KUWAIT CITY, April 2: Global Investment House (“Global” or the “Company”), a regional asset management and investment banking firm headquartered in Kuwait, with offices in major capital markets in the MENA region, today announced its financial results for the year ended Dec 31, 2016 reporting a net profit of KD 3.5 million ($11.3 million), total revenues of KD 14.7 million ($47.5 million), and fee and commission income of KD 11.5 million ($37.7 million) representing 78 percent of total revenues.
During 2016, the Asset Management business remained resilient with KD 1.0 billion ($3.2 billion) of assets under management. Our asset management teams remained focused on launching products and services best suited to our clients’ investment needs offering recurring income/yield accompanied with low volatility.
During the year, the Company raised approximately $105 million of new money in various strategies, including incomeyielding UK real estate and GCC & MENA listed equities. Several funds managed by the Company outperformed their respective benchmarks and peers. During 2016, the Investment Banking team generated revenues from 9 different mandates, ranging from advisory to M&A mandates, 4 of which were successfully closed during the year.
The team is currently working on several mandates and has an interesting pipeline of M&A and advisory mandates. On the brokerage front, Global made focused efforts to grow the institutional brokerage business leading to gains in Kuwait market share. However, due to decline in the market turnover in most key markets where Global operates, the brokerage revenues declined. During the year, we completed exits from Egypt brokerage operations and also decided to close Oman brokerage operations. The Company’s continuous efforts to control and rationalize its cost base resulted in reducing our operating cost base from KD 13.3mn ($43.6 million) in 2015 to KD 12.3 million ($40.0 million) in 2016.
In backdrop of continued profitability in the past four years, accompanied with a conservative asset allocation, high levels of cash and other liquid assets on the balance sheet, the board of directors has proposed a KD 22.9 million ($75.0 million) cash distribution to shareholders by capital reduction. The BoD’s proposal is subject to the regulatory and shareholders’ approval in the extra-ordinary general assembly of the shareholders. The capital reduction will be implemented by cancelling 229,065,000 shares.
The shareholders will be paid KD 0.100 cash for each share cancelled. The share cancellation will be applied pro-rata to the holdings of all shareholders excluding the Treasury Shares. On conclusion of the capital reduction, the authorized, issued and fully paid share capital of the Parent Company will be reduced from KD 79.923 million to KD 57.017 million and the number of issued and fully paid up shares will be reduced from 799,233,980 to 570,168,980. Following the distributions, the Company will have adequate capital and liquidity to fund its core fee business. The capital reduction would also improve the return on equity and book value per share.
On a proforma basis, the book value per share would increase from KD 0.115 (115 Kuwaiti fils) as at Dec 31, 2016 to KD 0.121 (121 Kuwaiti fils). Hareb Al-Darmaki, Chairman of the Board of Directors, said: “Global has remained on a consistent path of profitability for the fourth consecutive year, driven by effective implementation of its fee business driven strategy. We are delighted by these financial results, which were generated during difficult times for the capital markets and the investment services industry in the region.
Good operating performance, an excellent capital structure and highly liquid asset composition have facilitated the Board’s decision to recommend a cash distribution of KD 22.9 million to shareholders through capital reduction.” The Board would like to thank Maha Al-Ghunaim, Vice-Chairman and Group CEO and Bader Al-Sumait, CEO, who are retiring from their executive roles, for their contribution in founding the Company and effectively steering it in both good and challenging times. Al-Ghunaim will continue on the Board and Al-Sumait will serve as a board member after having recently joined the Board. Al-Darmaki, also welcomed Abdul wahab Al-Halabi, director who will assume the role of Chief Executive Officer.
Al-Halabi has over two decades of experience in financial services, advisory and real estate industries and has held various leadership roles in the region and London. Abdul wahab Al-Halabi, Chief Executive Officer, commented: “Despite the extremely volatile and challenging times, we successfully widened our client base, enhanced our product offering, signed new mandates, raised new money and maintained our profitability momentum. Furthermore, we reduced our operating costs by 8 percent in spite of expanded business activities. Being a MENA player, Global cannot be isolated from the regional headwinds; however, we remain committed to continue creating value to all our stakeholders, through our resilient and robust fee-based business model, innovative strategies and execution capabilities.”