Kuwait's, Investment Dar, made heads turn in the financial and motoring worlds recently when it bought 50 per cent of Aston Martin, the quintessential British sports car which has achieved fame on the race track and James Bond films, and has come to epitomise glamour, style and speed.
In a high-profile deal, the prestigious sports marque was sold by Ford Motor Company for $925 million to a consortium led by Prodrive chairman David Richards, American banker John Singers, Investment Dar and its investing partner Adeem Investment, also of Kuwait. Under the sale, Investment Dar acquired a slightly-over 50 per cent stake worth $464.16 million while Ford retained a $77 million operating stake, with the other three consortium partners sharing payment for the remaining $384 million. The deal was partly financed by international banks, which agreed to a $393 million Shariah-compliant loan.
Investment Dar's sporty acquisition brought the prowess of this visionary investment group - which has associated projects and assets under management in excess of $15 billion - in the spotlight of the business world yet again. As Chairman and Managing Director, Adnan Al-Musallam, puts it, "The world is Investment Dar's oyster and it aims to harvest as many pearls as possible through a one-two punch strategy of geographical expansion and investment diversification."
Raising the Bar
Last year was the "jewel in the crown" of Investment Dar's 11-year history, with the company posting remarkable results for 2006. Net profits grew by 14.3 per cent to KD92 million ($318 million), compared with KD 80.5 million ($278 million) the previous year while share profitability rose 13.3 per cent to 141.2 fils, compared with 124.6 fils. Assets increased by a remarkable 58.4 per cent to KD1.06 billion ($3.66 billion), compared to KD669 million ($2.31 billion), shareholders' equity skyrocketed by 74.6 per cent to KD309.1 million ($1.06 billion), compared with KD177 million ($610 million), while revenues jumped 34.6 per cent to KD162.6 million ($561 million), compared with KD120.8 million ($417 million) for 2005. Investment Dar also outdid itself with a 37.8 per cent return on equity and a 10.6 per cent return on assets, the highest ratio yet for the company in the investment sector, despite a notable 58 per cent increase in assets by and a 74.6 per cent growth in equity.
In light of the performance, the board has recommended a 50 per cent cash dividend and 7.5 per cent bonus share issue. "Last year was a difficult time for Gulf and Arab stock markets in general and Kuwait in particular, but we stayed on track to record superlative returns," says Al-Musallam. "This year we are poised to reap a harvest through global and regional expansion in diversified projects that promise high returns. All in all, the outlook is dynamic."
Last year Investment Dar restructured its finances by raising its capital by 20 per cent to KD104 million ($359 million) and issuing a $150 million sukuk on the market. "The five-year musharaka (joint venture) sukuk follows the unprecedented success of our debut musharaka sukuk the previous year," explains Al Musallam. "Issued in co-operation with Unicorn Investment Bank and WestLB London, the sukuk was significantly oversubscribed, attracting major investment and finance institutions across the Gulf, Southeast Asia and Europe." Offering a return of 1.25 per cent plus Libor, payable every six months during the first three years, in addition to a return of 1.75 per cent over the six-month Libor for the fourth and fifth years, the sukuk has also been listed on the Dubai International Foreign Exchange (DIFX).
Sparing No Effort
Meanwhile, as Investment Dar made its presence felt in the Arab world with investments and projects across the UAE, Saudi Arabia, Bahrain, Syria and Egypt, it also continued to blaze a trail into the West, buying into Grosvenor House, a landmark blue-chip property in London, UK. Frequented by royalty, celebrities and business leaders since its opening in 1928, the historic Grosvenor House is reputed for its exceptional style, service and five-star facilities. Set in Mayfair near museums and landmarks, grand department stores, West End theatres and businesses, this 'Grande Dame' of Park Lane is British to the core. It is now undergoing a multi-million-dollar renovation and will open its doors later this year. The takeover of Grosvenor House apartments was leveraged through Investment Dar's subsidiary, Park Lane Properties. "The deal is expected to yield annual returns of around 20 per cent per year and we ensured that the finance came from Shariah-compliant tools," Al-Musallam says.
Banking has always been a core business for Investment Dar and 2006 saw new milestones reached in its strategy to expand its Islamic banking operations. Following the purchase of a 30 per cent stake worth $85 million in Bahrain Islamic Bank (BIsB) in 2005, Investment Dar upped its share in the bank to 40 per cent, as the BIsB's profits for the year rose 77 per cent to BD13.1 million ($34.7 million).
The target, says Al-Musallam, is to own a controlling stake in BIsB, which was the first Islamic bank to be established in Bahrain in 1979 and a feather in Investment Dar's cap. "In the long term we plan to move most of our over 90,000 clients to BIsB, which will in turn drive the bank's expansion," he says. "BIsB is not only an asset to Investment Dar; it is an asset to the community as a good corporate citizen, providing interest-free loans for marriages, house renovations, education and health care."
Investment Dar is also setting up an investment bank in Bahrain to complement BIsB's commercial activities. Called Investment Dar Bank, the new entity will have a paid-up capital of $200 million, and a total capital is $1 billion. Investment Dar Bank will operate in accordance with Islamic law offering consultancy services, arranging corporate finance and assisting mergers.
Further afield, Investment Dar, last year took a 12.5 per cent stake in a new Islamic bank in Syria, in a bid to tap into that emerging Arab market. Called Cham Bank, the institution has a capital of $100 million of which $50 million is paid up, and is now pressing ahead with a five-year investment and expansion across the country.
