Markaz Launches IPO & Pre-IPO Program


Kuwait Financial Centre “Markaz”, one of the Middle East’s leading investment banking and asset management companies, announced the launch of its new investment portfolio program, which is to invest in IPO and Pre-IPO issues globally. The Program seeks to achieve capital appreciation over the medium to long term by participating in IPOs and Pre- IPOs predominantly focused on Emerging Markets, particularly Asia and the GCC/ MENA regions. The Program will strive to achieve superior risk-adjusted returns, such that an IRR exceeding 15% is expected to be achieved over the life of the Program. Mr. Gopal Menon, EVP International Investments, said “Markaz IPO and Pre-IPO program is a product that invests globally. The program is not restricted to any region or sector. We will provide a dedicated team of analysts including sector specialists in order to examine the financial strength and potential of the corporations seeking IPOs. With our impressive track record in management of Funds locally and internationally, investors will welcome this investment portfolio program.” Investments would be made after a thorough due diligence of the available opportunity based on fundamental analysis. The team will also look at the prevailing macroeconomic environment in terms of economic growth, reform initiatives, capital market regulation, and political stability. Investment into any specific IPO / pre-IPO or other instruments will be at the discretion of the Investment Advisor. Commenting on the prospects of such a program Mr. Barrak Al Usaimi, AVP – International Investments, provided the present background and future outlook. He stated that Global IPO activity revived in 2004, and gathered momentum in 2005 and 2006. The highest amount of capital raised was in the United States; however, Emerging Economies are not far behind, especially China, India, GCC/MENA. Corporations in these Emerging economies have higher earnings growth and RoE compared to most developed markets. Unlike in the past, corporate governance is rapidly improving, and the capital markets in most leading Emerging Markets are characterized by ample liquidity due to capital inflows (Asian economies) and Oil (GCC). The MENA region is replete with the right ingredients for long-term growth. Over the last few years, there has been a paradigm shift in economic fundamentals and capital market dynamics in the region. The surge in oil prices has led to huge fiscal surpluses, and the regional governments are taking positive steps to ensure that this has a strong multiplier effect on the non-oil sectors too, not just in GCC, but in the entire MENA region. Bold initiatives have been taken to partly divest government stakes in certain business segments in favor of the private sector. In 2006 China had the most activity in the IPO market with Industrial Commercial Bank of China (ICBC) breaking the record for being the largest IPO in history. Japan accounted for a fair share of global IPOs in the last two years; global investors expect this to rise substantially in 2007-08, as Japan’s economy has finally come out of the doldrums. Overall, the trend appears set to continue for the next several years in view of the robust growth projected for the Emerging Markets, particularly the BRICs and other Asian countries. Among the attractive features of the Program, an investor needs to pay only 25% of his commitment at the time of subscription. In addition, there is no subscription fee. The remaining balance will be called in stages at the discretion of the Investment Advisor, Markaz, subject to adequate notice being given to the investor. For exiting from IPOs / pre-IPOs, the Investment Advisor would send advance notice of sale to the Investors to incorporate their views, exit would usually be carried out within seven business days unless a response to the contrary is received. This will provide the investor with the opportunity to decide on exiting from any issue. One year lock-up applied to the redemption is only for the initial subscription. Incremental investments can be redeemed freely upon the expiry of the lock-up period for the initial subscription. Kuwait Financial Centre S.A.K. 'Markaz', with total assets under management of over KD1.20 billion as of December 31, 2006, was established in 1974 has become one of the leading asset management and investment banking institutions in the Arabian Gulf Region. Markaz was listed on the Kuwait Stock Exchange (KSE) in 1997; and was recently awarded a BBB+ corporate rating by Capital Intelligence Ltd. -Ends-