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ADP Takes Control of Queen Alia Airport

A team from Khalifeh & Partners including Khaldoun Nazer (Partner), Dina Issa, (Associate) and Mouawyeh Tarawneh (Associate) worked with Clifford Chance LLP (DIFC Office) on the sale of 85.7% of the shares of Airport International Group (AIG), the Concession Holder of Queen Alia International Airport (QAIA). The transaction is valued at approximately USD $530 million. K&P acted for the sellers’ group comprised of Abu Dhabi Investment Company, Noor Financial Investment Company, J&P-Avax S.A., Joannou & Paraskevaides (Overseas) Ltd, and Edgo Investment Holdings Limited, while Freshfields Bruckhaus Deringer LLP and Obeidat Freihat acted for the buyers.

This transaction allows ADP International S.A. to hold approximately 51% of QAIA, and gives it exclusive control of AIG. There are also new co-shareholders in AIG: Paris-based Meridiam Eastern Europe Investments 2 S.A.S and Abu Dhabi-based Mena Airport Holding Ltd, while Edgo retains its co-shareholder status.

In November 2007, under the terms of a 25-year design, build, operate, and transfer (DBOT) concession agreement, AIG became the Jordanian entity responsible for the operation of QAIA. Funding for the project was secured through the International Finance Corporation, the Islamic Development Bank, a syndication of commercial lenders, and shareholder equity. K&P previously acted for a consortium that bid for the project.

The DBOT concession witnessed the rehabilitation of the airport’s facilities, and the construction of a new passenger terminal. Since 2007, it has already increased the capacity of QAIA to host more than 6.2 million passengers, inaugurated a new terminal, and became the second airport in the Middle East to earn the Airport Carbon Accreditation.

ADP’s objectives for the remainder of the concession include strengthening the airport’s route network, improving the quality of service offered to its passengers, enhancing the performance of aeronautical and commercial activities, and ensuring sustainable and social responsible development for the remaining duration of the project.

Khalifeh & Partners is a full-service law firm that offers comprehensive expertise to our clients across many practice areas and jurisdiction, and is ranked “Tier 1” by Chambers and IFLR 1000. Please visit www.khalifehlaw.com for additional information about our practice and lawyers.

Victory Off-Field for Jordanian Football Club

The 2017 Arab Club Championship was held in Alexandria, Egypt in August of this year. With the final match between Esperance de Tunis, a Tunisian club, and Al-Faisaly Football Club from Jordan running into overtime, the excitement and suspense escalated quickly until a controversial call from one of the referees during overtime allowed Tunisia to take gold, leaving Jordan with silver.

The ensuing confrontation between several Al-Faisaly players and the referee who made the call resulted in the Union of Arab Football Associations (UAFA) issuing disciplinary sanctions of one-year suspensions against five Al-Faisaly players and one club official, as well as financial penalties against both the sanctioned players and the Club itself. Given that the players who were sanctioned are key members of the team – four also play on the Jordanian National Team – the suspensions were likely to have a massive impact on both Al-Faisaly and the Jordanian National Team.

Later that month, the Asian Football Confederation (AFC) was requested to extend the UAFA sanctions on an Asian-wide level, and AFC’s Disciplinary and Ethics Committee agreed. Working in tandem with the Jordan Football Association (JFA) and Al-Faisaly, and with the unwavering support of the His Royal Highness Prince Ali bin Hussein, Chairman of JFA, Khalifeh & Partners submitted 16 appeals to AFC’s Appeals Committee in an effort to dismiss the sanctions.

AFC’s Appeals Committee convened on November 13th, and the decision was made to uphold the appeals that were submitted by K&P and to set aside the motion of the AFC Disciplinary and Ethics Committee to extend the sanctions. “This is a great achievement; the result has been awaited by practically everyone in Jordan”, says Managing Partner Ala’ Khalifeh, who led the K&P team that filed the appeals.

Khalifeh & Partners is quickly becoming a leader in the areas of sports and entertainment law, having worked with both the Jordan Olympic Committee and JFA, as well as numerous Jordanian athletes. Still, the odds were against Al-Faisaly – more often than not, AFC dismisses appeals and chooses instead to uphold disciplinary measures. Ala’ emphasized the efforts of his colleagues, saying, “I’m very proud of our team. The fact that our appeal was upheld speaks to the standard of work that our lawyers adhere to and produce.”

The success of the appeal also has positive implications for the future of Jordanian athletics. Jordan’s sports industry is continuing to develop and has recently garnered more visibility on a global scale, as evidenced by the ambitious plans of the Jordan Olympic Committee and Ahmad Abu Ghaush’s gold-medal taekwondo performance at the 2016 Olympics in Rio. But increased prominence and activity also increases the likelihood of encountering sanctions, suspensions, and other legal issues in the future, which requires niche legal knowledge of sports laws and regulations. The success of this endeavor indicates that Jordan is well-prepared to continue its progress and development in athletics both on and off the field.

