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Global Investment House A success story

May 2008. Global Investment House A success story. Company overview. A leading GCC and MENA player. Overview.

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Global Investment House A success story

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  1. May 2008 Global Investment HouseA success story

  2. Company overview

  3. A leading GCC and MENA player Overview • Global Investment House is a leading asset management and investment banking company providing a comprehensive range of financial services with operations across the GCC, the wider MENA region and in other emerging markets, with around 457 employees globally • Listed on the Kuwait Stock Exchange (since May 2003), the Bahrain Stock Exchange (since October 2004) and the Dubai Financial Market (since September 2005) and on LSE (expected 21 May 2008) • Rated BBB (long term) and F3 (short term) by Fitch (4 June 2007) • Market capitalisation of approximately KD1.0bn (US$3.8bn) as of 18 May 20081, expected to go up to KD 1.3 bn (US$ 5 bn) post GDR 5 business pillars: creating an integrated client driven business model Asset Management Principal Investments & Treasury Investment Banking Real Estate Brokerage Net operating income KD 23.2m2 Net operating income KD 113.8m2 Net operating income KD 13.8m2 Net operating income KD 3.5m2 Operations to commence in 2008 • Client base an advantage to other pillars • Non-discretionary portfolio will support initial development of Brokerage • Supports AM by building track record and making co-investments • Supports IB by making investments in start-ups • Creates investment opportunities for Asset Management clients • Generates principal investment opportunities • Builds expertise that supports IB and AM businesses • Helped by strong research capacity and AM client base • Completes full product range Supported by brand building and innovative research product (1) Pre-GDR (2) As at 31 December 2007; segment figures are inclusive of inter segmental revenues

  4. History of strong growth Global has grown significantly since its inception 1998/99 2008 • 1 office in Kuwait • Presence in 16 countries across MENA region • 47 employees • 457 employees1 • Kuwait focused Asset Management and IB business • Five pillars with wide range of products • 4 funds with US$653m AuM • 30 funds with US$9.3bn AuM4 • Approximately US$58m of shareholders equity • Approximately US$1.1bn in shareholders equity4 Share price and market capitalisation2 Geographic presence3 Share price (KD) Market cap (KD million) May-08 (1) As at 31 December 2007 (2) Kuwait Stock Exchange (3) Also has a presence in Pakistan, India and Hong Kong (4) As at 31 March 2008 Source: FactSet, Bloomberg

  5. Strategy “To be the preferred Investment Bank in the region” Geographic expansion • Establish a significant local presence in each market in the GCC and wider MENA region where they operate • Invest in organic growth: • Grow Saudi operations to similar scale as existing Kuwaiti operations • Invest in expanding existing operations in the region, particularly Egypt and Qatar, in the coming years • Strategic investments in MENA and selected emerging market countries to expand presence Product and service expansion • Increase proportion of assets in its private equity and other alternative asset funds which generate higher fees • Build on AM reputation and client base to introduce new products to new markets • Increase fee generating activities and achieve a better balance of revenue contribution from the five pillars including Investment Banking and Brokerage

  6. Capital increase Successfully concluded a USD 1.150 bn GDR issuance with expected LSE listing on 21 May 2008 Geographical split of all demand Geographical split of institutional demand Investor type • Use of global offer proceeds • Up to 25% for organic growth in the GCC and MENA regions • Up to 25% as co-investments in new AuM funds in the short to medium term • Up to 50% for acquisitions to enhance distribution channels, including Asset Management businesses or a commercial bank

  7. Economic environment

  8. Kuwait overview Country Rating • Aa2 (Moody’s), AA- (S&P), AA- (Fitch) • The State of Kuwait is organized as a parliamentary constitutional monarchy • US$ 102 billion (2006), 21.6% growth over previous year • 3.1 million (2006 estimate) – 1.2 million non-national • US$ 32,015 in 2006 • Amongst the highest in the world • 5th largest oil reserves in the world • 102 billion barrels proven oil reserves (8.3% of the world’s total) • Tied to a basket of major currencies Federal Structure Nominal GDP Population Per Capita Income Proven Oil Reserves Pegged Exchange Rate

