BY MOHAMMED SALISU CHIEF ECONOMIST GULF ONE INVESTMENT BANK Gulf One’s Strategic Positioning in Supporting Sustainable Economic Growth in the GCC Region 1 (C) Copyrights 2011. Gulf One Investment Bank B.S.C. (c). Renewable Energy Financing Mechanism Workshop: Riyadh, 4 April 2011
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BY
MOHAMMED SALISU
CHIEF ECONOMIST
GULF ONE INVESTMENT BANK
Gulf One’s Strategic Positioning in Supporting Sustainable Economic Growth
in the GCC Region
1(C) Copyrights 2011. Gulf One Investment Bank B.S.C. (c).
Renewable Energy Financing Mechanism Workshop: Riyadh, 4 April 2011
2
AGENDA
CHALLENGES FOR PROMOTING SUSTAINABLE
ECONOMIC GROWTH IN THE GCC REGION
COMMERCIAL FINANCING CHALLENGES AND
OPTIONS
THE ROLE OF GULF ONE INVESTMENT BANK
CONCLUSION(C) Copyrights 2011. Gulf One Investment Bank B.S.C. (c).
SUSTAINABLE ECONOMIC GROWTH CHALLENGES
(C) Copyrights 2010. Gulf One Investment Bank B.S.C. (c). 3
Real GDP Growth Rates in the GCC Countries
(C) Copyrights 2011. Gulf One Investment Bank B.S.C. (c). 4
(C) Copyrights 2011. Gulf One Investment Bank B.S.C. (c).
...Despite Attractiveness of Infrastructure Asset Class
(C) Copyrights 2010. Gulf One Investment Bank B.S.C. (c). 18
Financing problems more acute for Renewable Energy in the Region
(C) Copyrights 2010. Gulf One Investment Bank B.S.C. (c). 19
Europe37%
Asia & Oceanic34%
North America17%
South America 10%
Middle East & Africa
2%
New Investment in Renewable Energy by Region 2009 (Global Total=US$119.3 Bn)
Source: Global Trends in Sustainable Energy Investment 2010, UNEP & Bloomberg NEF
Key Reasons for Low RE Financing in the GCC Region
(C) Copyrights 2010. Gulf One Investment Bank B.S.C. (c). 20
Low domestic conventional energy prices driven by decades of subsidies, making it difficult to attract investment in the alternative energy sector
Limited domestic awareness of energy and environmental concerns
Lack of financial incentives, e.g. feed-in tariffs, that can boost the cost-competitiveness of renewables
Inadequate institutional capacity and inexperienced environmental authorities
ROLE OF ENVIRONMENTAL FUNDS
(C) Copyrights 2010. Gulf One Investment Bank B.S.C. (c). 21
Australia, 5%Belgium, 2%
Cayman Island, 5%
Denmark, 2%
France, 5%
Germany, 5%
Luxembourg , 37%
South Korea, 2%
Switzerland, 2%
Taiwan, 10%
U.K., 12% U.S.A., 12%
Distribution of Environmental Funds in the World (%)
Source: Trevista and Gulf One Bank
EFs focusing on a wide range of sectors
(C) Copyrights 2010. Gulf One Investment Bank B.S.C. (c). 22
39
14 1310 9 9 9
6 6 6 5 5 4 4 3 3 3 2 2 1 1 1 1 1 1
05
1015202530354045
Elec
tric
al &
Eq
uip
Mis
cella
neo
us
Man
ufa
ctu
rin
g
Ener
gy A
lter
nat
ive
Envi
ron
men
tal C
on
tro
l
Ch
emic
al
Sem
ico
nd
uct
ors
Wat
er
Div
ersi
fied
Fin
anci
al S
ervi
ces
Mac
hin
ery-
Div
ersi
fied
Tran
spo
rtat
ion
Bu
ildin
g M
ater
ial
Engi
nee
rin
g &
Co
nst
ruct
ion
Co
mm
erci
al S
ervi
ces
Oil&
Gas
Foo
d
Ph
arm
aceu
tica
ls
Tele
com
mu
nic
atio
n
Hea
lth
Car
e
Ret
ails
Aer
osp
ace/
Def
ense
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mp
ute
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Co
smet
ics/
Pers
on
al C
are
Fore
st P
rod
uct
& P
aper
Inte
rnet
Mu
nic
ipal
Nu
mb
er
Source: Trevista and Gulf One Bank
Global Sectoral Allocation of Environmental Funds
Most EFs invest in equities
(C) Copyrights 2010. Gulf One Investment Bank B.S.C. (c). 23
Derivatives, 27%
Equity, 68%
Equity & Derivatives, 5%
Investment Strategy of Environmental Funds
Source: Trevista and Gulf One Bank
A knowledge-based investment bank for financing infrastructure in the GCC and MENA Regions
