Saudi Arabia 2017 | FINANCE | INTERVIEW

TBY talks to Yousef S. Al-Sager, Chairman of Saudi Kuwaiti Finance House (SKFH), on its advisory activities, the opportunities with Vision 2030, and the challenges ahead.

Yousef S. Al-Sager
Yousef S. Al-Sager is Chairman of the SKFH. He holds an MBA from the University of California and a bachelor’s degree in business administration from the University of Kuwait. He also held several leading roles at The Industrial Bank of Kuwait, including being a member of the Board of Directors of the National Investments Company, as well as being the head of the Internal Audit Committee, and a member of the Executive Committee. He is currently the Executive Director at Al Riyash Trading Co, the Lighting Systems Company, and Al Sager Industries.

How would you describe your client base and the core line of business?

For SKFH, asset management and investment banking and private equity both are equally important to serve its client base. Our client base includes large and medium-sized financial institutions, family offices, large and medium-sized corporates, and retail clients. Kuwait Finance House is globally recognized for its sukuk services. We have many interests, but have decided to concentrate more on this area because of the current deficit and the need in the market for such finance. There is high demand for sukuk, not only in Saudi Arabia or the Middle East. It has also become a growing trend in the European market, in the UK or Luxembourg for instance. In Saudi Arabia, due to the high demand for finance in an alternative SME market, we are currently taking advantage of this opportunity and trying our best to earn the status of the leading company in this area. There are many new possibilities and assets up for sale at a great discount. Therefore, our task is to evaluate, see what area the client is interested in, and then make assessments.

Which sectors do you expect to benefit the most from the ongoing reforms associated with Vision 2030?

Saudi Arabia is experiencing the largest economic transformation in the country's history in an attempt to reduce its reliance on oil. The Saudi government aims to raise more than USD100 billion in non-oil revenue a year by 2020, through measures including value-added taxation, as it seeks to balance the budget. Capital markets have a great role to play in the future economy. The diversification that is being promoted by the vision is empowering local entrepreneurs and investors to look toward the future and invest in it. As such, the experience and market knowhow, which companies such as SKFH possess, will prove vital. In terms of the sectors that could thrive the most in the coming years, this country is creating an opportunity for future health and education demand; hence, we are considering these sectors right now. Saudi Arabia has a great deal of interest in building more schools and healthcare facilities. More importantly, a large portion of this comes directly from the private sector, which is crucial as this means less expenditure for the government and makes this a great opportunity for the private sector to move in that direction and begin to take the lead.

What are your expectations for the company in the year ahead?

The Saudi economy is going through challenging times due to massive economic transformation; however, we believe every challenge provides an opportunity, and we see many opportunities in the equity and debt capital markets of Saudi Arabia in the coming years. SKFH has not built in optimistic revenue targets for next two years but rather has developed a focused strategy for next three years and would look to improve operational efficiencies. SKFH would retain and source the right talent to implement its strategy. Right now, we are concentrating on our clients' needs, and do not expect to do much before 2018, which will certainly be a much better year for SKFH. There are many challenges ahead of us this year, as well as the next one. There will be more cost cutting and consolidation for efficiency. In spite of the fact that there are a great deal of opportunities to be seized, the present geopolitical and financial circumstances, including the oil prices and the US elections, affect the environment here, because we are overwhelmingly bound by the US dollar. Nevertheless, we see an optimistic future ahead. There are many favorable changes being made concerning the laws, which are supposed to encourage foreign investors to come to Saudi Arabia. Several things, including low stocks and low oil prices, should encourage international investors to come and make investments, and we will be there to guide them throughout.