  9. Kuwait – key economic statistics (Y/E 2006) Real GDP Growth (%) and Nominal GDP Value (USD bn) Oil Production Composition of GDP (%) Current Account and Inflation Source: Central Bank of Kuwait & Global Research

  10. Bahrain Kuwait Oman Qatar Saudi Arabia UAE Gulf Cooperation Council (“GCC”) overview • Created in 1981, GCC is a regional organisation comprised of 6 nations with shared objectives for economic and social development. • The GCC holds 40% of world’s proven oil and 23% of natural gas reserves. • The GDP of GCC states is estimated to be about USD 735 billion; comparable to Mexico (USD 743 billion), Australia (USD 745 billion) & Netherlands (USD 665 Billion). • Due to high oil prices, the Gulf’s current account has moved from a deficit in the 1990s to a strong surplus in ’02-06. • Current account surplus of the GCC states was about USD 200 billion in 2006. • Total export earnings of the six GCC states were more than USD 1.5 trillion between 2002-06. • Total foreign assets held by GCC countries is about USD 1.6 trillion; China’s FX reserves is USD 1.1 trillion • Average per capita income of GCC states is fairly high at USD 20,500 (Portugal 18,000 / Korea 18,000) Source: Goldman Sachs, Institute of International Finance, IMF

  11. Strong macroeconomic fundamentals Strong GDP growth in GCC GCC among the fastest growing economies in the world CAGR: 6% Source: Global insight Source: IMF Record levels of liquidity on the back of high government surpluses Low levels of correlation with developed and other emerging markets Correlation with international equity markets 2001 to 2007 (%) Source: IMF Source: Global and Reuters

  12. Stock market performance Source: ‘Global’ Research The reasons for the strong growth in the markets are still present: • Strong macro-economic growth • Strong corporate earnings • Strong liquidity • High business and consumer confidence. • High oil prices

  13. Investment highlights

  14. Investment highlights Comprehensive Asset Management and Investment Banking product offerings Extensive geographic reach Large and expanding client base Well positioned to benefit from high regional growth Strong historical performance

  15. On-line facility Telephone facility OTC transactions Comprehensive Asset Management and Investment Banking product offerings Asset Management Investment Banking Research Brokerage Pan MENA coverage Balanced & bond funds Start-ups IPOs Equity funds 100+ companies Equity placing Money market funds Indices M&A Islamic funds Derivatives transactions Funds of hedge funds Corporate Bonds and syndicated loans Margin trading Private equity funds Islamic finance Securities trading and settlement Real estate funds Corporate advisory & structuring Custody services Portfolio management Margin lending Innovation driving new product offerings in the region Research • Among first pan-MENA focused research • Over 70,000 subscribers • First to launch audited regional indices Funds • Introduced funds of hedge funds • Launched MENA country focused equity funds • Offers private equity funds Start-up promotion • Innovative approach in starting new businesses and attracting third party investors • Generates investment opportunities for clients and Global

  16. AM Bro Asset Management Brokerage PI Principal Investments ●  Existing direct and indirect operations Planned operations (medium term) IB RE Investment Banking Real Estate Extensive geographic reach Expansion strategy – Saudi Unique MENA based platform that is able to provide a full Investment Banking product suite across the region Year of entry Country Activities AM PI IB Bro RE 1998 Kuwait ● ● ● ● ● 2003 Bahrain ● • Build on existing client relationships in Saudi • Recruit up to 35 employees by year-end 2008 • Establish research hub - to enhance brand name • Launch • Investment Banking: aimed atmid-market with a focus on equity placements and Islamic structured products • Asset Management: existing products to Saudis, followed by Saudi funds • Brokerage: to tap increase in trading activity in Saudi 2004 UAE   ● ● 2005 Oman   ● Jordan ● ● ● ● ● Tunisia ● ● ● 2006 India  ●   Qatar    Hong Kong ● Pakistan  ● ● ● Sudan ● ● Yemen  2007 Egypt ●  ● ●  Iran ●  Saudi Arabia      2008 Turkey     

