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Middle East Debt Capital Market Conference

Middle East Debt Capital Market Conference . April 2008. Agenda. Overview. Strategy . Financial Overview & Outlook. Liability Management. Annexures. KIPCO: Overview. Presence across 21 countries. Key Verticals: Financial Services & Media. Premier holding company focused on MENA .

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Middle East Debt Capital Market Conference

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  1. Middle East Debt Capital Market Conference April 2008

  2. Agenda • Overview • Strategy • Financial Overview & Outlook • Liability Management • Annexures

  3. KIPCO: Overview Presence across 21 countries Key Verticals:Financial Services & Media Premier holding company focused on MENA Excellent management track record & strong shareholder support Assets under management :~ US$24 billion 16 years of continued profitability Among the most actively traded stock on KSE S&P Rating:BBB+ CI Rating: A- Employees7000+

  4. KIPCO: Ownership & Liquidity Shareholding Pattern – March 2008 KIPCO Share – Price & Volume (2002-2008YTD) Apr-08 Total Outstanding Shares as on March 23, 2008: 1,049.6 million Source: KSE website • KIPCO is among the most actively traded stocks on KSE • KIPCO constitutes 1.9% of market cap* of KSE • Average daily trading volume in 2007 was 5.9 million shares • Since Jan 2002, KIPCO stock price has appreciated at a CAGR of 57% • KIPCO’s major shareholder, Al Futtooh Investment Company (AFI) is owned by prominent members of the Al-Sabah family *As on April 15, 2008; since March 26, 2007 KIPCO share price is trading ex-Dividend

  5. KIPCO: Key Milestones 1988 Acquisition of United Gulf Bank (UGB) 1994 Acquisition of stake in United Real Estate Company (UREC) 1994 Acquisition of stake in Burgan Bank 1995 Formation of Gulf DTH (Showtime) Acquisition of stake in Gulf Insurance Company (GIC) 1996 Establishment of United Industries Company (UIC) 1996 Acquisition of Saudia Dairy and Foodstuff Company (SADAFCO) by UIC 1996 1998 Formation of Kipco Asset Management Company (KAMCO) 1999 Acquisition of stake in NMTC (Wataniya Telecom) Establishment of United Networks Company (UNC) 2003 2005 Initial Public Offering of SADAFCO Established US$2 billion EMTN programme 2006 Sale of stake in Wataniya Telecom 2007 Sale of stake in United Aviation, Jet Aviation & United Fisheries of Kuwait (UFK) 2007 Credit rating upgraded by two notches to BBB+ by S&P - Highest rated Holding Company in the MENA Region 2007

  6. Media Management Services 3 Companies 5 companies Real Estate Industrial Medical & Others 5 Companies 12 Companies 10 companies KIPCO Group Companies: Asset Composition The KIPCO Group comprises over 50 companies across diversified sectors Financial Services 21 Companies US$ 881 Million US$ 1,138 Million Total Assets US$ 18,092 Million US$ 91 Million US$ 283 Million Total Revenue US$ 2,053 Million US$ 131 Million Total Assets US$ 158 Million US$ 1.8 Million US$ 46 Million Total Revenue US$ 164 Million US$ 1.2 Million On a 100% basis, Total Assets of the KIPCO Group Companies is over US$20 billion. Core Banking and Insurance assets account for 80% (US$16.4 billion) of the total assets of Group Companies. In addition assets of the KIPCO Parent* are US$3.6 billion. * Not included in the sectoral composition above

  7. KIPCO: Core Operating Companies Financial Services Media Kuwait 11 countries 6 countries 22countries Geographic Presence in MENA Shareholding 63.3% 50.6% 65.0% 84.5% Notes: 1. Stakes given are as on Dec 31, 2007 2. Overall group stake in Showtime is 78% 3. Overall group stake in United Gulf Bank is 87%

  8. Agenda • Overview • Strategy • Financial Overview & Outlook • Liability Management • In Summary • Annexures

  9. KIPCO Strategy: Corner Stones Regional Outlook Investing in engines of growth Target ROE: 20% MENA Building Businesses Diversified revenue streams Balanced Portfolio Being first In the region Thought leadership Team approach Strong managerial expertise

