Moody's assigns MQ2 rating to Jadwa Asset Management

London, 11 October 2010 -- Moody's Investors Service has today assigned an Investment Manager Quality (MQ) rating of MQ2 to Jadwa Asset Management, a division of Saudi Arabian investment bank Jadwa Investment. This is the first MQ rating in the Middle East region and reflects Moody's opinion of the firm's very good investment management capabilities, financial profile and investment performance. At the same time, the rating also takes account of the firm's limited operating history, exposure to "key man" risk and the challenges the firm may face in managing growth.

In Moody's opinion, Jadwa demonstrates the effective organizational structure and high standard of corporate governance characteristic of MQ2-rated investment firms. Jadwa's investment process is well structured and follows a top-down and bottom-up investment approach, drawing upon the investment team's discipline to combine a valuation and macro-driven asset allocation with fundamental stock selection. The investment process is supported by an investment team which draws significant depth of expertise from both inside and outside the Arab investment arena. "Jadwa has built an investment management platform that will be able to support further growth in assets. Moody's expects the team's disciplined investment process to contribute to further outperformance in Jadwa's niche markets," says Michael Eberhardt, Moody's Vice President and lead analyst.

Jadwa complements its in-house expertise with that of third parties to supplement its internal resources as necessary. Management has engaged external consultants to conduct independent reviews and outline process improvements throughout many critical areas of the firm. In Moody's opinion, this independent validation has helped Jadwa develop a sophisticated investment platform in line with the demands of the business. In addition, Jadwa's implementation of a Bloomberg order management system (AIM) pulls together the complexity of trade execution, position management and compliance in an efficient manner. Furthermore, Moody's understands that Jadwa uses external, Shari'ah scholars so that its product offerings are compatible with Islamic Shari'ah law. Jadwa's partnerships with Russell Investments, Investec and CIT demonstrate the firm's ability to reach beyond its traditional investment offering by combining its niche expertise with the strengths of its external partners.

Moody's believes that Jadwa's challenge to grow is primarily personnel-driven. A shortage of local investment talent and the challenge of retaining key members of the intestment team are likely to test Jadwa's ability to maintain the high standard of its personnel.

However, Moody's notes that Jadwa has been successful in attracting talent both locally as well as from outside the GCC. Moreover, the firm also reinforces the team's capabilities through internal and external training, and offers equity-based incentives to align interests and minimize turnover of key staff.

The rating agency also notes that Jadwa has outperformed its peers within the Saudi and GCC equity arena since the launch of the firm's flagship funds in 2007. This performance track record is the result of Jadwa's investment discipline and has resulted in the recent growth in assets under management. Nonetheless, by global standards, Jadwa remains a relatively small asset manager with a short performance history. A number of the firm's flagship funds have recently completed their three-year anniversary, thereby offering a track record of a sufficient duration to demonstrate the team's performance capabilities to an institutional investor base. Maintaining the firm's current track record of performance will enhance Jadwa's ability to grow assets. Successful management of this growth will put upward pressure on the MQ rating while failure may result in downward rating pressure.

From a financial strength perspective, Moody's believes that Jadwa has the resources necessary to support its business. Jadwa Investment's commitment to the asset management business is substantial as can be expected given the division's significant contribution to overall revenue and profitability. Relative to the global rated universe, Jadwa's revenue and resources are modest, but its profit margins and growth to date have been significant. The firm's initial capital investment was well in excess of regulatory demands and has been bolstered by additional investments from Khazanah Nasional, the Malaysian sovereign wealth fund.

The firm's lack of debt and the presence of Saudi royalty and key members of Saudi industry amongst the firm's board and shareholder base serve to add further support to Jadwa's firm financial standing.

Headquartered in Riyadh, Saudi Arabia, Jadwa Asset Management is a strategic business line of Jadwa Investment, which was founded in 2006.

As of 15 September 2010, Jadwa's assets under management totalled SAR 7.2 billion (US$ 1.9 billion), largely consisting of Saudi equities and private equity investments.

