Middle East Debt Capital Market Conference
Post on 14-Dec-2014
460 Views
Preview:
DESCRIPTION
Transcript
11
Middle East Debt Capital Market Conference
Middle East Debt Capital Market Conference
April 2008
22
Overview
Strategy
Financial Overview & Outlook
Agenda
Liability Management
Annexures
33
Excellent management
track record & strong
shareholder support
Premier holding
company focused on
MENA
Assets under management :
~ US$24 billion
Presence across 21 countries
Presence across 21 countries
Key Verticals:Financial
Services & Media
Employees7000+
KIPCO: Overview
S&P Rating:BBB+
CI Rating: A-
16 years of continued
profitability
Among the most actively traded stock
on KSE
44
0
200
400
600
800
1000
1200
1400
J an- 02 Feb- 03 Apr- 04 J un- 05 J ul- 06 J ul- 07
0
20
40
60
80
100
120
140
KIPCO Volumes KIPCO Prices
KIPCO: Ownership & Liquidity
• 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
KIPCO Share – Price & Volume (2002-2008YTD)
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%
Apr-08
Total Outstanding Shares as on March 23, 2008: 1,049.6 million
Shareholding Pattern – March 2008
Primary Promoter
(AFI ) 44.3%
Treasury Shares 2.7%
Investment Funds6.2%
Investment Companies
31.9%
HNIs7.2%
Retail I nvestors
7.7%
55
1994
1988 Acquisition of United Gulf Bank (UGB)
Acquisition of stake in United Real Estate Company (UREC)1994
Acquisition of stake in Burgan Bank
Establishment of United Industries Company (UIC)1996
Formation of Gulf DTH (Showtime)1995
1996 Acquisition of Saudia Dairy and Foodstuff Company (SADAFCO) by UIC
1996 Acquisition of stake in Gulf Insurance Company (GIC)
Acquisition of stake in NMTC (Wataniya Telecom)1999
2003 Establishment of United Networks Company (UNC)
2005 Initial Public Offering of SADAFCO
2006 Established US$2 billion EMTN programme
2007 Sale of stake in Wataniya Telecom
Sale of stake in United Aviation, Jet Aviation & United Fisheries of Kuwait (UFK)2007
1998 Formation of Kipco Asset Management Company (KAMCO)
KIPCO: Key Milestones
Credit rating upgraded by two notches to BBB+ by S&P - Highest rated Holding Company in the MENA Region2007
66
3 Companies
Media
US$ 158 Million
US$ 164 Million
10 companies
Industrial
US$ 1,138 Million
US$ 283 Million
Total Assets
The KIPCO Group comprises over 50 companies across diversified sectors
21 Companies
Financial Services
5 companies
Management Services
5 Companies
Real Estate
US$ 18,092 Million
US$ 1.8 Million
Total Revenue
US$ 2,053 Million
US$ 1.2 Million
Total Assets
US$ 881 Million
Total Revenue
US$ 91 Million
KIPCO Group Companies: Asset Composition
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$3.6 billion.
12 Companies
Medical & Others
US$ 131 Million
US$ 46 Million
* Not included in the sectoral composition above
77
Media
84.5% 63.3% 50.6% 65.0%
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%
Financial Services
Geographic Presence in MENA
11 countries 6 countries Kuwait 22 countries
Shareholding
KIPCO: Core Operating Companies
88
Overview
Strategy
Financial Overview & Outlook
Agenda
Liability Management
In Summary
Annexures
99
Building Businesses
Strong managerial expertise
Thought leadership
RegionalOutlook
Investing in engines of
growth
Diversified revenue streams
Bein
g fi
rst
In th
e re
gio
n
MEN
A
Target ROE:
20%
Bala
nce
dP
ort
folio
Team approach
KIPCO Strategy: Corner Stones
1010
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
Invest in Our Success
Invest in ‘What We Know’
Invest with Financial Discipline
Invest primarily in MENA Region with selective global diversification
KIPCO: Investment Philosophy
1111
Listed Equity Portfolio
Private Equity/ Hedge Fund Portfolios
Listed Equity Portfolio
Rated Fixed Income
Private Equity
Seed Capital Investment
Invest or partner in regional products, Islamic & conventional products for the region
JVs/meaningful stakes in global companies
New Businesses
Existing Businesses
Global Regional
Focus onFinancial Services
Focus onFinancial Services
Selective Regional and Global Diversification
Selective Regional and Global Diversification
KIPCO Strategy: Looking AheadKIPCO Strategy: Looking Ahead
Increase ownership
Strengthen capital base
Deeper & faster regionalisation
Consolidation
KIPCO: Looking Ahead
1212
Overview
Strategy
Financial Overview & Outlook
Agenda
Liability Management
In Summary
Annexures
1313
2,402
569
724801
2004 2005 2006 2007
Consolidated Equity*
406
247
552
3,203
2004 2005 2006 2007
US$ million
130
86
173
1,889
2004 2005 2006 2007
US$ million
15,222 4,698
2,763
3,643
2004 2005 2006 2007
US$ million US$ million
KIPCO (Consolidated): Key Financials
* Attributable to equity holders of the Parent
Net Income*Total Revenues
Consolidated Assets
CAGR: 62%CAGR: 77%
CAGR: 180%CAGR: 134%
1414
2974
193 173
33
244187
112
GIC UGB BB KIPCO2006 2007
KIPCO & Core Companies: 2007 Financials
Net Income – KIPCO and Core Companies
29102
193 173142
268 271
1,889
GIC UGB BB KIPCO2006 2007
US$ million991%163%389% 40%
Net Income – KIPCO and Core Companies (Excluding Non-Recurring Gains**)
US$ million41%51%14% -3%
** Primarily on account of sale of NMTC (Wataniya Telecom)
1515
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.