  17. Large and expanding customer base Number of clients Dedicated client relationship management • Invested in building dedicated client relationship teams responsible for sales and building client relationships • 23 client relationship managers in Kuwait alone • 14 team members for the MENA region • 2 sales professionals in Abu Dhabi, 2 in Bahrain, 9 in Dubai and 5 Jordan • The AM client base provides distribution platform for IB, supports the roll out of the brokerage service and produces referral business for the real estate business Growth Diversity (by AuM) Length of relationships As at 31 Jan 08 As at 31 Jan 08 Number of clients for

  18. Well positioned to benefit from high regional growth Regional themes Global platform supporting future expansion Growing wealth • Leading Asset Management franchise with truly pan-MENA reach • Large network of over 6,500 clients, to be grown through geographic and product expansion • Sizeable number and scope of funds with potential to allow increased fees per client Developing regional capital markets • Significant experience in the highly regulated Kuwaiti market, allowing Global to take expertise to new markets • Innovative Investment Banking products providing access to underserved mid-market segment • Wide geographic placement reach and services Unique investment opportunities • Significant principal investment expertise • Local relationships and experience provide access to deals not open to international players • Strong and developed track record Increased investment and trading activity • Increase assets under management supported by large number of well performing equity funds • Pan-MENA trading and placement capability, supporting the establishment of the brokerage business Liberalisation of regional markets • Local know-how and existing client relationships • Licences to operate in Saudi, Egypt and Qatar • Established relationships with regulators

  19. Global Ind1,2 Strong historical performance Performance Revenue growth Profitability 189% 64% 174% 38% 40% Financial ROE% 27% 31% 52% 17% n/a KDm CAGR: 71% Principal Investments Managed funds Annualised gross return (%) Selected fund types Top performing funds Average annual returns % Investment Conventional funds Global 10 large cap index fund 32.2% Islamic funds Global Al-Durra Islamic fund 34.6% Fund of hedge funds Zenith fund 17.8% Real estate funds GCC Real Estate Fund 6.0% (1) Average of all banks and financial institutions in ME with total assets > US$1bn (Source: Bankscope); (2) Growth in total operating income (IFRS)

  20. Business segments

  21. Research • Used to build brand name in new markets prior to launching new products and operations • Expertise in research gives an advantage to AM and IB • Supports AM by building track record and making co-investments • Supports investment banking by making investments in start-ups Principal Investments Integrated model • Helped by strong research capacity and AuM client base • Completes full product offering to clients Brokerage Investment Banking Client base • Client base an advantage other pillars • Non-discretionary portfolio will support initial development of Brokerage • Creates investment opportunities for Asset Management clients • Generates principal investment opportunities Asset Management Real Estate • Builds expertise that supports IB and AM businesses

  22. 56 394 39 Asset ManagementOverview Background and development Strategy • Launched in 1998, with four funds by the end of 1999 • 31 Dec 2007 AuM of KD2.3bn (US$8.6bn) • Mix of 30 conventional, Islamic and alternative funds • Principal investments experience and track record across the region to launch a range of private equity funds • Create specialised teams in certain regional offices • Continue to develop innovative new fund products to meet regional demand • Focus on higher margin alternative investments products • Use Research as a marketing tool Comprehensive product offering Products Managed funds Portfolios Others MENA or GCC Alternative investments Balanced Bond Equity Money market Funds of hedge funds Private Equity Real Estate Dis-cretionary Non-dis-cretionary Murabaha Equity Placement Islamic funds No of funds 2 1 8 3 2 6 5 3 N/A N/A N/A N/A AUM1,2 18 28 420 11 85 N/A N/A 192 137 Total: 1,051 Total: 967 Total: 329 • As at 31 Dec 2007 – excludes Egypt fund which was launched in February 2008 • KD millions

