Africa’s biggest private arms maker gets big boost from war against Islamic State in Middle East

The conflict with IS “does create opportunities,” Ichikowitz says. However, South Africa’s lack of global political influence won't help orders.

ISLAMIC State’s expansion is causing instability from Basra to Beirut, but it’s also boosting business for Ivor Ichikowitz, the founder of Africa’s biggest privately owned arms company.

Ichikowitz’s Paramount Group, which sells products ranging from naval patrol vessels to refitted Mirage fighter jets, last month won an order to sell 50 armored vehicles worth more than $1 million each to Jordan.

The South African entrepreneur and businessman expects more business to follow with Middle Eastern governments looking to bolster their defenses as the Islamist militant group battles state forces in at least three countries and threatens to invade more.

While the US is leading airstrikes against Islamic State in Iraq and Syria, its limited involvement in ground operations compared with previous operations in Iraq and Afghanistan is creating opportunities for Paramount as governments arm themselves, he said.

“Today the conflict in the Middle East is a conflict that belongs to the Middle East,” Ichikowitz, 48, said in a March 12 interview in a Johannesburg office decorated with model aircraft and armoured vehicles. “We’re not in political battles. We can exist only on our quality.”

Jordan and the United Arab Emirates are part of a coalition that is carrying out air strikes to push Islamic State militants out of the areas it controls in Iraq and Syria. Jordan borders Iraq and Syria, where 220,000 people have been killed in a four- year civil war that includes Islamic State and al-Qaeda affiliated militants.

“When you’re in a war with Islamic State there are no rules, so you’ve got to make sure that your armies are properly equipped with safe equipment,” Ichikowitz said. “Our platforms are all focused on making a safer environment for the soldier.”

Pilot burned

Jordan stepped up attacks on Islamic State after the group in February released a video in which its showed a captured Jordanian pilot being burned alive in a cage.

The King Abdullah II Design and Development Bureau, Jordan’s state-owned defense company, signed the contract to buy Paramount’s six-wheel-drive Mbombe infantry combat vehicles at last month’s International Defence Exhibition in Abu Dhabi, Ichikowitz said. The Mbombe can withstand land mines, 14.5 millimeter heavy machine gun rounds and 155 millimeter artillery bursts, according to Paramount.

“The Jordanians are in the front line,” Ichikowitz said. “They had the choice of any equipment in the world. They chose our equipment on merit.”

Still, South Africa’s lack of political influence in comparison with US and Europe-based companies may hurt Paramount’s chances of winning orders, Helmoed Heitman, a Cape Town-based defense analyst, said in an interview.

Dramatic arts

The conflict with Islamic State “does create opportunities,” he said on Tuesday. “His one problem will be is that a lot of countries will want to buy something that’s backed by its own government. The selling point is that it’s practical stuff that works for a reasonable price.”

Ichikowitz grew up on the eastern outskirts of Johannesburg, where he studied dramatic arts, before founding Paramount in 1994, the same year South Africa held its first all-race elections.

Ichikowitz’s businesses now include oil and natural gas, property, retail, mining, tourism and agriculture, according to Paramount.

His family foundation started the African Oral History Archive, which collects witness accounts from South Africa’s struggle against apartheid. It is also funding a programme to train dogs to hunt down the poachers targeting South Africa’s rhinos.

Revenue shortfall

After a setback during the global financial crisis, Paramount is still short of its 2015 target of $1 billion in annual revenue, he said, declining to give more detail.

As well as armoured vehicles, Paramount makes reconnaissance aircraft, communications technology and is producing 10 naval ships at its plant in Cape Town this year, according to the company.

Paramount is owned by “a number of interests,” including lenders who took up equity in exchange for financing to help expand the business, according to Ichikowitz.

The company is now seeking to expand its reach beyond the Eastern European, Middle Eastern and African countries it works in by forging partnerships with other companies, he said. Its most significant partnership so far is the agreement it signed with Boeing Co. in July last year to “jointly develop defense and security opportunities in key international markets,” the companies said in a joint statement at the time.

Helicopter repairs

Ukrainian President Petro Poroshenko witnessed Ichikowitz sign a cooperation agreement with Ukrainian engine maker VAT Motor-Sich in Abu Dhabi. While it doesn’t create business for Paramount in connection to the conflict in Ukraine, it allows the company to participate in the repair and upgrade of hundreds of helicopters, Ichikowitz said.

It also gives Paramount access to new markets, including Indonesia, Malaysia and 22 Latin American countries, he said.

“The only way we can grow is through collaboration, through partnerships,” Ichikowitz said. “Our competitors are General Dynamics, British Aerospace, the biggest players in the world, with billions of dollars in market cap and huge government support.”

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