News

4 March 2018

Global to manage a new wind-down mandate, USD90mn portfolio of assets for a regional group

Global entered into an asset management agreement with a regional group to manage a portfolio worth USD90mn by its Special Situations Asset Management team.

Global is mandated to manage the diversified portfolio for wind-down while promoting value enhancement initiatives to attain the ultimate objective of maximizing realization proceeds over the course of the mandate.

 

Abdul Hamid Mihrez, CFA, Executive Vice President, Special Situations Asset Management said: “We are excited to engage our new mandate since we began offering this service in 2013. The mandate marks the team`s continued efforts to grow this specialized line of the asset management business and is a recognition to our achievements and track record that we have built over the past years.”

 

Changes in market fundamentals play a pivotal role in reshaping balance sheet structures for companies especially in prolonged conditions. Companies become inclined to revisit business models and extend efforts to revamp operations to suit market conditions, which in most cases led to down scaling.

 

On the other hand, debt to asset swap solutions are on the rise as financing companies continue to offer alternative settlement options to defaulting clients although such solutions only provide temporary relief considering regulatory requirements to unwind ‘acquired’ assets in the short term which emphasizes the need for a specialized team to manage and wind-down such non-strategic assets that are usually left without proper attention as focus is usually driven towards bread and butter of the core business operations.

 

Efforts to decouple non-core assets become increasingly challenging as such assets tend to possess inherent illiquidity that not only weigh down on overall company performance but lag and fail to play catch up in up trending markets.

 

“This segment of developing orderly exits for non-core assets created a niche market where we have been active in over the last four years and have built competencies and track record. As an independent asset manager, we apply a value driven divestment strategy through execution of a disposal program designed to facilitate optimal cash returns,” Mihrez added.

 

The Special Situations Asset Management team offers an unbiased and independent view on maximization of realization proceeds through unique and tailored solutions for asset owners with regional exposures in equity investments.

 

With this agreement, the total value of wind-down mandates the team has been awarded to manage since launching the service in 2013 stands around USD830 million for several clients. The successful execution of the portfolios’ strategies resulted in generating cash inflows north of USD370mn to represent an exit multiple in excess of 1.5x to clients’ target valuations.

 

The team is represented by specialized professionals with comprehensive experience and complimented with Global’s regional platform of services in investment banking, full cycle private equity transactions and brokerage.

 

He concluded, “Our success depends on our ability to remain focused on our clients’ main objective, optimal realization on a timely manner, by adhering to a total portfolio management approach and making more informed holding and selling decisions by setting aside principles of loss aversion thereby creating an improved risk-return tradeoff. We are currently expanding our offering to regional markets, especially in Saudi Arabia and United Arab Emirates”.

 

It is worth noting that Global is among the very few investment companies in the region with expertise and competencies in such mandates.

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