Global Investment House “Global” announced today in Dubai the launch of Global Opportunistic Fund II with a capital of USD 1 billion to invest in Pre-IPOs and IPO in the GCC, Middle East & North Africa and Asia (MENA).
Mr. Omar El-Quqa, Executive Vice President at Global and Mr. Shailesh Dash, Senior Vice President Strategic Investments Group in the company, launched the fund in a joint press conference held in Emirates Towers in Dubai in the presence of selected media from the region.
Mr. El-Quqa started with a brief on Global and its expertise and strength as the fund manager at the outset of the conference stating that with its head office in Kuwait, the company has expanded geographically by opening offices in Bahrain, United Arab Emirates and Jordan in addition to buying strategic stakes in financial institutions in Oman, Sudan, Palestine and Tunisia.
“Global is in the process of expanding into several other countries in the Middle East and already has strategic relationships with established private equity managers and investment banks in the target countries.”
He affirmed that this strategy has given Global in-depth understanding of the markets in addition to the presence that allowed it to grasp major opportunities which resulted in founders' allotment in leading IPOs such as Dana Gas, Ras Al Khaimah Properties, Al Salam Bank, BankMuscat International, Arabian Logistics Company and Al Mal Capital. In addition, Global has invested with other regional leading institutions such as Emaar, Amlak, The Investment Office - Dubai, The Investment Office - RAK, Royal Court of Muscat, CCFI, Olayan Group and others.
Global EVP emphasized that the company has an excellent track record in various investment related activities whether it’s asset management or investment banking. It manages around 25 investment funds with different strategies, and the assets under management have over passed USD 6.2 billion.
“Today, Global houses the largest corporate finance team in the region supported by world-class fundamental and quantitative research which gives the fund manager access to the new companies launched as well as the IPO mandates by the Investment Banking Group,” he said.
Mr. El-Quqa shared the deal flow that Global has worked on over the past 12 month period. Global has reviewed over 200 investment proposals across industry sectors and across the region that totaled USD8 billion of which nearly 50 were self-generated and proprietary. Global has participated in over 35 investment proposals, he stated.
“Currently, Global has a direct investment portfolio in excess of US$ 750 million and has a significant number of investment opportunities in the pipeline such as telecom service companies and a petrochemical company in Saudi Arabia, a leading bank and a mining company in China, a gas distribution company in Pakistan in addition to Reliance Petroleum Limited (refinery) and shipping and petroleum company in India.
Mr. El-Quqa noted that the Global Opportunistic Fund, the first IPO fund launched and managed by Global with a capital of USD550 million last August, has reported excellent results within only 7 month. The fund has exited part of its investments realizing gains of over 200% in one transaction and 40% in another. The average gain from such sale of investments has been over 70% on an invested capital of USD10.4 million.
It is worth noting that the fund which invests in Pre-IPO and IPO opportunities primarily within the GCC, has already committed USD 413 million and disbursed nearly USD 250 million till the end of March.
On the other side, Mr. Shailesh Dash, Senior Vice President Strategic Investments Group, gave an in-depth view on the IPO and Pre-IPO market in the GCC region, Jordan, Lebanon, Iran, and the MENA region. These countries enjoy improving macroeconomic conditions, significant liquidity and positive initiatives by the respective governments. These countries have a total population exceeding 2.8 billion people, a combined GDP in excess of USD3,500 billion with increasing per capita incomes. Global believes that these countries will continue to deliver attractive investment opportunities to experienced and well-regarded investors.
He followed by saying, “Global believes that this is an opportune time to invest in pre-IPO and IPO offerings in the target countries where conditions are favorable and market prospects look very promising. The IPOs in the target countries have performed well with significant improvements underway in the capital markets of these countries.”
“Accordingly, the Global Opportunistic Fund II will primarily invest in Pre-IPO and IPO equities offered by governments through privatization initiatives, family owned businesses and leading companies in sectors selected by the Manager in the target countries.”
Mr. Dash motioned that the fund seeks capital appreciation with optimum returns, within controlled levels of risk, over the medium to long term by investing in IPO and Pre-IPO issues in the target countries. “Though there are significant numbers of IPO's planned across the target countries, the Fund would target IPO's of stable, mature & profitable businesses and invest by leveraging on the Managers understanding of the respective markets,” he emphasized.
The Fund will also target rapidly growing companies with enterprise values in excess of USD100 million that are profitable, have proven business models and require capital for expansion but are likely to provide liquidity to the Fund during its tenure through a stock market listing.
In addition to investing in these companies, the Fund will also invest in privatization opportunities by governments of the target countries, Dash added. These privatization opportunities may include companies that are already listed and further privatization has been undertaken by the government.
The Fund will target a hurdle rate of not less than 20% over a 5 year period which will be net of all incentive and other fees payable but inclusive of any dividend declared during the tenure of the Fund.
Regarding the fund strategy, Mr. Dash said that it will be to offer institutional and high net worth individuals the opportunity to invest in pre-IPO and IPOs across a diverse selection of sectors in the target countries. Global has already developed significant experience in the Pre-IPO sector by investing in companies in the GCC region and other MENA countries.
“Global understands the dynamics and expectations of business owners and managing issues of investment bankers. The focus will be on transactions with an average deal size of USD20 million. The size and scale of the Fund in itself is an attractive proposition for investment bankers, financial intermediaries and other business owners when considering financial investors as strategic alternatives for companies,” he asserted.
Mr. Dash went into addressing the fund benefits which offers its unit holders the opportunity to participate in the IPO / Pre-IPO sector in these target countries. Some of the immediate benefits of investing in the Fund for either institutional or high net worth individuals will include limited access to all issues especially in the target countries, understand that not every IPO is a “hot IPO” and investing in the wrong IPOs can lead to losses...instead of blockbuster gains.
Also, the fund’s ability to build on Global’s research, analytical expertise, valuation and evaluation of management, in addition to due diligence on the companies and the company’s extensive relationship with local and international investment banks
Mr. Dash ended by mentioning that the fund is a closed-ended fund with a minimum lock-up of at least 12 months followed by partial redemption thereafter (refer to redemption option). The fund size is USD 1 billion with a minimum investment of USD 1 million and an initial drawdown 50% and the balance after a period of 180 days at the discretion of the manager. The offering period of the fund will be 2 month starting on 16 April 2006 and closing on 15 June 2006.