  23. Asset ManagementAttractive growth and asset composition AuM growth Managed funds composition Funds Clients By fees (for the year ended 31 Dec 2007) By assets (as at 31 December 2007) % AuMKDbn Equity Hedge Islamic Money market Private Equity Real Estate Other • Managed funds and portfolios house the majority of assets (86%) • ‘Other’ comprises Murabaha and companies floated by Global • Historically focused primarily on MENA equity stocks – the bedrock of managed funds • However, Private Equity playing an increasingly important role which is expected to continue

  24. Principal Investments and TreasuryOverview Background • Started in 1999 with KD9m (US$30.5m) to facilitate first stage of expansion outside of Kuwait; approximately KD659m (US$2.4bn) invested as of 31 December 2007 • Treasury operations to pursue short-term opportunistic investments and for general treasury management Principal Investment criteria: • Attractive fundamentals and potential to generate attractive returns in their own right • Additional strategic benefits that support one of: • our regional expansion: investments in associates outside of Kuwait providing new distribution channels and access to new markets • our product expansion: investments in related financial service companies that can strengthen some of Global’s five business pillars • Supports our Asset Management and Investment Banking business • Co-investments in private placements or new Global funds

  25. Principal Investments and TreasuryPortfolio analysis Principal investment portfolio size KD(millions) Average carrying value for the year Annual gross income, as at 31 December of relevant period Annualised gross return (rhs) Investment by sector1 Investment by location1 Investment by type / purpose1 (1) By value as at 31 December 2007

  26. Investment BankingOverview Background Strategy and outlook • Set up in 1999 initially in response to demand from Asset Management clients • Historical focus on equity placements into start-ups that Global sponsors • Competitive cost-to-income ratio: commission of c. 5% on equity raised, while maintaining a low cost base as many mandates are generated through referrals from current clients • This expertise and capacity has been and is being used to increase advisory and debt capital markets mandates, including Islamic finance segment • Build Saudi Arabia operations • Leverage-off existing relationships in Saudi Arabia • Obtained licence in 2007 • Focus on mid market segment and equity raisings • Offer more higher-value services • Leverage off Islamic finance experience to offer more Islamic products • Increase mandates relating to advisory and structuring mandates Product suite Equity capital markets & corporate advisory(KD 5.5m in revenues)(1) Debt capital markets (KD 1.1m in revenues)(1) 2007: 13 transactions, total value of KD147m 2007: 64 transactions, total value of KD435m Start-ups IPOs Equity placing Listing advisory M&A Bonds and syndicated loans Islamic finance Others2 (1) For the year ended 31 Dec 2007 (2) Including establishment of SPVs and margin lending

  27. Significant investment banking experience Selected transactions (1) Mandated deals to date

  28. Investment Banking growth initiatives Initiatives Actions High growth investment banking sector Build Saudi Arabia operations • Leverage-off existing relationships in Saudi Arabia • Obtained licence in 2007 • Focus on mid market segment and equity raisings GCC volumes (US$bn) Offer more higher value services • Leverage-off Islamic finance experience to offer more Islamic products • Move from equity placements to advisory and structuring mandates Source: Dealogic

  29. Real Estate investment Background and development • Set up in 2006 to focus on commercial and residential real estate • Established to make opportunistic investments to take advantage of attractive growth in the real estate sector in the region • Real Estate expertise also supports Global’s Asset Management and Investment Banking business • Track record for Real Estate funds • Expertise to win more real estate related Investment Banking business • Established a dedicated team based in Dubai – who are able to source and invest in high value opportunities for Global, their clients and certain managed funds • Sold majority of portfolio in 2007 to focus on new opportunities

