Markaz eyes Saudi, U.S. mortgages

06/11/2008

Kuwait's Markaz eyes Saudi, U.S. mortgages KUWAIT (Reuters) - Kuwaiti investment firm Markaz said on Wednesday it planned to expand into real estate and financial services in Saudi Arabia and would set up a fund to tap low prices in the U.S. mortgage debt market. Markaz was looking to acquire a financial services firm and set up a real estate company in Saudi Arabia to take advantage of growth in the world's largest oil exporter, General Manager Manaf Alhajeri told the Reuters Middle East Investment Summit. "We signed memorandum of understanding for both opportunities," he said. Markaz wanted to buy a majority stake in an unlisted financial services firm in Saudi Arabia with a capital of 50 million riyals ($13.33 million). "It's going to begin with investment banking ...

There is a tremendous deal flow of opportunities across sectors. We are going to expand our money management expertise," Alhajeri said. The company also wants to set up with Kuwaiti and Saudi partners a real estate company with a capital of 500 million riyals of which Markaz would provide 50-75 million riyals. "There is an interesting gap between supply and demand with residential property," he added. Alhajeri also said the company is planning a fund of up to $100 million to invest in distressed debt in the U.S. mortgage industry. "We see real value on distressed debt-based on mortgage financing," he said. "We are looking very actively at opportunities." BARGAIN OPPORTUNITIES Prices on some debt had fallen to between 40 percent and 60 percent of par value, he said.

The fund would be between $50 million and $100 million. Markaz, which has previously managed funds investing in warehousing or commercial property in the United States, would make its first investment for the new fund by the end of March, 2009, Alhajeri said. "We see more value on the debt rather than on the property," he said. Markaz, which offers investment bank and financial services such as asset management, corporate finance or advisory on mergers, was also looking at investing in the energy and real estate sectors in Algeria, he said.

It is also in talks with the Syrian government to sign a memorandum of understanding to develop a hotel real estate project in the northern city of Aleppo. Alhajeri added he expected Gulf sovereign wealth funds, some of which are Markaz clients, to invest more money at home rather than abroad. The credit crunch and global financial crisis have left them nursing substantial losses on overseas investments. "We will see more of the surplus deployed in the region rather than other parts of the world," he said. The firm has sovereign funds as clients. Markaz, which has about 25 percent of the mutual fund market in Kuwait, has about $5 billion under management, Alhajeri said.

(Reporting by Ulf Laessing and Will Rasmussen; Editing by Hans Peters) © Thomson Reuters 2008. All rights reserved. Users may download and print extracts of content from this website for their own personal and non-commercial use only. Republication or redistribution of Thomson Reuters content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters. Thomson Reuters and its logo are registered trademarks or trademarks of the Thomson Reuters group of companies around the world. Thomson Reuters journalists are subject to an Editorial Handbook which requires fair presentation and disclosure of relevant interests.