 

Khalifeh & Partners is a full-service law firm that offers comprehensive expertise to our clients. Khalifeh & Partners would like to thank HRH Prince Ali bin Hussein, the Jordan Football Association, and Al-Faisaly Football Club for their confidence in Khalifeh & Partners and for their encouragement and support during the appeal process.

The Future of Renewable Energy in the Middle East

With recent developments in energy law and a plethora of opportunities for international investment, Jordan has the potential to become a global leader in the field of renewable energy.

The EDAMA Association for Energy, Water and Environment, in partnership with the United States Agency for International Development (USAID), released the first-ever Jordan Clean Technology Sector Report in January 2017. The report finds renewable energy and energy efficiency to be the two clean technology sectors that have matured the most in Jordan, with hydropower and biogas showing potential for future development.

Overall, renewable energy projects are on the rise. Last month, his Majesty King Abdullah II oversaw the launch of 12 new photovoltaic power plants expected to generate 200 MW of electricity.

Furthermore, the Ministry of Energy and Mineral Resources (MEMR) is currently seeking expressions of interest for the construction of what is anticipated to be one of the largest utility-scale electrical storage projects in the Middle East. Located in the Ma’an governorate, “the storage facility will be primarily used for ramp-rate control of PV and wind power plants, as well as for energy shifts of otherwise curtailed renewable energy.” Phase 1 of the project is scheduled for completion by August 2019, while Phase 2 is expected to be completed by 2020.

Other more established projects are also beginning to see returns on their investment. Jordan’s first-ever wind farm project – located in Tafila – recently celebrated its first year of commercial operations.

“The wind farm project in Tafila has laid the foundation for the government to achieve its goal of diversifying energy sources. Since the launch of this project, we’ve advised numerous developers, lenders, and EPC contractors in connection with a number of solar and wind projects,” says Ala’ Khalifeh, Managing Partner at Khalifeh & Partners.

Such developments are evidenced by the launch of several solar and wind projects throughout the Kingdom in recent months, namely in Ma’an, Fujeij, El Quweira, Mafraq, and Aqaba.

 

Regulatory changes

Funding for current renewable energy projects in Jordan has come from both domestic and international investors, including the International Finance Corporation, ACWA Power, and the European Investment Bank. Recent regulatory changes are expected to encourage additional foreign investment and spur further growth in the Jordanian renewable energy sector.

The new laws, under the Regulation for Organizing Non-Jordanian Investments No. 77, loosen the requirements for foreign investors and are expected to have a positive impact on investment in the clean and alternative energy sectors.

Other government policies continue to encourage investment. Jordan has committed to allocating a share of 10 percent of its total energy mix to renewable energy by 2020. The government plans to accomplish this through long-term Power Purchase Agreements, tax and customs exemptions for renewable energy systems and equipment, and other incentives that promote clean energy projects outlined in the Renewable Energy and Efficiency Law (REEEL).

 

Impact on the private sector

According to EDAMA, 82 percent of surveyed companies are fully owned by Jordanians and they employ nearly 13,000 employees, 72 percent of whom are engineers or technicians.

The projects, many which are located outside of major cities, provide an opportunity to increase employment and raise living conditions in more rural areas of the country.

The uptick in renewable energy investments in Jordan has also inspired the expansion of university programs that train future employees in subjects critical to such fields, including energy and water engineering and environmental management.

 

Our take

Jordan’s solar and wind energy potential has the power to bring significant investments to the country, provide jobs across a variety of sectors to an expanding workforce, and demonstrate a model for other countries on the cusp of shifting toward a more sustainable future.

Mr. Khalifeh offered, “Jordan has been among the first in the [MENA] region to set the model for diversification and sustainability when it comes to energy sources, and the continued interest from many parties with regards to investment in these programs is evidence that this commitment is paying off.”

Khalifeh & Partners is renowned for its lawyers’ expertise on the renewable energy sector in the Middle East. Our firm has been at the forefront of legal developments in solar, wind, and conventional power in Jordan for more than a decade

The Birth of Ritz-Carlton in Amman

On April 25th 2017, Al Eqbal Real Estate Development and Marriott International announced the expansion of the Ritz-Carlton brand to Amman with the signing of an agreement to establish the Ritz-Carlton hotel and residences at Fifth Circle in Amman.

Luxury development

Expected to be completed in 2020, the Ritz-Carlton Amman will bring new options to guests and residents in the form of luxury suites, restaurants, branded apartments, and a grand ballroom.

The groundbreaking ceremony took place on Thursday, May 18; Prime Minister Hani Mulki laid the foundation stone inaugurating the project.

