DRIVING GROWTH

Kuwait 2019 | FINANCE | INTERVIEW

KAMCO develops innovative international product offerings for its clients, including products, investment advisory solutions, and platforms such as open architecture.

Faisal Mansour Sarkhou
BIOGRAPHY
Faisal Mansour Sarkhou joined KAMCO’s team in 2000 and was last promoted as CEO in 2014 after heading the corporate finance department from 2006-2010 and the financial services and investment division since 2010. Sarkhou is also Chairman of Global Investment House. He has extensive experience of over 19 years in investment banking, asset management, financial products, as well as financial services. He commenced his career in the late 1990s with KPMG Corporate Finance in Kuwait. He is an economics graduate with honors from the University of Birmingham, UK, and holds an EMBA with distinction from HEC Paris.

With KAMCO recently acquiring the majority stake of Global Investment House, what are the company's new ambitions?

KAMCO performed well in 2018, and its results are a testament to its progressive growth and enhanced operational performance. KAMCO continuously strives to enhance its contribution to a sustainable future in the local capital market by taking the role as lead managers in several debt issuances that have stimulated local and economic growth. We acquired a 69.5% majority stake in Global Investment House, one of the leading investment firms in Kuwait and the region. As we grow into a larger entity, we will be able to offer a wider selection of diverse investment solutions and introduce new offerings that can add great value toward local and regional investors. Our acquisition is in line with the Amiri 2035 Vision. By pursuing its vision of becoming the preferred asset management and investment banking player in Kuwait and the region, KAMCO can cater to a wider network through diverse investment solutions in various asset classes. This will assist the country's vision of becoming a key regional financial hub. KAMCO has also been awarded an exclusive role in providing its extensive advisory services to assist in the Boursa Kuwait privatization initiative. KAMCO is seeking further roles and opportunities to collaborate with entities within the public sector, as well as future privatization initiatives. On a regional level, prior to purchasing the majority stake in Global, KAMCO assessed the benefits of gaining access to Global's international presence in the UAE, Saudi Arabia, Bahrain, Egypt, Jordan, and Turkey. Through Global's established presence, both firms can further expand their exposure and offerings throughout the MENA region. KAMCO has now taken the first step toward its vision of becoming the preferred investment firm in the region.

In what ways can the ratio equity market capitalization, GDP, and the debt market ratio be improved?

Kuwait's market cap-to-GDP ratio at over 70% is broadly in line with major GCC peers. Though the market cap-to-GDP ratio for Kuwait is below some of the developed markets where the ratio is well above 100%, the ratio does not fully represent Kuwait's entire corporate market. This is mainly because the ratio excludes predominantly family-owned private businesses and conglomerate groups. Family-owned businesses in Kuwait are typically well run, funded by internal equity, and have high rates of return, which generally disincentivizes such entities from taking the IPO or listing route. Public stock markets' performance is key to pushing the market cap-to-GDP ratio up as well. The performance of stock markets after the global financial crisis did make GCC investors more risk averse and led to lower trading activity on regional indices, and Kuwait was no exception; however, we expect the trading activity in Kuwait's stock market and market performance to pick up from higher passive and active flows from regional mandates, as Kuwait witnessed upgrades in market status and features in global index compilers. The upgrades should drive the initial rally in large cap names included in these upgrades, as witnessed from the performance of the Premier Market Index YTD in 2018.

What will the roadmap and outlook for KAMCO's key business segments and asset classes look like?

We see potential for growth within each segment. Given the ongoing volatility in the global financial markets and the associated concentration risk for each asset class, investors should aim for a diversified portfolio of investments. We offer our clients access to all assets classes globally while assessing them with our best-in-class technology. In terms of asset classes, equity markets in the GCC are expected to see higher institutional interest going forward, and this is further solidified by the recent inclusion of certain GCC countries such as Saudi Arabia and Kuwait as emerging markets into global index compilers such as MSCI and FTSE. As a result, we expect more passive fund flows, higher foreign ownership of stocks, and increased trading activity on the region's exchanges.