Al-Muthana Al-Maktoum

KUWAIT: On March 21, 2023, the National Investments Company held its Analysts Conference for the fiscal year ending on 31 December 2022. The conference witnessed the participation of Girish Nair, NIC’s Chief Financial Officer; Bashar Khan, Senior Vice President – Investment Banking Sector; Al-Muthana Al-Maktoum, Executive Vice President – Wealth Management Sector, who presented a brief about the company and shed light on the positive financial results achieved in 2022, which proved that NIC was able to achieve stable financial performance, thanks to its strategy and dynamic diversification to achieve value aimed at providing sustainable returns and maximizing shareholder value.

Girish Nair presented a detailed report about the company’s financial position, emphasizing that the company has recorded a net profit of KD 8.7 million and earnings per share equivalent to 11 fils. Through shareholders’ equity, the company’s comprehensive income has reached KD 9.4 million, and the total comprehensive income reached KD 18.1 million for 2022.

Girish Nair

During the comparative period of 2021, the company recorded a profit of KD 24.4 million, earning per share of 31 fils, and a profit of KD 25.6 million as other comprehensive income. The total comprehensive income amounted to KD 50 million.

Girish pointed out that during 2022, the return on average equity and average assets based on net profit amounted to 4.2 percent and 3.3 percent, respectively and the leverage ratio reached 24.9 percent and the liquidity ratio reached about 56.3 percent during that period. And that the total assets and shareholders’ equity attributable to the parent company for 2022 amounted to KD 271 million and KD 198.8 million, respectively, compared to KD 290.6 million and KD 216.8 million, at the end of 2021.

Earnings per share for the current year amounted to 11 fils. In line with NIC’s commitment to delivering consistent and positive returns to shareholders, the Board of Directors has recommended a dividend of 28 fils per share for the year ended 31 December 2022, through Retained earnings and part of the voluntary reserve, subject to approval by the General Assembly and other regulatory bodies.

NIC’s assets

Nevertheless, the company’s total owned assets and shareholders’ equity decreased by 7 percent to reach KD 271 million compared to KD 290.6 million at the end of 2021, while the company’s total assets under management increased to reach KD 1.121 billion as of December 31, 2022, compared to assets of KD 1.09 billion during the previous year 2021, an increase of 3 percent.

NIC’s performance

Presenting and analyzing the main drivers of NIC’s performance, Girish has referred to the total income during 2022, which amounted to KD 19.9 million; a primary contributor to this is a dividend income of KD 8.5 million as well as the management, brokerage, and advisory fee income of KD 9 million. The total expenses in 2022 amounted to KD 10.4 million, compared to KD 11.1 million in 2021.

Income from management, brokerage, and advisory fees grew by 19 percent to reach KD 10.9 million by the end of 2022, compared to KD 9.1 million during the same period in 2021. This growth was mainly driven by brokerage revenues of Al-Waseet Financial Business Company, with an increase of 11 percent and an increase in consulting fees and other income by 755 percent.

Performance of NIC’s main sectors

At the conference, Girish also reviewed the achievements of NIC’s leading sectors. He stated that the MENA securities sector had taken advantage of Boursa Kuwait’s new authorized tools, provided Market Maker service to 11 companies, and benefited from some investment opportunities by directing clients’ funds and portfolios toward qualified sectors and companies. This has led to achieving positive returns for the company’s investment funds.

Wataniya Fund yielded3.05 percent and yields of Mawarid, Al-Mada, Zajil, and Al-Darij were -1.84 percent, -5.09 percent, 3.00 percent, and 0.25 percent, respectively as of 31 December 2022. The company’s discretionary portfolios generated a return of 3 percent higher than the benchmark, while our flagship local mandate produced a return of 8.9 percent as of December 31, 2022, increasing interest rate environment has negatively affected the performance of equity markets.