  30. Property Dubai Health Care City II Arjan Project – Dubai Land Khayal Project1 Al Basateen Location Dubai Dubai Ras Al Khaimah Sharjah Type Commercial Residential Serviced Apartments Residential Residential, Commercial, Hotel Land Land area (sq m) 11,210 8,372 12,094 24,859 132,256 75,864 Potential built up area 30,878 sq m 40,195 sq m 58,047 sq m 74,605 sq m 370,319sq m 2 N/A Expected date of commencement Q2 2008 Q3 2008 Q2 2008 N/A Expected date of completion Q2-Q3 2010 Q3-Q4 2010 Q2-Q3 2011 N/A Purchase cost paid (KDm)3 7.3 3.1 4.7 3.0 Amount outstanding(KDm)4 13.0 7.2 27.7 0 Real Estate InvestmentOverview Background • Set up in 2006 to make opportunistic investments to take advantage of attractive growth in the real estate sector in the region • In house real estate expertise provides opportunities for our Asset Management and Investment Banking businesses Existing portfolio5 • Owns a 60% stake in Island “A” • Of a Total BuA of 617,198sq m • The 2007 balance sheet also includes assets held by subsidiaries that are not part of the Real Estate pillar • Amounts due over the development life of the project • Some additional small holdings in Kuwait

  31. BrokerageOverview Background Brokerage development plan • Started exposure to brokerage market in 2004 with stakes in a number of brokerage companies in the region • Set up own Brokerage division in Jan 2008, following investments in new electronic platform and new hires • Expects regional trading activity to increase significantly • Kuwait and Saudi operations by end of Q2 2008 • Transfer all non-discretionary portfolios to brokerage arm • Start offering brokerage services to other existing clients • Leverage Research capability to generate new business • Connect regional operations to create a pan-GCC platform Market leading research with 70,000 subscribers driving new brokerage offering Among first to launch coverage of KSE listed companies 26 analysts Among the first to launch country and sector specific coverage in the GCC and MENA region Coverage of over 100 companies representing around 50% of the GCC market capitalisation Research hubs in Kuwait, Jordan, Egypt and India Coverage of 16 economies in MENA and South Asia

  32. Market leading research capability driving new brokerage offering Research Among first to launch coverage of KSE listed companies Among the first to launch country and sector specific coverage in the GCC and MENA region Coverage of 16 economies in MENA and South Asia 26 analysts Research hubs in Kuwait, Jordan, Egypt and India Coverage of over 100 companies representing around 50% of the GCC market capitalisation With over 70,000 subscribers, Global’s research enhances its brand value and demonstrates its leading knowledge of the region

  33. Leading regional index publisher Global is a leading regional index publisher Pioneer in the region Covers a wide range of markets • First regional company to publish audited index data on the KSE • First to launch regional indices in the region • Among the first to launch Islamic index • Global General Index • Global Banking Index • Global Investment Index • Global Insurance Index • Global Real Estate Index • Global Industrial Index • Global Services Index • Global Food Index • Global Kuwait Only Index • Global Non-Kuwaiti Index • Global Large Cap. (Top 10) • Global Small Cap. (Low 10) • Global High Yield Index • Global Islamic Index Helps enhance its regional and international brand exposure and to generate interest in its funds

  34. Financial overview

  35. KDm CAGR: 38.8% CAGR: 50.9% Profit & loss statement Revenue Profit after tax CAGR: 22.0% CAGR: 54.3% Business mix (revenue) Cost / income ratio Q107: KD35m Q108: KD53m

  36. CAGR: 33.6% CAGR: 33.6% CAGR: 74.2% CAGR: 74.2% Balance sheet Assets Equity and Liabilities KDm KDm Return on capital1 Capital/leverage ratios Equity ROE% Tier 1 & 2 Leverage KDm CAGR: 33.4% CAGR: 63.7% (1) RoE for Q107 and Q108 based on annualised earnings