The project represents a major element of Marriott International’s plans for expansion in the Middle East market. The company currently represents the broadest portfolio of brands in the Middle East and North Africa, and holds a lucrative position in the eyes of consumers in this region. In Jordan alone, Marriott already operates five hotels, and Marriott’s President and Managing Director for Middle East and North Africa, Alex Kyriakidis, estimates that the company is on track to double its portfolio in the region in the next four years. Already in the works are plans to open properties in Tunis, Tunisia; Ras Al Khaimah, United Arab Emirates; Sharm El Sheikh, Egypt; and in the Moroccan cities of Tamuda Bay, Marrakech and Rabat.

Potential for continued economic growth

The Ritz Carlton Amman is anticipated to have a positive impact on the Jordanian economy. Notably, the project is an entirely Jordanian investment. Experts estimate that nearly 2,000 jobs will be created in the course of construction and operations, many of which will go to Jordanian youth.

Emad Al Kilani, CEO of Al Eqbal Real Estate Development, noted that the hotel and residences plan to work with both international and Jordanian architects to capture the “authenticity of Jordanian culture with a modern twist.”

K&P corporate partner Khaldoun Nazer led the team advising Al Eqbal Real Estate Development on all hotel management and residential agreements. He commends both parties for their tireless dedication to bringing the project to life saying, “The fact that Jordan is considered to be an integral part of the growth of the Ritz-Carlton brand in the Middle East, and that they established a close partnership with a prominent Jordanian firm, has exciting implications for future development and growth within the country.”

Khalifeh & Partners has an established track record for its lawyers’ work on large-scale real estate deals and other construction projects.

Amazon Sets Sights on Middle East Expansion

In possibly the largest M&A transaction in the history of the Middle East, Amazon recently acquired Souq.com, the region’s largest online retailer. The acquisition suggests that the Middle East could become a new frontier for online sales.

 

Selling e-commerce to the masses 

Amazon’s move signals a desire by the internet giant to move into the Middle Eastern market, which is relatively untapped. Some estimates suggest that online sales represent only two percent of the current retail market in the region.

Challenges to the expansion of e-commerce in the Middle East include the logistical difficulties of delivery in a region where many areas lack a developed postal system, as well as a retail culture built on existing relationships and face-to-face interaction.

Entrepreneurs and tech firms should watch Amazon and Souq.com closely to understand their strategy of popularizing online retail in the region and adopt similar strategies if those of Amazon and Souq.com prove to be successful.

 

Emerging competition

Despite the relatively nascent nature of e-commerce in the Middle East and North Africa, competition is already building.

Amazon won the bid for Souq.com over Emaar Malls founder Mohamed Alabbar, who reportedly offered $800 million for the company.

Noon, an online retailer owned by Alabbar and backed by Saudi Arabia’s sovereign wealth fund, is expected to move into the market with 20 million products and a 3.5 million square foot warehouse in Dubai.

Alabbar also acquired online marketplace JadoPado and online fashion retailer Namshi in two separate transactions in May.

If current estimates prove correct, the market may be big enough to share: analysts at Standard Chartered predict that online retail in the region will grow 30% annually, and consulting agency AT Kearney expects that the GCC e-commerce market could almost quadruple to reach $20 billion by 2020.

 

Invest, or acquire?

Amazon’s expansion into the Middle East contrasts with its strategy in other developing markets. This includes India, where Amazon has invested billions to grow its presence from the ground up. In comparison to Amazon’s strategy in India, TechCrunch calls the acquisition of Souq.com “a significant move for the U.S. firm to expand in this inorganic manner in order to move in quickly in the Middle East.”

According to reports, Amazon plans to preserve much of Souq’s existing branding, structure, and management as the companies foster their partnership in the region. The Dubai-based Souq.com will bring with it a loyal customer base, experienced team, and a tailored infrastructure for payments and fulfillment, and Amazon recognizes this.

Amazon will also inherit Souq.com’s many solutions to the unique challenges of conducting e-commerce in the region. As Engadget points out, Souq recognized the difficulty of promoting online sales in a region without wide credit card usage. In response, they developed a prepayment card where users top up in retail stores before ordering goods online. Souq also “built a network of local couriers who knows where people live” to address the issue of delivering in areas without a unified logistics platform or system of addresses.

Either of these issues could have proven prohibitive for Amazon’s expansion in the Middle East. However, by recognizing the value of Souq.com’s regional knowledge, Amazon has maximized its potential for growth in the region while simultaneously demonstrating the advantages for international companies seeking partnerships in new markets, acquire regional expertise, and forge local relationships instead of building a new expansion from the ground-up. It remains to be seen if Amazon’s plan to expand e-commerce in the Middle East will be successful, or if consumers will maintain their preference for brick-and-mortar shops.

Khalifeh & Partners specializes in corporate and financial transactions in the Middle East. Our firm has a depth of experience advising on major M&A transactions in the region.

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