  10. KIPCO: Investment Philosophy Invest in Our Success Invest in ‘What We Know’ Invest with Financial Discipline Invest primarily in MENA Region with selective global diversification Invest in green field ventures to introduce new products & services in the region Invest through M&A transactions to regionalise, build scale & attain market leadership

  11. KIPCO: Looking Ahead KIPCO Strategy: Looking Ahead Focus on Financial Services Selective Regional and Global Diversification Existing Businesses New Businesses Regional Global • Increase ownership • Strengthen capital base • Deeper & faster regionalisation • Consolidation • Invest or partner in regional products, Islamic & conventional products for the region • JVs/meaningful stakes in global companies • Listed Equity Portfolio • Rated Fixed Income • Private Equity • Seed Capital Investment • Listed Equity Portfolio • Private Equity/ Hedge Fund Portfolios

  12. Agenda • Overview • Strategy • Financial Overview & Outlook • Liability Management • In Summary • Annexures

  13. KIPCO (Consolidated): Key Financials Total Revenues Net Income* US$ million US$ million CAGR: 134% CAGR: 180% Consolidated Equity* Consolidated Assets US$ million US$ million CAGR: 77% CAGR: 62% * Attributable to equity holders of the Parent

  14. KIPCO & Core Companies: 2007 Financials Net Income – KIPCO and Core Companies 389% 163% 40% 991% US$ million Net Income – KIPCO and Core Companies (Excluding Non-Recurring Gains**) -3% 41% 14% 51% US$ million ** Primarily on account of sale of NMTC (Wataniya Telecom)

  15. KIPCO Outlook for 2008: Overview • MENA region fundamentals getting stronger in 2008 • KIPCO continues to regionalise • Organic growth through expansion in commercial banking, investment banking, asset management and insurance sectors • Consolidation opportunity in the media sector • Expanding financial services adjacencies • Long term savings and pension plan • Re takaful • Making a Difference Project • Education: K-12 Projects in India, GCC and broader MENA Region • Housing: Residential Housing in Algeria, Saudi Arabia, Egypt and Syria A focused strategy aimed at organic growth and continued margin expansion would result in an improved portfolio. This coupled with greater operational flexibility and continued discipline in capital allocation better positions KIPCO to take advantage of the growth opportunities in the region.

  16. Core Companies: Projections Net Income - GIC Net Income - UGB US$ million US$ million 58% 26% Net Income – Burgan Bank EBITDA - Showtime US$ million US$ million 671% 64%

  17. KIPCO (Parent): Projections Net Income US$ million 59% On a normalised basis, KIPCO net income is projected to increase at a growth rate of 59% over 2007-08 * On a normalised basis

  18. Agenda • Overview • Strategy • Financial Overview & Outlook • Liability Management • In Summary • Annexures

  19. KIPCO (Parent): Financing Policies & Targets Financial Policies • Optimise sources of funds • Diversification of debt instruments from domestic to global markets • Extend maturity profile • Maintain adequate committed and uncommitted Lines of Credit to cover short term maturing debt • Proactive management of cost of funds to reduce spread vis-à-vis benchmark rates Financial Targets Well defined financial targets at the Parent Level • Target Debt/Equity: not to exceed 2.5x • Target Net debt/investments: 20-30%

  20. KIPCO (Parent): Liability Management Highlights 1990 • Commercial bank term borrowing from Kuwaiti banks secured by collateral • Established money market lines from Kuwaiti and regional banks 1994 • First bond issue of KD12 million (US$41 million) in Kuwait 2000 • Term borrowing from regional banks • New borrowings only on unsecured basis 2001 • First issuer of KIBOR based floating rate bonds 2004 • US$100 million debut international syndicated loan completed • No outstanding borrowings on secured basis 2005 • US$175 million international syndicated loan completed 2006 • Assigned investment grade rating by Standard & Poor’s • Set up US$2 billion EMTN programme • Drawdown of US$635 million in two tranches under the EMTN programme 2007 • Net debt/investment portfolio ratio < 1% • Based on target net debt/ investment portfolio value, additional borrowing capacity of > US$1 billion