  37. Target business mix 2007 revenue mix Medium term revenue mix strategy • To increase fee income contribution • Asset Management and Investment Banking to increase share to constitute a significantly higher proportion of revenues and enhance fee income contribution • Brokerage to capitalise on established client base and to contribute to fee income • Private equity and quoted security investments to contribute a smaller proportion of revenue as track record is already established and holdings are realised • Co-investments expected to rise in line with growth in AuM • Investments in strategic associates will increase as we continue to acquire a number of significant stakes in strategic targets that may be integrated into the Global franchise Fee income contribution • Principal Investments constituted the majority of revenues in 2007 • large number of realisations and investments performed well • Asset Management and Investment Banking the next largest • Brokerage expected to contribute in 2008 (1) Other income is comprised of income from strategic associates

  38. Global stock & shareholders

  39. Investing in Global Stock Global stock is traded on Kuwait (KSE), Dubai (DFM) and Bahrain (BSE) * wef 21 May 2008 S&P /IFCG Extended Frontier 150, comprising of the largest and most liquid stocks, placed Global amongst the best 19 listed companies on Kuwait Stock Exchange

  40. Ownership Key Points Regulatory Public disclosure once ownership reaches 5% or over whether it is direct, indirect, or in different markets. Ceiling for total non-GCC investors ownership is 49% Restrictions as per articles of association Maximum ownership by a single investor is limited to 20% of the issued capital.

  41. Awards & recognition

  42. Awards & recognitions Global Investment House "Best Investment Bank in Kuwait” Euromoney magazine - 2007 Global Investment House Contribution to Islamic Fund the Middle EastGlobal Advisors (MEGA) - 2007

  43. Awards & recognitions Global Buyout Fund L.P. Fund of the Year Private Equity World Awards MENA, Terrapinn - 2007 Global 10 Large Cap Index Fund Best Performing Fund in Kuwait Lipper Reuters - 2006 Global Distressed Fund 4th Best in the World based on Sharpe Ratio Barclays – 2007 Global Distressed Fund 3rd Best in the World EurekaHedge - 2005 Global Umbrella Fund - Asia/Japan Best Hedge Fund Manager in Asia EurekaHedge - 2005

  44. Disclaimer Global Investment House has obtained the information in this presentation from sources it believes to be reliable. Although Global Investment House has taken all reasonable care to ensure that the information herein is accurate and correct, Global Investment House makes no representation or warranty, express or implied, as to the accuracy, correctness or completeness of such information. Furthermore, Global Investment House makes no representation or warranty, express or implied, that its future results will be consistent with results implied, directly or indirectly, by such information or with Global Investment House’s past results. Any information herein is as of the date of this presentation and may change without notice. Global Investment House undertakes no obligation to update the information in this presentation. In addition, information in this presentation may be condensed or incomplete, and this presentation may not contain all material information in respect of Global Investment House. This presentation also contains “forward-looking statements” that relate to, among other things, Global Investment House’s plans, objectives, goals, and strategies. Such forward-looking statements may be characterized by words such as “anticipates,” “estimates,” “expects,” “projects,” “believes,” “intends,” “plans,” “may,” “will” and “should” and similar expressions but are not the exclusive means of identifying such statements. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause Global Investment House’s results to be materially different from the operating, financial or other results expressed or implied by such statements. Although Global Investment House believes the basis for such forward-looking statements to be fair and reasonable, Global Investment House makes no representation or warranty, express or implied, as to the fairness or reasonableness of such forward-looking statements. Furthermore, Global Investment House makes no representation or warranty, express or implied, that the results anticipated by such forward-looking statements will be achieved. Such forward-looking statements represent, in each case, only one of many possible scenarios and should not be viewed as the most likely or standard scenario. Global Investment House undertakes no obligation to update the forward-looking statements in this presentation.

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