Mission: To mobilise local & global capital to execute infrastructure projects via innovative financial solutions
Strategy:a catalyst for unleashing the GCC's potential to achieve
sustainable economic growth and social prosperity by building on region’s resource strength and competitive advantagestructuring and investing in infrastructure projects and
energy-related mega-initiatives, by building of strategic partnerships and alliances with local and international investors and institutions in our core businessesProviding advisory and debt arranging services to
infrastructure, PPP/BOT sector(C) Copyrights 2010. Gulf One Investment Bank B.S.C. (c). 25
GULF ONE INVESTMENT BANK
SECTOR FOCUS KEY FOR ECONOMIC GROWTH AND DEVELOPMENT
SAUDI ARABIA INCOME MULTIPLIER
26
Sector Income multiplier (GDP / loans)
Crude oil -
Non-crude oil industries 4.3
Transport and communication 4.5
Water, gas and electricity 3.1
Finance 1.8
Construction 1.6
Commerce and tourism 1.2
Source: Gulf One analysis from official data
(C) Copyrights 2011. Gulf One Investment Bank B.S.C. (c).
ONGOING INVESTMENTS
27
Fund / Deal Sector Market
Moya Holding Company B.S.C.
(c)Water sector MENA / India
Gulf One SME Opportunities
Fund SMEs GCC
Gulf One Buchanan Industrial
Technologies Fund I L.P.Industrial Technologies
Germany, Austria,
Switzerland
Montajat Veterinary
Pharmaceuticals Co.Pharma Saudi Arabia
Jao Investment Fund Aviation GCC
Z Aljazira Power Saudi Arabia
SCC & SCC–MENA Environment GLOBAL & GCC
Source: Gulf One Bank
(C) Copyrights 2011. Gulf One Investment Bank B.S.C. (c).
Jeddah Hajj Terminal: Islamic Deal of the Year 2007 – Euromoney PF
28
Advisory:A 20-year BTO concession for the Hajj Terminal at King AbdulazizInternational Airport, Jeddah
Our Projects
Source: Gulf One Bank
(C) Copyrights 2011. Gulf One Investment Bank B.S.C. (c).
Moya Holding Company
29
Our Projects
Source: Gulf One Bank
(C) Copyrights 2011. Gulf One Investment Bank B.S.C. (c).
Investment:
A PE Company in partnership with the Bushnak Group investing inwater projects (desalination, wastewater treatment, distributionetc.) principally in the MENA region and the Indian Subcontinent
JAO Investment Fund
30
Our Projects
Jao Investment Fund
Source: Gulf One Bank
(C) Copyrights 2011. Gulf One Investment Bank B.S.C. (c).
Investment:
A MENA focused private equity fund investing in attractiveopportunities within the aviation sector
31
Our ProjectsGulf One Buchanan Industrial Technologies Fund: DACH Fund
GULF ONE BUCHANAN
INDUSTRIAL TECHNOLOGIES
FUND I LP
Source: Gulf One Bank
(C) Copyrights 2011. Gulf One Investment Bank B.S.C. (c).
Investment:A private equity fund developed in partnership with BIT, investing inattractive companies in the industrial technologies sectors withinthe DACH Mittelstand – a conduit for industrial technology transferto the GCC
Our Projects
32
Investment:An exclusive MENA joint venture operating company forthe carbon abatement, Clean Development Mechanismand alternative energy business in the MENA region
(C) Copyrights 2011. Gulf One Investment Bank B.S.C. (c).
SCC MENA
INDEPENDENT RESEARCH CAPABILITY
33
Independent
Enhancing client and market knowledge base
Addressing relevant regional issues
Providing indigenous GCC perspective
Supported by international knowledge reach
Ongoing research on Environment Economics & Alternative Energy
Established by G1 Funding
Research focused on economic and financial developments in the Middle East and North Africa, particularly the GCC
(C) Copyrights 2011. Gulf One Investment Bank B.S.C. (c).
GULF ONE - Every Little Helps!
34(C) Copyrights 2011. Gulf One Investment Bank B.S.C. (c).