1616
187
306
2007 Normalised 2008E
33
52
2007 Normalised 2008E
112
141
2007 Normalised 2008E
Net Income – Burgan Bank
Net Income - GIC Net Income - UGB
US$ million
EBITDA - Showtime
US$ millionUS$ million
US$ million
58%
26%
64%
3
26
2007A 2008E
671%
Core Companies: Projections
1717
244
388
2007A* 2008E
Net Income
US$ million
On a normalised basis, KIPCO net income is projected to
increase at a growth rate of 59% over 2007-08
59%
* On a normalised basis
KIPCO (Parent): Projections
1818
Overview
Strategy
Financial Overview & Outlook
Agenda
Liability Management
In Summary
Annexures
1919
Financial Targets
Well defined financial targets at the Parent Level
Target Debt/Equity: not to exceed 2.5x
Target Net debt/investments: 20-30%
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
KIPCO (Parent): Financing Policies & Targets
2020
Commercial bank term borrowing from Kuwaiti banks secured by collateral Established money market lines from Kuwaiti and regional banks
1990
First bond issue of KD12 million (US$41 million) in Kuwait 1994
Term borrowing from regional banks New borrowings only on unsecured basis 2000
US$100 million debut international syndicated loan completed No outstanding borrowings on secured basis 2004
Highlights
US$175 million international syndicated loan completed 2005
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
2006
First issuer of KIBOR based floating rate bonds 2001
Net debt/investment portfolio ratio < 1% Based on target net debt/ investment portfolio value, additional borrowing capacity of >
US$1 billion 2007
KIPCO (Parent): Liability Management
2121
Debt Type: Dec 2005*
Maturity Profile: Dec 2005* Maturity Profile: Dec 2007*
Debt Type: Dec 2007*
MTN65%
Term Loan14%
KD Bonds21%
1- 2 yrs .
6%
2- 3 yrs .
16%
3- 4 yrs .
47%
0- 1 yr.
31%
* Assuming, the exercise of extension option on KD Bonds
Total Gross Debt: US$ 963 million
0-1 yr.34.8%
4-5 yrs.25.4%
3-4 yrs.8.6%
2-3 yrs.10.6% 1-2 yrs.
20.7%Total Gross Debt: US$816 million
KD Bonds37.4%
Money Market3.5%
Syndicated Loans33.7%
Committed Lines
25.5%
Total Gross Debt: US$816 million Total Gross Debt: US$ 963 million
KIPCO (Parent): Debt Profile
2222
963952824
2005 2006 2007
1,290
9551
2005 2006 2007
- 327
857773
2005 2006 2007
KIPCO is now a Net Placer of Funds
Liquidity Position (C= A-B)
Gross Debt (A) Cash and Liquid Assets (B)
US$ million
US$ million
US$ million
KIPCO (Parent): Net Placer of Funds
2323
Key Rating Ratios December
2006December
2007
Cash Coverage (ST Debt) 0.5x 3.1x
Unutilised available lines coverage (ST Debt) 0.9x 1.4x
Cash Coverage (upto 3 year debt) 0.2x 2.3x
Unutilised available lines coverage (upto 3 year debt) 0.4x 1.1x
Net Debt/Investment Portfolio 29% 0.5%
Dividend/Interest Coverage 2.1x 8.7x
Core Investments/Investment Portfolio 99% 91%
KIPCO (Parent): Key Liquidity Ratios
2424
Overview
Strategy
Financial Overview & Outlook
Liability Management
In Summary
Annexures
Agenda
2525
Diversification by industry and asset class
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
Strong market conditions
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
Geographical diversification
Presence in 21 countries As at December 31, 2007; 36% of assets are from outside Kuwait
Excellent track record
16 years of continued profitability Effected successful investments (greenfield/ acquisitions) and profitable
exits
Experienced management team
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
Key Strengths: Business profile
2626
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
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
Very low leverage
Very good liquidity
Funding flexibility
Target net debt/investment portfolio: 25%-30% Dividends/interest + expenses coverage >2 times Dividends/interest coverage >3 times
Conservative financial policies
Key Strengths: Financial profile
2727
Moody’s FSR Rating: C-
S&P: BBB+/Positive
S&P: BBB+/Positive
Moody’s: Baa3
Key Rating Considerations
Strong Profitability
Adequate Capitalisation
Growing Franchise
Improved Funding Profile
Key Rating Considerations
Strong Operational Performance
Strong Competitive Position
Good Capitalisation
Improved Net Combined Ratio
Key Rating Considerations
Strong Operational Performance
Comprehensive Risk Management
Adequate Capitalisation
Improved Asset Quality
Key Strengths: High credit worthiness of Underlying Assets
2828
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
Why KIPCO?
