Kuwait-based regional asset management and investment banking firm Global Investment House has announced a net profit of KWD 2.5 million ($8.3 million) for 2017, down from KWD 3.5 million ($11.3 million) in 2016. Total revenues of KWD 14.1 million ($46.7 million) were down KWD 0.6 million on the previous year while fee and commission income of KWD 10.3 million ($34.1million) (73 per cent of total revenues, down from 78 per cent a year earlier) was down from KWD 11.5 million ($37.7 million).
During 2017, the Asset Management business remained resilient with KWD 910 million ($3.0 billion) of assets under management. The company raised over $71 million of new money in various strategies primarily income-yielding UK real estate and has distributed to clients more than $93 million from dividends and proceeds from exits.
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 successfully acquired four properties in 2017 to raise the total assets acquired through the commercial real estate program launched late 2015 to seven assets with total value of GBP300 million. These properties were off-market investment opportunities outside Central London, of Grade A specifications, producing rental income on long-term triple-net leases with investment grade or government related entities. The team has successfully distributed an average annualized income of 9.25 per cent on the managed assets since inception and is currently working on several transactions in the developed markets.
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 three portfolio companies and continued to provide its clients with liquidity in challenging geopolitical and economic environment. The team is expected to distribute more than $35 million to its clients in the first quarter 2018.
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 with an exit multiple around 1.6x to clients’ target valuations.
During 2017, the Investment Banking team generated revenues from four different mandates in Kuwait and Saudi Arabia, including the sale of a controlling stake one of the largest social infrastructure companies in Kuwait. 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 Jordan market share. Due to handsome increase in the market turnover in Kuwait and market share gains in Jordan, the brokerage fee revenues recorded a 25.6 per cent year-on-year growth.
The company’s efforts to control and rationalize its cost base resulted in a marginal decline of KWD 0.2 million in the operating cost base to KWD 12.0 million, despite a one-off impact of change in Kuwait’s Labor Law relating to indemnities for Kuwaiti employees. Full impact of the change in law, amounting to KWD 0.6 million, was recorded in 2017 financial results.
Following the KWD 22.9 million ($75 million) distributed in August 2017 through capital reduction, the board of directors have proposed a five per cent cash dividend.