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UK private equity firm to sell stake in Dubai shisha company

One of AIR's businesses produces flavoured molasses for shisha pipes Reuters/Mohamed Abd El Ghany
One of AIR's businesses produces flavoured molasses for shisha pipes
  • British equity company owns Dubai producer
  • Kingsway bought AIR for $1.4bn in 2020
  • Seller also seeking an IPO

Kingsway Capital is in talks with tobacco firms as it tries to sell its stake in Dubai’s Advanced Inhalation Rituals (Air).

The British private equity company, the majority owner of Air, has met with potential investors including British American Tobacco and Japan Tobacco, two sources told Reuters.

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.

Kingsway hired Rothschild & Co to advise it on options for Air, including a possible IPO, Reuters reported in March. 

Kingsway, Rothschild and Japan Tobacco did not immediately respond to a request for comment. Air and British American Tobacco declined to comment.

An IPO would take place in the region, either on Saudi Arabia’s Tadawul or the Abu Dhabi Securities Exchange.

Al Eqbal Investment Company, based in Jordan and listed on the Amman Stock Exchange, was bought by Kingsway in 2020 for $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. Its website says its products are sold in more than 100 countries.

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 $22 billion through IPOs, according to Dealogic, which was more than half the total for the wider Europe, Middle East and Africa region.