BRIDGING THE GAP

Kuwait 2017 | ECONOMY | INTERVIEW

TBY talks to Fawaz Al-Issa, Vice-Chairman & CEO of Turkapital Holding, on the road to exits, the role of Islamic finance, and maintaining a firm footing amid a changing landscape.

 Fawaz Al-Issa
BIOGRAPHY
Fawaz Al-Issa started his career in 1989 with the Bank of Kuwait & Middle East. In 1993, he joined Kuwait Finance House (KFH) Group and in 1996 was seconded to Kuwait Turkish Participation Bank (KTPB). Al-Issa acted as the link between Kuwait/GCC and Turkey for many years. In 2007, he became a Member in the Board of KTPB and established Turkapital Holding as part of KFH Group to be the group’s investment arm in the region. Al-Issa is a board member of KTPB and the Vice-Chairman & CEO of Turkapital.

How would you characterize the past year for your operations?

We did reach the end of the investment plan, acquiring and booking investments, and now the shareholders, including our largest shareholder Kuwait Finance House (KFH), and other investors are expecting payback so we are exiting the investments. Turkapital is structured originally as a fund, which means that, just like any other fund, there is always going to be an exit plan. As we are currently in the eighth year of the fund, we are discussing and trying to resolve the road to the exit and this is where we are. Turkapital functioned as the investment arm of the KFH group within Turkey, so the team at Turkapital originated many deals and opportunities in the market. Turkapital's team identified and closed deals in Turkey. Turkapital's portfolio of investments includes real estate (residential, industrial, and commercial), non-life insurance, and auto fleet leasing businesses. Operationally, they are all profitable while the challenge remains the Turkish lira's volatility.

What markets will be crucial for Turkapital in the upcoming year?

As a group, KFH remains interested in the Turkey/Eurasia region. For Turkapital, a vehicle that was created to invest in the same region and reached the end of the investment line, we are in the process to finalize the roadmap to exit. However, as a group, we remain interested in Turkey and the region, and we will continue to look at opportunities in private equity and real estate as well. Also, Turkey offers many attractive opportunities in different sectors like infrastructure, healthcare, and energy. We will also look at Eastern Europe and Western/Central Asia, including Russia.

What are some challenges in reconciling complex financial technologies with the principles of Islamic finance?

There is definitely a steep learning curve. Some of the complex financial models are still not even mastered by conventional economists and the finance world. So when coming to sharia-compliant economists and financial mathematicians, they have to reshape and tailor the models to fit. It is not impossible but it constitutes a challenge, and the risk is not to fall for the quick and cheap game. The players in the market should stick to a genuine ethical business and try to come up with models that are genuine as well, realistic, and more efficient than the previous ones. Although at Turkapital we are a small and young sharia-compliant fund/firm, we have consistently tried to maintain an ethical touch in our business.

What is your overall outlook for the upcoming year for Turkapital?

We will try to finalize the exit plan for shareholders and the investments as well. In addition, 2017 is going to be yet another worthwhile year for Turkey as the government had set a number of challenging objectives for Turkey as an economy and as a player in the region; socially, financially, and politically. We shall see how this evolves, and Turkapital will be in a good position to benefit and to take advantage of such developments hopefully.

What do you consider to be the most important change your company will implement in the medium term?

Our current focus is executing the exit plan and to meet shareholders' expectations hopefully while maintaining the group's presence in Turkey through a well-established business platform to originate, package, and launch investment opportunities form the region. We shall continue to formulate an asset exit strategy based on predetermined key financial and market indicators, as well as ensure regular monitoring of the performance of the assets alongside periodical reporting (quarterly and annual) of the asset performance and asset valuation.