Kuwait Finance and Investment Company (KFIC), a Well-Established Asset Manager in Kuwait

Interview with Tareq M. Al-Bahar, Board Member & CEO of Kuwait Finance and Investment Company (KFIC)

What is your overall assessment of the provision of the investment sector in Kuwait? How do you see the sector in 2017, and where is it heading?

In Kuwait, the sector started very strong in January. The stock market was one of the best stock markets in the world in terms of volume. We can still see the effect of January now, but it is not as strong. Our analysis is that this will continue in 2017, though we cannot promise this. We will have a good year, a better one than we had the past three or four years.

To what do you attribute this growth and change that you see?

The government contributed in a large way to this growth. They injected funds and the local portfolios for their present worth. Some of the settlements of major customers contributed, such as the sale of Americana, which injected a large amount of money in the market and helped grow the volume of trading.

What is your overview of KFIC? What do you provide to your clients?

Since year 2003, we are in KFIC providing full-fledged financial services to our clients. We are providing portfolios and fund management through our Asset Management Team. Currently, we have approximately USD 1 billion of assets and funds under management. We also offer to our clients investment banking services and unique structured products that fit clients’ risk appetite. We provide to our clients a direct access on different stock markets including US, GCCs, Egypt, and Kuwait through our On-Line Trading Platform MUTADAWIL. We also provide retail and commercial finance to our clients, an activity that is subject to Central Bank of Kuwait Regulation.

Which of these business is the strongest?

The diversity of KFIC’s activities is differentiating KFIC from its competitors and enabling KFIC to explore the growth opportunity in each activity when market conditions become favourable for such growth. For example, during the financial crisis, we witnessed a steep decline in asset management and brokerage revenues, while a steady cash flows was generated from financing activity.

Our focus is to provide high quality services to our clients in asset management and wealth management fields and concentrate on investing that are diversified sector-wise and geographically.

How do you differentiate yourself from other asset managers here in Kuwait?

Integrity, Sustainability, and the High level of Quality in the services that we are providing to our clients are our key advantages in differentiating ourselves. We have maintained our client base compared to other asset managers, especially during the crisis from 2008 to 2014. Our number of portfolios and clients did not decline materially. Unlike other companies, which faced going concern issues, and others, which witnessed major deterioration, we have remained servicing our clients. The performance of our funds compared to other companies was one of the best.

Who are your clients in asset management?

We have a boutique asset management department. Our major clients are high net worth individuals and private institutions in Kuwait. Some of our clients also reside in GCC. It is good to mention that, KFIC does not have assets under management for the governmental bodies in Kuwait, unlike other companies, which rely mainly on the Funds deployed by Kuwaiti governmental bodies like (Kuwait Investment Authority).

You mentioned that, KFIC has diversity in activities. What are the areas of growth that you see for KFIC?

Our focus is to provide high quality services to our clients in asset management and wealth management fields and concentrate on investing that are diversified sector-wise and geographically. In asset management and wealth management, we bring products and opportunities to our clients and we do very thorough due diligence on what we offer to them. We offered to our clients several investment opportunities with acceptable level of risks and with excellent yield.

Can you describe your vision in terms of the real estate expansion here in Kuwait?

In general, I can say that currently we are not going to expand in the real estate business in Kuwait. Our real estate assets in Kuwait do not present a material amount in our balance sheet. We see the liquidity in the real estate market is declining, which affected and will continue affecting the prices in the real estate market. Nevertheless, if there is an opportunity in the market for us or for our clients that we can generate value from, we will definitely look at it.

We do very thorough due diligence. We are presented with many opportunities in real estate abroad. We have our team in Kuwait in the investment department who spends sufficient time doing the due diligence. They view more than one investment opportunity and they come to us, the committee, and the board to make sure that it fits our criteria. Then we present it to our clients. They have been with us during several investments in the past. We have the credibility and they trust that we went through all the proper channels before presenting these opportunities to them. This is what has made us successful in marketing those real estate investments to them.

What is your overall strategy for KFIC? Where would you like to see the company in the medium term, if everything goes well? What is your mission for what the company?

Two years ago, a five-year growth strategy 2015-2019 has been approved by the BOD. Part from our strategy has been achieved during the last couple of years. Going forward, we are striving to achieve the remaining targets of this strategy. Our focus is to concentrate more on the direct investment side and entering into investment opportunities with our clients that generate acceptable return with steady pattern of cash flows with potential of capital appreciation upon exiting. We want to increase the contribution of the direct investment to our revenues and net profits.

We aim to grow the assets under management volume that we currently have and to widen our customer base to have a mix of clients including institutions, governmental institutions, and high net worth individuals. We have a one-stop investment product where a client can come and open a portfolio, get finance, and go through our brokerage and trade. We will continue providing our financing services to retail and commercial clients with a very conservative approach taking into consideration the macroeconomic environment changes that we have been witnessing since 2014.

Geographically, what is your presence outside of Kuwait?

Our strategy several years ago was to start having a presence outside Kuwait and diversify the geographic allocations of our assets. We have indirect investment in the real estate markets in the region, namely Bahrain and Jordan. We have direct real estate investment in the US and the UAE.

Do you have any message for Kuwaitis, potential clients, and international investors?

The environment of doing business in Kuwait has changed to better and will continue evolving. The CMA came into effect in 2011 with lots of fears, but I can see now the financial market has started to absorb the necessity of the existence of a regulator. We can witness improvement in Kuwait Stock Exchange (Boursa Kuwait). Several improvements in the trading systems/mechanisms are announced and are taking place now. New products have been offered such as the license of Market Maker. This will definitely attract the foreign investors. I strongly believe the government should continue supporting the efforts of the CMA and Boursa Kuwait, so we can see a different financial market in Kuwait. We will see healthy volumes and a very liquid market.

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