Girish also shed light on the remarkable achievement of the Investment Banking Sector at NIC; it has played the lead coordinator role, listing advisor, and a joint placement manager and subscription agent in several listings, such as the listing of Ali Alghanim and Sons Automotive Company, covering more than 10.8 times the offering value, to be the fastest listing process in Boursa Kuwait’s Premier market. Also, the subscription to increase the capital of National Consumer Holding Company and Alrai Media Group, and the merger of Boubyan Petrochemical Company, Educational Holding Group, Safat Investment Company, and Capcorp Investment Company.  Also, the company is in the final stages of negotiating an IPO, listing authorization for a Kuwait-based company, a sale and acquisition mandate for an oil and gas company in Kuwait, and a robust set of cross-sector proposals in Kuwait.

NIC’s Alternative Investments Department has invested in an Amazon facility and a real estate fund based on retail services assets in the United States of America. The company has also invested in several direct venture capital opportunities in a leading global financial technology company, Mezzanine investment for multi-family development in the United States of America, and other financial products. It continues exploring new investments and direct investment opportunities.

As for the Real Estate Investments Sector, it continued to improve the collection rates and occupancy of the real estate portfolio. The company achieved collection rates of 73 percent and occupancy rates of 87 percent during the fourth quarter of 2022. The sector also launched the automated real estate system, expanded the number of clients and secured new real estate portfolios> and also working on renovation of several managed real estate portfolios, and renewal of Al-Wataniya Resort management contract.

Bashar Khan

Business development

Bashar Khan, Senior Vice President of – Investment Banking Sector, said that NIC’s strategy focuses on four key elements to grow the business and enhance its competitive position, those are: building assets under management, utilizing technology, and attracting competencies, improving governance, and developing the investment banking leadership in the market segment.

Building assets under management works on three main initiatives, where advisory services are developed in a structured manner, focusing on venture capital and international real estate products. To achieve this, the company maintains a strong team and a group of professional bankers that can support growth; in addition, a solid reputation is being built to bring joint investment opportunities to the company’s investors, such as Boursa Kuwait, Kuwait Foundry, FINCO, and Amazon.

He went on to say that the second element of NIC’s strategy focuses on utilizing technology and attracting competencies; the company puts much effort into digital resilience and investing in the digitization of processes and the development of work environments; in line with that, NIC has launched new digital channels for customers such as online trading, customer platform, and WhatsApp customer relationship management application, while harnessing operational efficiencies through outsourcing processes and working with co-consultants to leverage their capabilities, knowledge, and experience.

The third element of our company’s strategy is improving governance, one of the key reasons behind upgrading NIC to the first market status on Boursa Kuwait, demonstrating our commitment to increasing transparency and control, in addition to updating our risk management framework to include quantitative and qualitative metrics in line with international best practices. Finally, the fourth element in the strategy is building and developing investment banking leadership in the mid-market segment of investment banking with a focus on medium-sized clients, where the company could attract new key clients, complete high-profile transactions, and build specialized teams in capital markets, mergers and acquisitions, and venture capital that were identified as key growth areas.

Seizing opportunities

On the other hand, Bashar Khan shared many examples that reflect the company’s ability to seize opportunities and execute them in the market, such as Boursa Kuwait, which was an idea of investing in obtaining a strategically important asset with strong, recurring and sustainable cash flows, due to its leading position in the market. A controlling stake in Boursa Kuwait was acquired in February 2019. The company’s direct stake reached 14.4 percent since the acquisition as Boursa Kuwait underwent an IPO and listing process, and today’s market price has reached twice the purchase cost. The investment has achieved a total return of 9.67 times based on the current market values.

“Kuwait Foundry is another example,” added Khan, adding that the investment’s significance was to acquire the pricing asset with an intrinsic value much greater than the prevailing market value, where 20 percent was received in January 2019. The necessary work was done to achieve weight. Most of the company’s shares were recovered in this transaction with a total multiplier return of 1.22 times on a market value basis.

A third good example is Amazon Kitzingen, where NIC has financed this facility in Germany. The project has been leased for 15 years and is expected to generate a cash return of 10 percent over 15 months. A fourth case is a Mezzanine investment in Germany to develop the Amazon Contwig project, where the same developer of Amazon Kitzingen develops the project, which will generate a return of 11 percent over 12 months.

Concluding the conference, NIC has confirmed constant communication with customers and shareholders while keeping them informed of developments in the company through the quarterly analyst conference.