As one of the newest comers to the Financial Serves market in the kingdom, Khalijia Invest launched its operations during the World Islamic Banking Conference (WIBC) with its corporate slogan, “Big opportunities in the small details”.
It received its license as a fully fledged Shari’ah compliant investment bank in August of 2008. Providing a range of Islamic investment products, the company is specialized in corporate finance and asset management. The company highlights its impressive list of shareholders and its world class team of professionals as its strongest asset and main tools in becoming a leading regional player and distinguishing itself in a crowded marketplace.
BL: Would you kindly provide me with a brief about the newly established Khalijia Invest?
Muneer A. Al Shehri: Khalijia Invest was established around a year ago with the Aim to become a major player in the regional market. The Capital Market Authority (CMA) has licensed around one hundred twenty investment companies and we are one of them. We think the market still lacks professional financial institutions. Definitely, the big players are there, the international banks are there as well, but the size of the market we will operate in is big enough and can still absorb more serious players. We don’t expect our journey to be an easy one, and we acknowledge that many of our colleagues in the sector are serious contenders but we are also confident in our abilities and plans. We established Khalijia Invest with a strong capital base of four hundred million Saudi Riyal. Also, we have a board of directors chaired by HH Prince Sultan Bin Mohammad Bin Saud Al Kabeer and comprises industry leaders, namely the National Investments Company of Kuwait (NIC), the Gulf Bank of Kuwait, and distinguished businessmen.
Now that we are done with setting up our company and ready to receive clients, we are in the process of launching two funds, an IPO fund for the GCC region and a money market fund. These two funds will be launched in the next two weeks. We think such times are appropriate to launch these funds, especially with the improving confidence and sentiment of the investors and the improving liquidity in the markets and among the investors as well. I believe 2010 will be a starting year of a new era in our industry. And we are at Khalijia Invest ready to play a strong role in the era, in this industry, in this region. As I told you earlier, we think we’re ready to go public and launch our services and compete also with the well-known names. Of course, the big European and American names have been in KSA for a long time but those can no longer count on their names to lure clients. Investors now are very sophisticated and much more aware of risks and will definitely use lessons they have learned the hard way with some of those reputable institutions.
BL: You said that you will be launching soon an IPO fund. Would you please elaborate?
Al Shehri: Actually, one of the 2 funds is an IPO fund. As you know, the year 2009 was not a good year for IPOs nor for the IPO funders in the region as well as globally. We believe that 2010 will be the right time to go and work on such a fund. We know that in the Saudi market there are about twenty IPOs that are finalizing their flotation into the markets. We will be able to select and participate in the attractive issues and translate this into strong realized returns for our clients. We also expect the fund to have a strong participation in other IPOs in the regional markets. The IPO market has traditionally been lucrative in this part of the world, and we expect that it will continue to present exceptional opportunities for us and our clients with the clear understanding of the risk taken. The performance of IPOs is linked to a number of factors, beside the viability of the company floating and its financial attractiveness; this is a market which is highly influenced with liquidity levels, which is one of the key characteristics of our current monetary environment.
BL: What are the names of these two funds?
Al Shehri: The fist fund is called Khalijia Invest GCC IPO Fund and the second one is called Khalijia Invest Murabaha Fund.
BL: What about Saudi restrictions on foreign investments?
Al Shehri: First of all, the current regulations do allow foreign investors access to our equity markets, first through managed funds through any of the licensed investment managers, and secondly through the swap agreements foreign investors can have with any of the local dealers. Of course this is still a restricted access, but I am sure the CMA is working on increasing access of foreign capital to our market. But of course, they have their worries. The CMA doesn’t want something wrong to happen in our market, like having high volatility -and that’s why they want to stabilize the market and they are introducing measures to avoid such problems. For example, they are working on regulations to allow foreign investors to invest in our funds and other funds. But CMA has its own way to regulate the market.
BL: Muneer, does Khalijia Invest have plans to expand in the entire kingdom of Saudi Arabia?
Al Shehri: of course, in the future, but not right now. We don’t have any plans to open any branches immediately. We set all the plans and goals from our head office in Riyadh.
BL: May I know the percentage of the shareholders?
Al Shehri: National Investment Company of Kuwait is one of the biggest institutions in Kuwait and is our major partner that owns around 30% and Gulf Bank of Kuwait owns 5%. The Saudi shareholders own around 65%.
