2017 was a continuation of four profitable and successful years
KUWAIT CITY, April 22: 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, held today its Annual General Meeting.
The shareholders approved all the agenda items including the Board of Director’s recommendation to pay 5% cash dividend for the financial year ended Dec 31, 2017 and the transfer 10% of net profits to the voluntary reserve account amounting to KD 270,851, among others. The meeting was chaired by Sulaiman Mohammed Al-Rubaie, Deputy Chief Executive Officer who affirmed the Company’s continued profitability for the fifth consecutive year despite challenging macro-economic environment and geo-political uncertainties through progress made by its businesses in implementing their growth-driven, client-focused and yet risk-conscious strategies. During 2017, the Company achieved a net profit of KD 2.5 million, albeit lower than 2016.
Total Income (revenues) stood at KD 14.1 million and fee-based businesses (asset management, investment banking and brokerage) contributed to KD 11.9 million of total revenues. Abdul Wahab Al-Halabi, Director and Chief Executive Officer said: “The Company has a healthy capital structure with no external debt and a capital base of KD 69.9 million. Other liabilities of KD 10.0 million mainly reflect trade and staff related payables and are covered almost 3 times by cash in hand.
The Company’s capital is conservatively deployed primarily in liquid assets, operating assets and co-investments in the Company managed products. During 2017, following the shareholders’ vote and regulatory approvals, we completed KD 22.9 million cash distribution to shareholders in lieu of capital reduction in par.
On conclusion of the distribution and capital reduction the authorized, issued and fully paid share capital of the Parent Company reduced from KD 79,923 thousand to KD 57,017 thousand, while maintaining adequate capital and liquidity to fund the core fee business”. Al-Halabi added, “Global today is an investment target, thanks to its positive performance, strong financial position, debt free structure, regional footprint and track record.”
In addition to the company’s strong financial position and its wide range of products with competitive performance, transparency and others, the human capital remains one of the most important factors. Despite all the challenges we have faced, we continue to serve our clients effectively, achieve high competitive performance, and introduce new products and services.
Al-Halabi affirmed that during the year, the company remained at the forefront in ensuring full compliance with the letter and spirit of the various applicable laws and regulations and kept itself abreast with new regulatory developments. Global was among the first 10 companies to submit “the Corporate Governance Report for 2017” gaining an acclaim from the CMA in its statement issued in August 2017.
Al-Halabi added that the Company’s continuous efforts to control and rationalize its cost base resulted in a marginal decline of KD 0.2 million in the operating cost base to KD 12.0 million, despite one-off impact of change in Kuwait Labor Law relating to indemnities for Kuwaiti employees. Full impact of the change in law, amounting to KD 0.6 million, was recorded in 2017 financial results.
Al-Rubaie provided a detailed presentation on 2017 performance, being an extension of four years of achievements and profits, despite of the extremely volatile and challenging economic environment due to the geopolitical tensions in the region, low domestic government surpluses, low oil prices in addition to internal challenges including changes in executive management and expected change in shareholders’ structure. At the beginning of 2017 and following the resignation of the Group’s CEO and Chief Executive Officer from their executive positions, the company’s management was restructured to sustain the growth pattern.
The year also marked the beginning of the negotiation process between the major shareholder (owning 70% of the capital) and several investors interested in acquiring the majority stake. Al-Rubaie affirmed that the company has maintained the quality of its revenues through a strategy focusing on core fee-based businesses which include Asset Management, Investment Banking and Brokerage.
The revenue generated by the main fee-based businesses represents 84 per cent of the total revenues, i.e. KD 11.9 million, while revenues from fees and commissions amounted to KD 10.3 million or 73 per cent of total revenue. The company maintained its leading position in terms of revenues from fees and commissions during the year compared to listed regional peers despite exceptional internal and external challenges. He stressed on the performance of the fee-based businesses and stated that the Asset Management business generated total fee revenues of KD 9.1 million and 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 over $70.9 million of new money in various strategies primarily income-yielding UK real estate and has distributed to clients more than $110.0 million from dividends and proceeds from exits. MENA Asset Management continued to report competitive performance for its managed funds and portfolios in the regional equity markets. Several funds managed by the Company outperformed their respective benchmarks and peers.
inception and is currently working on several transactions in the developed markets. In Private Equity, the team’s efforts add value to portfolio companies resulted in achieving major milestones in implementing the growth strategies for several companies.
The team successfully exited three portfolio companies and continued to provide its clients with liquidity in challenging geopolitical and economic environment. Special Situations Asset Management, a tailored “wind-down” asset management service offered to clients seeking value enhancement and optimal realization of difficult assets portfolio covering multi asset classes with focus on the MENA region, has successfully executed the portfolios’ strategies and resulted in generating cash infl ows with an exit multiple around 1.6x to clients’ target valuations.
During 2017, the Investment Banking team generated KD 0.4 million of fee-revenues from four different mandates in Kuwait and Saudi Arabia, including the sale of a controlling stake in one of the largest social infrastructure companies in Kuwait.
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 Jordan market share. Due to handsome increase in the market turnover in Kuwait and market share gains in Jordan, the brokerage fee revenues recorded a 25.6% year-on-year growth to reach KD 0.8 million.
Future Outlook Al-Rubaie ended by saying: “We look forward to focusing our efforts on developing the main fee-based businesses, continue to serve our clients more effectively, and offer diverse financial products and solutions that help grow our clients’ wealth in a versatile and challenging economic environment. The company is in the final stages of launching a private equity fund to invest in the promising logistics sector, and we are looking at a number of investment opportunities in the real estate sector in the US and Europe that provide our clients with a steady low risk returns. As for investment banking, we are now in the final stages of completing three regional M&A transactions.”