  21. KIPCO (Parent): Debt Profile Maturity Profile: Dec 2005* Maturity Profile: Dec 2007* Total Gross Debt: US$ 963 million Total Gross Debt: US$816 million Debt Type: Dec 2005* Debt Type: Dec 2007* Total Gross Debt: US$ 963 million Total Gross Debt: US$816 million * Assuming, the exercise of extension option on KD Bonds

  22. KIPCO (Parent): Net Placer of Funds Gross Debt (A) Cash and Liquid Assets (B) US$ million US$ million Liquidity Position (C= A-B) US$ million KIPCO is now a Net Placer of Funds

  23. KIPCO (Parent): Key Liquidity Ratios

  24. Agenda • Overview • Strategy • Financial Overview & Outlook • Liability Management • In Summary • Annexures

  25. Key Strengths: Business profile • Strong GDP growth registered by GCC economies (Kuwait:18.7% in 2006) • All GCC markets in positive territory on YTD basis (Kuwait market up 17.0%) • Strong oil prices, significant industrial & infrastructural investments drive economic growth Strong market conditions Geographical diversification • Presence in 21 countries • As at December 31, 2007; 36% of assets are from outside Kuwait • Widespread presence across financial services, media, industrial and real estate sector • Over 50 companies under management • Investment strategy continues to promote diversification across geography, industry and asset class Diversification by industry and asset class Excellent track record • 16 years of continued profitability • Effected successful investments (greenfield/ acquisitions) and profitable exits • Average stay with KIPCO of the executive management is 9 years • Exec. Vice Chairman, Group COO & Group CFO have been with the Group for over 18 years • Recent inclusions have rich experience in varied sectors Experienced management team

  26. Key Strengths: Financial profile • Target net debt/investment portfolio: 25%-30% • Dividends/interest + expenses coverage >2 times • Dividends/interest coverage >3 times Conservative financial policies Very low leverage • As at December 31, 2007, net debt/investments was 0.5% vis-à-vis the target 25-30% • Cash/debt due in 12 months of 3.1x • Large liquid asset base (62% of investment portfolio in listed/ liquid assets) • Liquidity monitored on a daily basis Very good liquidity Funding flexibility • Strong share price • Backed by strong and supportive shareholders with strong regional standing • Good access to domestic and international capital markets • Well developed lender base in Kuwait, region and the world • Balanced debt maturity profile

  27. Key Strengths: High credit worthiness of Underlying Assets • Key Rating Considerations • Strong Operational Performance • Comprehensive Risk Management • Adequate Capitalisation • Improved Asset Quality Moody’s FSR Rating: C- S&P: BBB+/Positive • Key Rating Considerations • Strong Operational Performance • Strong Competitive Position • Good Capitalisation • Improved Net Combined Ratio S&P: BBB+/Positive • Key Rating Considerations • Strong Profitability • Adequate Capitalisation • Growing Franchise • Improved Funding Profile Moody’s: Baa3

  28. Why KIPCO? • Thought leadership in the MENA Region – holds many firsts to its credit • First 100% private owned company in MENA to hold highest credit rating (BBB+/Stable/A2) from S&P • Strong credit profile – diversified lender base and balanced maturity • High quality of underlying assets – financial services operating companies have investment grade rating • Strong track-record of execution by the operating companies • Clear strategy and quality of management team

  29. Thank You

  30. Agenda • Overview • Strategy • Financial Overview & Outlook • Liability Management • In Summary • Annexure 1: Management Team