BL: We know that State-owned conglomerate Dubai World shocked the world with its recent news. When will Dubai recover from its financial crisis?
Al Shehri: I believe that Dubai and Dubai’s people will solve their problem in a very short time. They have the know-how and they can get out of it. It won’t take long time. This is my belief. Of course, this affected the name of the region, as a whole and it also affected the Islamic Sukuk. They will solve their problems soon especially after the involvement of Abu Dhabi with the bailout.
BL: Did this problem affect the Saudi economy?
Al Shehri: We don’t see the Saudi economy affected at all. The Saudi economy has strong fundamentals. Everybody now is eyeing Saudi Arabia and everybody is anxious to be in the Saudi market.
BL: What about the role of the Saudi business women?
Al Shehri: Recently we started seeing Saudi business women involvement in many sectors. In the Saudi Chamber of Commerce, we have two women members and there are many other Saudi women involved in high governmental posts. King Abdullah bin Abdul Aziz, the King of Saudi Arabia played an effective role in supporting Saudi women. For King Abdullah, advancing women’s rights in Saudi Arabia is a key point in his ambition to modernize the Kingdom’s
BL: Let’s talk about your expectations, objectives and plans for Khalijia Invest?
Al Shehri: At Khalijia Invest, we think it’s time for the local players to perform in accordance with the professional and international standards. This is our goal and this is what we want to do. We aim to become a big player in order for us to bring our investors true value and make them pleased, relaxed and convinced. We want to prove that the local players can do something like the international players. We have an excellent highly reputed professional team and we believe in them and we support their innovations. I think we’re gifted that we’re in the right markets, so there is no reason for us not to do very well.
BL: How will you close the year 2009?
Al Shehri: We have a corporate finance department that is up and running. We have deals already there. We are also aiming at corporate finance to be one of our strongest assets in going to the market. We will also work on growing our funds and our asset management team as well. You cannot grow from day one and put one billion Euros in your funds. This will have to be done over some time, organically. We are working together with our corporate finance; we are doing advisory work for several clients. We are confident that we will do well.
In fact, Khalijia Invest even before its recent inauguration has taken the mandate of three corporate finances, one of them to change the Saudi Football League (Saudi Professional League Commission-SPLC) and turn it into a professional league. This shows that though the company is newly-established, the government of Saudi Arabia has taken trust in Khalijia Invest and offered them the opportunity to give advice on converting the Saudi League from the traditional image into a professional league.
Even though we’re not heading corporate finance, we are aware of some of the issues that other companies are not aware of. By undertaking major mandates and participating very actively in the Saudi market, Khalijia Invest has already kicked off its success. Hence, we want to be considered as the asset manger as well as a corporate finance solutions provider.
BL: No doubt, Khalijia Invest has big hopes, big ambition and has the support of the government. Does Khalijia Invest have any intention or any plans to go and establish a fund abroad?
Al Shehri: Yes, we have the plan but not in this coming period, maybe in 2011. But we will explore potentials in India and Kazakhstan. We think there is potential in these countries and we have investor interest for such regions. Most of the Saudi investors are smart and they invest all around the world. They would like to see a local company that goes and open doors for them internationally. We do believe in such opportunities but we think that in the coming years, Saudi Arabia will be the center of the region and its market will be a global hub for opportunities and deals. We will focus on Saudi Arabia for the next two years and then later on we might consider expanding our activities to other countries. We have the local talent and understanding and we should work in our local market primarily.
BL: Most of the GGC countries are trying their very best to diversify their economies from being dependant on oil and gas. How far do you think this will apply to the Saudi economy?
Al Shehri: The government is now aiming to invest in the country, in education and healthcare and other services sectors. The recent investments in the new Saudi cities and other important projects make the economy of Saudi Arabia really diversified.
BL: Many Saudis invest in the United States. How far were the Saudi investments affected by the recent global meltdown?
Al Shehri: The problem is that we do not have reliable statistics about the number of Saudi investors who were hurt by the global financial crisis. But I think that most of the Saudi investors in the US were affected by this. Saudi investors are not only in the USA, they are in Europe, Asia and the MENA region. Yes, some of the Saudi investors were right in the middle of the financial crisis but I believe they learned their lessons.
BL: Are you considering both local and global investments?
Al Shehri: Exactly. We said ‘work local but act global’.
