Interview with Dr. Ali Al Shamali

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Given the current economy, where should a smart investor invest?


Can you give a few examples of high potential markets for the future?

Kuwait Investments, Chairman of Ektettab Holding Company and Al Madina Investment Company , Dr. Ali Al Shamali: Today we are receiving over 20 opportunities a day and I tell my colleagues it is very important to understand what kind of management is behind this opportunities rather than what they are about.  Simple ideas for screening these sectors is not enough. There are stupid ideas with great management teams behind it and there are also very appealing opportunities with poor management teams and destroy the idea. For example, in telecom it is a simple industry and there are companies that have done very badly with high exposure in different sectors, telecom itself is diversified and you have to understand these opportunities. In all sectors it is important to realize this. The crisis proved we need to look at business that are self-contained and self-managed and have great potential for expansion around the world. This all relates to management. In general I see growth opportunities in operational sectors including telecom, oil sectors, and any sector that produces cash on a daily basis is an opportunity to look at and enter.  I think the Middle East is most important for us due to good growth, government support, and good fundamentals. South America, however, is also a great place to go and will be a powerful region with good growth and demand where infrastructure is developing rapidly. You see a lot of international companies moving out there and doing well. Europe has potential but you need to be selective with the opportunities.  Different areas have different specialties - for example, London and finance. Also, Egypt would be a good place to enter massive consumption markets.  You need to tailor your products to fit the region you would like to enter.

Etkettab is very active in many sectors including telecommunications, asset management, funds, real estate, and you have license from Spain to Brazil in your telecommunications subsidiaries.  Is there any particular strategy behind all of these investments?

Kuwait Investments, Chairman of Ektettab Holding Company and Al Madina Investment Company , Dr. Ali Al Shamali: The group is made of three divisions: real estate, services (cash rich sector), asset management (investment house/bank).  We started the first shari'ah compliant fund invested in India and we have maintained it for three years despite the crisis and it is one of the best performing funds in the region. We have an IPO fund as well under our asset management division. In the service sector, telecom is very important and it is the fastest growing sector in the world. We have created a business model where we are included in mobile services and we are replicating this internationally.  Licensing projects are also important in the sector and could make up 60% of our business.  Distribution and marketing is especially important because it can make or break your business.  We have managed to expand upon our business model internationally from day one and this has allowed us to have a great speed of growth whether organically or by acquisition. 

This growth requires huge funds and we have seen liquidity problems by other players in the region.  How are you funding all your investments and where are you seeking your financing?

Kuwait Investments, Chairman of Ektettab Holding Company and Al Madina Investment Company , Dr. Ali Al Shamali: Before the crisis we were seen in the market with the least leverage- our leverage is quite small compared to our size.  Today after devaluation in assets we are probably below four billion but we have managed to handle all of our leverage wisely.  We are also cash rich because of our operations and as you can see over 50% of our assets are cash rich and generating cash on a daily basis and this is why we have managed to acquire and maintain our assets.  In telecom, for example, we pumped in over 45 million in telecom and real estate managed to pump in more than 15 million dollars.  Since 2008 we have paid over 300 million dollars of our debts off and reduced our debt from 450 to 150 million dollars and because of our leverage size and cash rich endeavors we have been able to do so.

What is your biggest challenge?

Kuwait Investments, Chairman of Ektettab Holding Company and Al Madina Investment Company , Dr. Ali Al Shamali: What matters at the end of the day is having the right management and I feel that our greatest asset is our management.   The team is quite ready to meet challenges, shrewd, reliable, and trust worthy.  During the crisis we maintained our spirit even though we reduced our salaries by 5% (they have since been reinstated).

Looking forward what kind of strategy would you like to implement and what is your long term vision?

Kuwait Investments, Chairman of Ektettab Holding Company and Al Madina Investment Company , Dr. Ali Al Shamali: We are hoping within the next five years we will be one of the top three investment groups in the region.  We don't want to be number one because usually number one and number two take a lot of the hits from the government. We want to exist on four main continents, have more of an operational investment portfolio, and enter into the banking sector to complement the business we have to support growth.  We also want to spread the shari'ah compliant business model because the crisis has proved it is one of the most stable groups and also least effected. I think we are much better off as a shari'ah compliant institution than others who are not and we seek businesses who are willing to be shari'ah compliant. 

What is your final message about the sectors you are present in and about Kuwait itself?

Kuwait Investments, Chairman of Ektettab Holding Company and Al Madina Investment Company , Dr. Ali Al Shamali: For fifty years we have seen that if you want to invest you should go to Europe, the US, or Japan.  After fifty years of experience with different institutions I think that we can say in the region and Kuwait we know have the companies and management to actually grow your money and manage it well.  Throughout the crisis we have seen this and we haven’t even heard about bankruptcy here.  We need to rebuild trust and we should pay attention to what is going on in the region.  The general research in the markets doesn’t shed enough light on this region which is, in fact, the fastest growing region in the world and we have all of the fundamentals to have a powerful economy.  There may be some political barriers at the moment, however, the future is here and the crisis has proved that this is one of the most stable regions in the world when it comes to investments and business.