  31. Executive Management Faisal Hamad Al Ayyar Executive Vice Chairman Pinak Pani Maitra Group CFO Mr. Al Ayyar was the Managing Director of the KIPCO Group for the last 17 years. He is one of the most well-known and successful entrepreneurs in the Gulf region. His focus on shareholder value has enabled KIPCO to become one of the leading groups in the MENA area. He has been strongly involved in the transformation of group companies such as United Gulf Bank (UGB), Gulf Insurance Company (GIC), Burgan Bank, SADAFCO and Showtime. Mr. Al Ayyar is a former fighter pilot of the Kuwait Air Force. Mr. Maitra has worked for the KIPCO Group for more than 18 years. He is a key member of the Group’s risk management and strategy development team. He is also responsible for performance analysis and budget evaluation of KIPCO and its companies. He is a non executive Board Director with a number of KIPCO’s operating subsidiary companies, including Showtime, Hunter Capital and Pulsar Knowledge Centre, Delhi. Prior to joining KIPCO, Mr. Maitra worked for the accountancy firms Arthur Andersen and Arthur Young. Ahmad Essa Al Ajeel Vice President, Marketing/R&D/PR Samer KhanachetChief Operating Officer Mr. Khanachet became Chief Operating Officer of KIPCO in 2008. For the previous 17 years, he was President of United Gulf Management, KIPCO’s subsidiary in the United States, where he identified strategic resources to support KIPCO’s activities in financial services, media and other sectors across the MENA region. He holds BSc degrees from the Massachusetts Institute of Technology (MIT) and an MBA from Harvard University. He sits on boards and committees at the American University of Kuwait, MIT, Harvard and the Forsyth Institute. Mr. Al Ajeel has worked for the KIPCO Group since 1994. His current responsibilities include financial institution relationship development and coordinating Group marketing activities. Prior to joining KIPCO, he worked for the Industrial Bank of Japan and the Kuwait Foreign Trading Contracting & Investment Company. Mr. Al Ajeel is a non-executive Board Director of United Networks, Kuwait. Declan Sawey Group Treasurer Lakhdar Moussi Senior Vice President, Financial Services Mr. Sawey is a professional with over 16 years experience in treasury and investment management. Prior to joining KIPCO in 2007, Mr. Sawey was Head of Asset & Liability Management for HBOS Corporate. Mr Sawey also has extensive Middle East experience, having worked for Gulf Bank and the Kuwait Investment Authority. He is a Fellow of the Institute of Chartered Accountants in England and Wales, a Chartered Financial Analyst (CFA) Charter holder and a Member of the Association of Corporate Treasurers (MCT). Mr. Moussi joined KIPCO Group in December 2005 to assist and advise on the Group’s expansion plans in the insurance, manufacturing and real estate sectors. He brings over 36 years experience in insurance, project finance, banking, investment, manufacturing, consulting and contracting. He has worked in Algeria, France, Bahrain and Canada. Over the last 16 years, he has been extensively involved in the region’s insurance industry through his association with ARIG, Bahrain.

  32. Executive Management (Contd.) Antony Miles Strover Advisor Corporate Finance Robert Drolet Senior Vice President, Technology & Media Mr. Antony Miles Strover has been associated with the KIPCO Group since 1996. Mr. Strover has been involved in acquisitions, structuring and financing of various transactions of the KIPCO managed companies. He also advises the KIPCO management on investment structure, governance and control policy, and provides taxation-related advice to KIPCO companies. Mr. Strover is registered as an authorised auditor by the Ministry of Commerce of the State of Kuwait and is also a Fellow of the Institute of Chartered Accountants in England and Wales. Prior to joining KIPCO, Mr. Strover was a Partner in Peat Marwick Mitchell & Co. Mr. Drolet is responsible for the supervision, development and optimisation of KIPCO's communications and media portfolio. Prior to joining KIPCO in 2006, he led and advised on successful turnarounds, major merger and acquisition transactions and strategic alliances. Mr. Drolet has 14 years experience in the telecom and media industry – he was CEO of Continental Europe, CEO of US Communications Solutions and Global Chief Commercial Officer for Cable & Wireless, following senior positions in the UK cable industry and at Bell Canada International. He is a member of the Québec Bar and a Solicitor (England & Wales). Mohsen Ali Hussain Group Chief Internal Auditor Mazen Hawa Group Vice President, Finance & Operations Mr. Hussain joined UGB in 2001. He was appointed as KIPCO Group Chief Internal Auditor in May 2006. He has over 15 years of experience in public accounting and internal auditing and was previously employed by KPMG, Arab Insurance Group (ARIG), National Bank of Bahrain and Ahli United Bank. He is a Certified Public Accountant (CPA), a Certified Information System Auditor (CISA), a Certified Internal Auditor (CIA) and hold a BSc in Accounting. Mr. Hawa joined KIPCO in 2001. His responsibilities include Group financial control and serving as advisor to a number of KIPCO’s operating subsidiaries. He is Vice Chairman of the United Pharmaceutical Company, Kuwait and a non-executive Board Director of the Fajr Al Gulf Insurance Company, Lebanon. He is a certified member of the American Institute of Certified Public Accountants and the Institute of Management Accountants. Prior to joining KIPCO, Mr. Hawa worked for the assurance and business advisory group of Arthur Andersen. Bibhau Tamang Group Vice President, Financial Control Robert Hipkins Group Communication Director Mr. Tamang has been with KIPCO since 2000. He brings with him over 16 years of experience in strategic planning, debt capital markets, mergers and acquisitions, initial public offerings and greenfield projects. He has been instrumental in establishing Pulsar Knowledge Centre and is also on the Board. He has done his MBA from Brigham Young University, USA. Prior to joining KIPCO, Mr. Tamang worked at Novell Inc. Mr. Hipkins has responsibility for KIPCO’s corporate communications. He joined KIPCO in February 2007 and was previously a senior consultant with Hill & Knowlton, one of the world’s leading public relations companies. Mr. Hipkins has over 20 years experience in public relations and marketing in the UK, the United States, Europe and the Middle East. He is a graduate of Edinburgh University, Scotland.

