Business

KFIC can start afresh after debt resolution

Investment bank in five-year accord with 22 lenders

Hadeel al Sayegh

June 07, 2010

A Kuwait investment company has concluded its debt restructuring, ending negotiations that began more than two years ago. Kuwait Financing and Investment Company (KFIC), an investment bank and asset management company, said yesterday it had reached a five-year accord with 22 local and international lenders to restructure 145 million dinars. The process stretches back to early 2008, before the financial crisis began.

"The completion of this process is a milestone achievement," said Saleh Yacoub al Homaizi, the chairman of KFIC. "Coming to an agreement with 22 local and international institutions in a time of crisis was not an easy feat by any of the involved parties." The company, which is listed on the Kuwaiti Stock Exchange and the Dubai Financial Market (DFM), dropped slightly on the Kuwait exchange to close at 0.07 dinars yesterday.

It was not traded on the DFM as the announcement came after the market closed. Considering its fate had been uncertain for more than two years, the company was remarkably bullish yesterday, claiming it now owns "one of the healthiest, cash-rich, highly liquid balance sheets among its peers". Its buoyant mood was no doubt aided by last week's announcement of a first-quarter profit of 1.1m dinars, compared with a loss of 6.1m dinars in the first quarter of last year.The company also reported last month it had been hired as a transaction manager for one of Kuwait's top developers, which planned to acquire the remaining stakes in one of its subsidiaries.

KFIC's deal with lenders includes repayment in four tranches, with the first payment recorded yesterday and the last one due on December 31, 2014. The company said it had a commitment from shareholders to raise additional capital this year. Looking forward, investors may be comforted to know that the company noted it was pursuing "minimal risk opportunities ? we will continue to bolster our balance sheet and expect our performance to gradually pick up with modest bottom-line earnings in line with the prevailing market conditions".

halsayegh@thenational.ae

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Blockchain is a form of distributed ledger technology, a digital system in which data is recorded across multiple places at the same time. Unlike traditional databases, DLTs have no central administrator or centralised data storage. They are transparent because the data is visible and, because they are automatically replicated and impossible to be tampered with, they are secure.

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Name: HyperSpace
 
Started: 2020
 
Founders: Alexander Heller, Rama Allen and Desi Gonzalez
 
Based: Dubai, UAE
 
Sector: Entertainment 
 
Number of staff: 210 
 
Investment raised: $75 million from investors including Galaxy Interactive, Riyadh Season, Sega Ventures and Apis Venture Partners
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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Company profile

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