Standard & Poor's Ratings Services has assigned its ‘BBB-’ long-term and ‘A-3’ short-term corporate credit ratings with positive outlooks to Kuwait-based holding company Kuwait Projects Company (Holding) - KIPCO. It is the first time that a major international credit ratings agency has assigned a rating to a corporate holding company in the Middle East.
The ratings primarily reflect KIPCO’s controlling stakes in Burgan Bank (BBB+/Stable/A-2), Gulf Insurance Company (BBBpi), United Gulf Bank, the investment banking arm of the Group, National Mobile Telecommunications Company one of the fastest growing regional mobile telephony operators trading under the Wataniya brand, as well as Gulf DTH which operates the leading regional satellite pay-TV platform Showtime.
Patrice Cochelin, a Standard & Poor analyst, commented: “The ratings reflect KIPCO’s satisfactory and improving liquidity. We believe that operations at most of the group’s holdings have growth potential, driven by regional expansion, strong economies, developing financial markets and business-friendly environments in GCC countries.
“We expect KIPCO to capitalize on those trends, helped by its solid track record of managing businesses in these countries. The group follows a pragmatic investment strategy and it has in the past divested small, more mature companies, or small stakes in its bigger holdings to fund new investments and create liquidity.”
KIPCO managing director and chief executive officer Faisal Al Ayyar commented: “The ratings by Standard & Poor are a measure of the growing maturity of KIPCO as a leading investment holding company in the MENA region. The clarity of our strategy, the diversity of our businesses in high growth sectors and the quality of the management team complemented by increasing liquidity and a clear long term funding strategy gave S&P confidence to provide positive outlooks to the ratings.”
Commenting on the changing regional dynamics, Mr Al-Ayyar said: “The Middle East and North African region has entered into an era of above trend growth of GDP driven by multi-year, multi-billion dollar mega projects launched on a scale never seen in the region before across many business sectors. There are more cross border deals being done by regional players.”
The KIPCO Group started its regionalization initiative in the 1990’s and it is well positioned strategically to capitalize on the emerging opportunities in the region.
“The last ten years were spent by the KIPCO Group in building a strong foundation in people, process and strategic positions. In the coming years we are going to enjoy the fruit of our investments with more profits and increasing value from our portfolio companies,” Mr. Al Ayyar stated.
According to S&P “the company generally anticipates debt maturities refinancing needs well in advance.” Earlier this month KIPCO mandated BNP Paribas, Dresdner Kleinwort Wasserstein and HSBC to act as joint arrangers of a US$ 2 billion EURO Medium Term Note (EMTN).
KIPCO is one of the leading diversified operating holding companies in the Middle East and North Africa with more than $15 billion under management or control. Its shares are among the most actively traded on the Kuwait Stock Exchange. It has substantial ownership interests in a portfolio of 55 companies, operating throughout the region and internationally in two major business sectors: Financial Services and Media & Telecommunications. Subsidiaries and affiliates of KIPCO companies with interests in real estate and Industry are contained in a sub-group within the Financial Services companies and other subsidiaries and affiliates are held in a Management and Advisory sector vehicle.