  33. Agenda • Overview • Strategy • Financial Overview & Outlook • Liability Management • In Summary • Annexure 2 : Major Investments

  34. United Gulf Bank • Established as an offshore commercial bank in 1980, acquired by KIPCO in 1988 and transformed into a leading investment bank • Licensed as a universal wholesale bank • Operations include asset management, corporate finance, equity, real estate, treasury and commercial banking • Diversified asset base with assets under management of US$7.3 billion • Rated by Moody’s (Baa3/Stable) • Dual Listing on Kuwait Stock Exchange & Bahrain Stock exchange Net Income Share Price Movement US$ US$ million CAGR: 84% 2.18 Source: Bloomberg, Bahrain Stock Exchange Source: Company

  35. Health Insurance Casualty Insurance Aviation Insurance Marine Insurance Life Insurance Property Insurance Gulf Insurance Company • Incorporated in 1962; acquired by KIPCO in 1996 • Market leader in Kuwait in life, property and casualty insurance segments • Comprehensive offerings include life, health, motor, property, casualty, marine and aviation insurance • Network of 10 local branches and operations in six countries: Kuwait, Bahrain, Saudi Arabia, Lebanon, Egypt and Syria • Rated by Standard & Poor’s (BBB+/Positive) • Listed on Kuwait Stock Exchange Net Income Share Price Movement US$ US$ million CAGR: 92% 2.98 Source: Bloomberg , Kuwait Stock Exchange Source: Company

  36. Technology Leader Beebank Services M-Commerce Solutions Corporate Governance Burgan Bank • Incorporated in 1975 and privatised in 1995 • 3rd fastest growing bank in terms of profitability • Fostering transparency and governance through international best practices • Technology-driven, innovative provider of financial services • Network of 20 branches, 42 ATMs, 6 K-Net ATMs and 24 Kiosks • Rated by Standard & Poor’s (BBB+/Positive) and by Moody’s (A1/Stable) • Listed on the Kuwait Stock Exchange Net Income Share Price Movement US$ US$ million CAGR: 38% 3.99 Source: Bloomberg, Kuwait Stock Exchange Source: Company

  37. Gulf DTH (Showtime) • Incorporated in 1995 • Leading DTH Pay TV operator • Joint venture between KIPCO and Viacom Inc. • Widest range of program offerings: Over 50 channels • Operating licenses for 22 territories in the MENA region • Highest revenue among all TV platforms – Pay or Free to Air • Exclusive rights of FAPC for three seasons starting August 2007 • Achieved positive EBITDA in 2007 Highest Revenue 22 Territories in MENA Region Offering Over 50 Channels

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