Moody's MQ2 Investment Manager Quality rating indicates a very good management and control environment. The ratings, which are expressed using a scale from MQ1 to MQ5, incorporate Moody's assessment of an entity's investment management activities and other management characteristics, including, as applicable, the performance of its product offerings, its financial profile, and client servicing performance. The principal methodology used in rating Jadwa Asset Management was "Moody's Approach to Evaluating and Assigning Investment Manager Quality Ratings to Asset Management Companies," published in August 2005 and available on www.moodys.com in the Ratings Methodologies sub-directory under the Research & Ratings tab. Other methodologies and factors that may have been considered in the process of rating these issuers can also be found in the Ratings Methodologies sub-directory on Moody's website.

NOTE: Moody's Investment Manager Quality ratings do not indicate a company's ability to pay a fixed financial obligation or satisfy contractual financial obligations, either in its own right or any that may have been entered into through actively managed portfolios. Also, the ratings are not intended to consider the prospective performance of a portfolio, mutual fund or other investment vehicle with respect to appreciation, volatility of net asset value, or yield.

-Ends-

London
Michael Eberhardt, CFA
Vice President - Senior Analyst
Global Managed Investments
Moody's Investors Service Ltd.
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

London
Kathryn Kerle
Senior Vice President
Global Managed Investments
Moody's Investors Service Ltd.
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Moody's Investors Service Ltd.
One Canada Square
Canary Wharf
London E14 5FA
United Kingdom

Copyright 2010 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

CREDIT RATINGS ARE MOODY'S INVESTORS SERVICE, INC.'S ("MIS") CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MIS DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL, FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT.

CREDIT RATINGS DO NOT CONSTITUTE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS ARE NOT RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. CREDIT RATINGS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MIS ISSUES ITS CREDIT RATINGS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY'S PRIOR WRITTEN CONSENT. All information contained herein is obtained by MOODY'S from sources believed by it to be accurate and reliable.

Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided "AS IS" without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources Moody's considers to be reliable, including, when appropriate, independent third-party sources. However, MOODY'S is not an auditor and cannot in every instance independently verify or validate information received in the rating process. Under no circumstances shall MOODY'S have any liability to any person or entity for (a) any loss or damage in whole or in part caused by, resulting from, or relating to, any error (negligent or otherwise) or other circumstance or contingency within or outside the control of MOODY'S or any of its directors, officers, employees or agents in connection with the procurement, collection, compilation, analysis, interpretation, communication, publication or delivery of any such information, or any direct, indirect, special, consequential, compensatory or incidental damages whatsoever (including without limitation, lost profits), even if MOODY'S is advised in advance of the possibility of such damages, resulting from the use of or inability to use, any such information.

The ratings, financial reporting analysis, projections, and other observations, if any, constituting part of the information contained herein are, and must be construed solely as, statements of opinion and not statements of fact or recommendations to purchase, sell or hold any securities. Each user of the information contained herein must make its own study and evaluation of each security it may consider purchasing, holding or selling. NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY SUCH RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY'S IN ANY FORM OR MANNER WHATSOEVER.

MIS, a wholly-owned credit rating agency subsidiary of Moody's Corporation ("MCO"), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MIS have, prior to assignment of any rating, agreed to pay to MIS for appraisal and rating services rendered by it fees ranging from $1,500 to approximately $2,500,000. MCO and MIS also maintain policies and procedures to address the independence of MIS's ratings and rating processes.

Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading "Shareholder Relations - Corporate Governance - Director and Shareholder Affiliation Policy."

Any publication into Australia of this document is by MOODY'S affiliate, Moody's Investors Service Pty Limited ABN 61 003 399 657, which holds Australian Financial Services License no. 336969. This document is intended to be provided only to "wholesale clients" within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY'S that you are, or are accessing the document as a representative of, a "wholesale client" and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to "retail clients" within the meaning of section 761G of the Corporations Act 2001.

Notwithstanding the foregoing, credit ratings assigned on and after October 1, 2010 by Moody's Japan K.K. ("MJKK") are MJKK's current opinions of the relative future credit risk of entities, credit commitments, or debt or debt-like securities. In such a case, "MIS" in the foregoing statements shall be deemed to be replaced with "MJKK". 

MJKK is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly owned by Moody's Overseas Holdings Inc., a wholly-owned subsidiary of MCO.

This credit rating is an opinion as to the creditworthiness or a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors. It would be dangerous for retail investors to make any investment decision based on this credit rating. If in doubt you should contact your financial or other professional adviser.

© Press Release 2010