In Saudi Arabia, Investment Dar's new venture, the Saudi Combined Company, was set up with a capital of SR600 million ($160 million) and recently kicked off operations. The Shariah-compliant company will offer consumer goods finance, asset management and consulting services. "Saudi Arabia holds a lot of promise," says Al-Musallam. "We will seek strategic commercial and investment opportunities to secure good returns."
Home Advantage
In Kuwait, 2006 marked another good year for three of Investment Dar's investment and finance subsidiaries - Al Dar Asset Management (Adam), Al Madar Finance & Investment, and Wared Finance & Leasing, while another new venture, Stehwaz Holding, was established with a capital of KD250 million ($864 million) to specialise in ownership and merger operations.
In real estate, Investment Dar continued to power ahead through three companies - Oqyana Real Estate Company, Manazel Holding Company and Khabary Holding Company - in which it owns significant stakes. Oqyana Real Estate is making waves with its awe-inspiring development at The World - a man-made archipelago of 300 islands in the shape of a world map being built by property developer Nakheel off the coast of Dubai, UAE.
Each island ranges from 23,000 sq sq m to 84,000 sq m in size, with 50 to 100 m of water between each island. The development will cover an area of 9 km in length and 6 km in width, surrounded by an oval breakwater. The only means of transport between the islands will be by boat and helicopter. Oqyana's project at The World is known as Oqyana World First and includes the 'Australia' and 'New Zealand' areas of the development, covering 1.86 million sq m, including 20 islands covering a total area of 417,288 sqm. Master-planned by Australia's Woods Bagot, the development has positioned Oqyana as a premier global real estate brand, and the company has now received several offers of interest for the project.
Should negotiations succeed, Oqyana Real Estate expects a profit of $1.5 billion, however, if the company sells the project partially, the expected returns from the sale will be $4.8 billion, with a net profit of $2.5 billion. Oqyana Real Estate made a net profit of more than KD35 million ($120 million) in 2006, qualifying for listing in Kuwait Stock Exchange, which it plans to do later this year.
Manazel Holding, meanwhile, has launched its first venture outside Kuwait with a 1 million sq m housing development in Cairo, Egypt. Sales of the houses are expected to begin in the fourth quarter of this year and Manazel is now seeking new land in west Cairo for another giant project in order to capitalise on explosive demand. Meanwhile, the company is also looking at similar projects in Saudi Arabia and Oman.
Khabary Holding Company is also pressing ahead with its Khabary Future City in Fahaheel, Kuwait City. This ambitious project covers an area of 250,000 sq m and will be home to an integrated, modern city, built from the ground up, with roads, business and educational buildings, shopping malls, parks, specialised medical clinics, and 15,000 sq m of underground parking.
In the field of logistics Investment Dar sees great scope for Rehal Logistics, in which it has a 30 per cent share. Rehal Logistics employs a significant fleet of trucks that includes open trucks of various shapes and sizes, tankers to carry liquids in compliance with international specifications, LPG transportation tankers and hydraulic lift services. Rehal aims to become a full-service logistics company and has taken steps towards these goals by acquiring a stake in Load Air, which is the only joint stock company in Kuwait licensed for air cargo.
Rehal, with its sister company Adeem Investment, also has a 45 per cent share in Gulf Craft, a leading UAE manufacturer of boats and yachts. With manufacturing facilities in UAE and Maldives Gulf Craft has established itself as a premier brand regionally and internationally, exporting to the GCC and Mena region, Australia, the US and Europe. "The stake in Gulf Craft is a strategic acquisition and will align with other Investment Dar activities, such as ferry, taxi and marine charter services to the Oqyana project in The World," says Al-Musallam. "It will also present an opportunity for Wared Finance and Lease and Al Madar Finance and Investment to finance Gulf Craft boat purchases."
Finally, the insurance sector, Investment Dar sees great growth for the takaful industry and has strategically increased its stake in Wethaq Takaful Insurance Company from 40.7 per cent to 67.4 per cent.
The Way Ahead
Summing up Investment Dar's success, Al Musallam says its achievements would not have been possible without the grace of God and the dedication of all its employees. He is also proud that Investment Dar - which was honoured with the 2006 Gulf Economic Award from former German chancellor Gerhard Schroeder - has stayed true to its roots. "We are an Islamic investment company and Shariah law is firmly entwined into the way we do business. This has led the way for us to become one of top 10 companies on the Kuwait Stock Exchange. Today our total assets exceed $3.6 billion, and our shareholders' equity more than $1 billion and we are the largest listed investment company in the GCC."
He continues: "The culture of corporate social responsibility also runs high at Investment Dar, with the company paying zakat towards charity, social and humanitarian work. In 2006, Investment Dar also reached out to Lebanon, donating $1 million to aid afflicted families during Israel's aggression against Lebanon."
Looking ahead, Al Musallam is confident that Investment Dar's future is secure. "We will keep expanding across the Arab world, while focusing on Saudi Arabia, Southeast Asia and Europe through strategic initiatives and alliances while remaining an engine of growth for our associates," he says. "Investment Dar is not only committed to success, it has proved that it knows how to achieve it and it plans to keep doing so through innovation and integrity."
© Business Islamica 2007
