Global reports KWD14.2 million revenues, KWD4.6 million net profit in 2018
2018 marked the 20th anniversary for the company and is considered a major turning point in its future with a strategic shareholder acquiring a majority stake in its share capital. Following negotiations and discussions with potential buyers, a purchase agreement was signed between NCH Ventures, the majority shareholder representing interests of more than 50 financial institutions, and KAMCO Investment Company in May 2018. In September 2018, KAMCO completed the acquisition of the majority stake thus becoming the largest shareholder owning around 70% of the company’s capital with the aim to merge both entities, where KAMCO will be the merging company and Global the merged company, to create one of the largest, strongest, and a more efficient player in the regional investment services sector namely asset management, investment banking and brokerage.
Since then, teams from both companies have been working closely to create value for all stakeholders with focus on shareholders and clients. In addition, a new board of directors was elected in December 2018 to reflect changes in shareholders’ structure and a joint request was submitted to Kuwait’s Capital Markets Authority and Central Bank of Kuwait with the intention to merge. Independent advisors were appointed to submit their reports as per the executive regulations and amendments of Law No. 7 of 2010 on the establishment of the Capital Markets Authority and the regulation of securities activity and the Kuwaiti Companies Law No. 1 of 2016.
The board of directors, in its meeting held on Thursday 21st of February 2019, discussed and approved the advice of the independent investment advisor, including the asset valuation report, and recommended to the approval of the Extraordinary General Assembly the merge with KAMCO according to the swap ratio recommended by the investment advisor, 0.75522821 KAMCO share against each Global share, after obtaining regulatory approvals.
Regarding operational performance, the Asset Management business generated total revenues of KWD9.2 million (USD30.5 million) and total assets under management stood at KWD863 million (USD2.85 billion). Asset management teams remained focused on launching products and services best suited to clients’ investment needs offering recurring income/yield accompanied with low volatility.
MENA Asset Management continued to report competitive performance for its managed funds and portfolios in the regional equity markets resulting in recognitions from industry leaders. Several funds managed by the Company outperformed their respective benchmarks and peers.
The Real Estate Asset Management team has successfully acquired a property in Germany and completed two successful exits in the United Kingdom. The first was an exit of an entire asset generating an IRR of 10.3% and the second was a partial exit generating IRR of 11%. The team has successfully distributed an average annualized income exceeding 9% on the managed assets since inception.
In Private Equity, the team’s efforts to add value to portfolio companies resulted in achieving major milestones in implementing the growth strategies for several companies. The team successfully exited several portfolio companies including Emirate Retakaful to a subsidiary of AXA Group, Al Jazeera Steel Products Company in Oman and Bindar Trading and Investment Company to a subsidiary of INVESTBANK in Jordan.
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 inflows of USD116 million to raise the total cash inflows generated since launching the service in 2013 to USD548 million.
On the other hand, the Investment Banking team generated revenues of KWD0.4 million (USD1.5 million) from two M&A mandates in Kuwait and Oman in addition to several advisory mandates. 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 market share and generated revenues of KWD1.3 million (USD4.2 million).
The Company’s continuous efforts to control and rationalize its cost base resulted in a 20% decline in the operating cost base to reach KWD9.6 million (USD31.5 million).
Following the KWD7.5 million (USD24.7 million) distributed in October 2018 through capital reduction, the board of directors proposed not to distribute dividends for the year 2018 and retain the liquidity.
Faisal M. Sarkhou, Chairman of the Board of Directors, said: “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. We look forward to successfully conclude the merger, thus creating value to shareholders and further enhancing our offerings with solutions that can protect and grow clients’ wealth even in challenging, uncertain and volatile economic environments.”
Sulaiman Mohammed Al-Rubaie, Acting Chief Executive Officer, commented: “Global has remained on a consistent path of profitability for the sixth consecutive year, driven by effective implementation of its fee business driven strategy. The company’s financial position, performance and human capital, among others, attracted several local and regional parties to acquire the majority stake in the company. 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.”
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