2929
3030
Annexure 1: Management Team
Overview
Strategy
Financial Overview & Outlook
Liability Management
In Summary
Agenda
3131
Faisal Hamad Al Ayyar Executive Vice Chairman
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.
Pinak Pani Maitra Group CFO
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
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.
Samer Khanachet Chief Operating OfficerMr. 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 theMassachusetts 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.
Lakhdar Moussi Senior Vice President, Financial Services
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.
Declan Sawey Group Treasurer
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).
Executive Management
3232
Antony Miles Strover Advisor Corporate Finance
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. Mohsen Ali Hussain Group Chief Internal Auditor
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.
Robert Drolet Senior Vice President, Technology & Media
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).
Mazen HawaGroup Vice President, Finance & Operations
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.
Robert Hipkins Group Communication Director
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.
Bibhau TamangGroup Vice President, Financial Control 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.
Executive Management (Contd.)
3333
Annexure 2 : Major Investments
Overview
Strategy
Financial Overview & Outlook
Liability Management
In Summary
Agenda
3434
0.0
0.5
1.0
1.5
2.0
2.5
Jan-02 Apr-03 Jul-04 Oct-05 Jan-07 Apr-08
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$7.3 billion
Rated by Moody’s (Baa3/Stable)
Dual Listing on Kuwait Stock Exchange & Bahrain Stock exchange
101
81
43
268
2004 2005 2006 2007
CAGR: 84%2.18
Sou
rce:
Blo
ombe
rg,
Bah
rain
Sto
ck
Exc
hang
e
Sou
rce:
Com
pany
US$ million
US$Net Income Share Price Movement
United Gulf Bank
3535
0.0
1.0
2.0
3.0
4.0
Jan-02 Apr-03 Jul-04 Oct-05 Jan-07 Apr-08
Incorporated in 1962; acquired by KIPCO in 1996 Market leader in Kuwait in life, property and casualty insurance segments Comprehensive offerings include life, health, motor, property, casualty, marine and aviation
insurance Network of 10 local branches and operations in six countries: Kuwait, Bahrain, Saudi Arabia,
Lebanon, Egypt and Syria Rated by Standard & Poor’s (BBB+/Positive) Listed on Kuwait Stock Exchange
Marine InsuranceAviation InsuranceCasualty Insurance Property InsuranceHealth Insurance Life Insurance
142
29
2024
2004 2005 2006 2007
CAGR: 92%
Sou
rce:
Blo
ombe
rg ,
Kuw
ait
Sto
ck
Exc
hang
e
Sou
rce:
Com
pany
2.98
US$ million
US$Net Income Share Price Movement
Gulf Insurance Company
3636
0
1
2
3
4
5
Jan-02 Apr-03 Jul-04 Oct-05 Jan-07 Apr-08
Incorporated in 1975 and privatised in 1995
3rd fastest growing bank in terms of profitability
Fostering transparency and governance through international best practices
Technology-driven, innovative provider of financial services
Network of 20 branches, 42 ATMs, 6 K-Net ATMs and 24 Kiosks
Rated by Standard & Poor’s (BBB+/Positive) and by Moody’s (A1/Stable)
Listed on the Kuwait Stock Exchange
Corporate Governance
M-Commerce SolutionsBeebank ServicesTechnology Leader
271
193
145
101
2004 2005 2006 2007
Net Income Share Price Movement
Sou
rce:
Blo
ombe
rg,
Kuw
ait
Sto
ck
Exc
hang
e
Sou
rce:
Com
pany
3.99US$ million
CAGR: 38%US$
Burgan Bank
3737
Highest RevenueHighest Revenue22 Territories in MENA Region
22 Territories in MENA RegionOffering
Over 50 Channels
Offering Over
50 Channels
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
Gulf DTH (Showtime)
top related