Kingsway Capital in talks with Big Tobacco over AIR stake sale - sources

Rothschild & Co SCA

08/06/2023 10:56

By Hadeel Al Sayegh
       DUBAI, June 8 (Reuters) - Britain's Kingsway Capital has
started meetings with big tobacco firms as the private equity
firm prepares to sell its stake in Dubai-based tobacco business
Advanced Inhalation Rituals (AIR), two sources familiar with the
matter told Reuters. 
    Kingsway, the majority owner of AIR, has held talks with
potential investors including British American Tobacco  BATS.L 
and Japan Tobacco  2914.T , said the sources, declining to be
named as the matter is not public.
    The talks are part of a dual-track process, where a seller
pursues a sale and an initial public offering (IPO) at the same
time.
    Reuters reported in March that Kingsway had hired Rothschild
& Co  ROTH.PA  to advise it on options for AIR, including a
possible IPO.
    Kingsway, Rothschild and Japan Tobacco did not immediately
respond to a request for comment. AIR and BAT declined to
comment. 
    An IPO would take place in the region, either on Saudi
Arabia's Tadawul or the Abu Dhabi Securities Exchange, the same
sources told Reuters in March.
    Kingsway in 2020 took private Jordan-domiciled and Amman
Stock Exchange-listed Al Eqbal Investment Company in a
transaction valued at more than $1.4 billion including debt. The
company was then rebranded as AIR.  
    Private equity firms generally seek to exit their
investments five to seven years after buying in.
    AIR's most valuable business is Al Fakher, which
manufactures flavoured molasses for shisha pipes sold in more
than 100 countries, according to its website. It also produces
OOKA, a pod-based device that simulates the experience of
smoking shisha without the charcoal. 
    An investment in AIR would provide global tobacco makers
access to the shisha and the vaping equivalent e-shisha market
in the Middle East and beyond, the sources said. 
    Middle Eastern companies bucked global trends last year to
raise about $22 billion through IPOs, according to Dealogic,
which was more than half the total for the wider Europe, Middle
East and Africa region.

 (Reporting by Hadeel Al Sayegh
Editing by Mark Potter)
 ((Hadeel.AlSayegh@thomsonreuters.com; +971566883310;))