppe Rutigliano speaks with Capitol, Intelligence/CI MENA using CI Glass at Tunisia Invest Forum. Tunis. June 11, 2015]  

Speaking to Capitol Intelligence/CI MENA during the Tunisia Investment Forum on June 11, 2015, Germanetti commercial director Giuseppe Rutigliano said the company is using its Tunisian transport network of trucks to deliver critical supplies to the country which has been basically cut off from the West.

Rutigliano said the company is now the largest logistic group operating out of Tunisia. He said the group, with an annual turnover of about EUR 70m, is planning to increase it foot print in North Africa considering that it has been Tunisia and North Africa since 1934, making it also one of the oldest transport companies in the Mediterranean.

Speaking to Capitol Intelligence at the World Bank IMF Spring Meeting, Libyan Central Bank Governor Saddek Omar Elkaber noted that only 5% of Libya’s economy is in private hands compared to over 80% prior to Colonel Gadaffi’s bloody military coup d’etat in 1969.

[Central Bank of Libya Governor Saddek Omar Elkaber speaks with Capitol Intelligence/CI MENA using Google Glass at IMF World Bank Spring Meeting in Washington, DC. April 18, 2015]

While the Libyan Central Bank is believed to have spent nearly half of its USD 160bn in cash reserves for current account spending, the central bank still holds significant stakes in Italy’s largest bank Unicredit (2.94%) and the UK listed education and media publishing giant (Financial Times) Pearson Plc (NYSE:PSO).

Libya, with only a population of a little less than Switzerland and a land mass 2.53 times the size of Texas, will eventually become one of the wealthiest countries in the world due to its unique position just south of Europe and the bridge between North Africa and the Middle East.

While Libya’s oil wealth is well known, no-one has ever explored since Mussolini’s time the country’s non-oil deposits of metals and other minerals.  A few years ago, the business elite in Benghazi were working to make the eastern Libyan port city a center for fine chemical production with the help of privately-held Wichita, Kansas-based Koch Industries and Midland, Michigan-based Dow Chemical (NYSE: DOW.)

Since the overthrow of Gadaffi, Libya has been operating electrical plants, airports, factories with little to no foreign workers and has achieved a level of, albeit unwanted, self-sufficiency.

All that is lacking is civil protection in the form of effective law enforcement.  Italian Carabinieri, Washington MPD and specialized anti-terrorist forces can easily bring the situation under control and allow the private sector to create the stability needed to make Libya a UAE or Qatar of the Mediterranean.

However, security alone will only repeat the failures of the past and decision makers must remember that no-one ever guards an empty bank. Also, a few thousand dairy cows would do wonders.

By PK Semler in Washington, DC and Tripoli, Libya

For more information please call 202-549-3399 or email: pks@capitolintelgroup.com

Copyright of Capitol Intelligence Group, Inc – Turning Swords into Equity ®