KIPCO WORLD 2021 Welcome to the World of KIPCO The KIPCO Group is one of the largest diversified holding companies in the Middle East and North Africa, with consolidated assets of around US$ 32 billion. The Group has significant ownership interests in a portfolio of over 60 companies operating across 24 countries. KIPCO’s strategy of acquiring, building, scaling and selling companies in the MENA region has worked successfully for over 30 years. This strategy has created a portfolio of companies with a primary focus on financial services, media, real estate, manufacturing and education. Although the year 2020 was a challenging year, it was KIPCO’s twenty-eighth consecutive year of profitability. We are proud of how much the company has grown during this time. Thanks to KIPCO’s sound investment strategy in a broad range of industrial, real estate and service companies in Kuwait and the MENA region, the holding company’s assets have come a long way since the US$ 220 million in 1990. This edition of KIPCO World celebrates our success story and that of our core Group companies. CONTENTS 2 26 42 KIPCO Burgan Bank Jordan Kuwait Bank 98 116 128 United Real Estate Company Qurain Petrochemical Industries United Education Company GIG - Ad - Eng.pdf 1 2/23/21 10:05 PM C M Y CM MY CY CMY K 56 66 80 Kamco Invest Gulf Insurance Group OSN 142 154 United Gulf Holding United Industries Company KIPCO 2 KIPCO KIPCO KIPCO’s business strategy has, from the start, been reliant on seeking the best acquisition opportunities to strengthen its business and expand its business base. Many of KIPCO’s core operations today - including Burgan Bank and Gulf Insurance Group - were acquired from the Kuwaiti government in a privatization plan in the mid-1990s. Both these companies have expanded into groups, with holdings across the MENA region and beyond. KIPCO management also prides itself in being able to determine just the right time to exit from an investment. The 2007 sale of Wataniya Telecom - KIPCO’s “deal of the decade” - is a testament to this. That said, KIPCO constantly seeks to bring in technical expertise through forging partnerships. Furthermore, the management of KIPCO is constantly on the lookout for untapped market opportunities. www.kipco.com +965 1805 885 3 KIPCO KIPCO acquires UGB In 1988, KIPCO (then Kuwait Investment Projects Company) acquired 94% of United Gulf Bank’s equity. The same year, UGB transformed itself into an offshore bank. UGB is a leading asset management and investment banking group, with operations spanning the MENA region. From its home base in Bahrain, and through its regional network of affiliates, the bank engages primarily in asset and fund management, investment banking, private equity, and corporate finance. 1988 1995 A year of expansion The year 1995 was one of expansion for the KIPCO Group, significantly increasing holdings in real estate, banking and media. Early in the year, KIPCO acquired a controlling interest in United Realty Company – now United Real Estate Company – through the Kuwaiti government’s privatization program. The publically traded real estate investment and development company was acquired for an initial investment of KD 19.9 million. At year-end, URC’s total assets totaled KD 121.6 million with holdings in Kuwait, Lebanon and Egypt. KIPCO Group also acquired material interests in two Kuwaiti commercial banks, Burgan Bank and Al Ahli Bank of Kuwait. Government, Central Bank and independent studies had clearly established that the Kuwaiti market was overbanked and ripe for Gulf DTH, marking KIPCO’s direct entry into the entertainment and restructuring. KIPCO supported the view of the authorities that banks media industry. The mission of Gulf DTH was to build a subscriber- should be merged and strengthened. based satellite television broadcast business serving the entire Middle East region. KIPCO’s entry into this fast-growing market was The third major investment of the year of the year was the formation of through a joint venture with the global entertainment giant Viacom. 4 KIPCO Entering the insurance and industrial markets The year 1996 marked KIPCO’s expansion of operations to include insurance and industrial activities. KIPCO acquired Gulf Insurance Company – now Gulf Insurance Group – as part of the Kuwaiti government’s privatization process. At the time, the insurance company ranked third and today it is the leader in Kuwait’s downstream industries sector in Kuwait insurance market and with operations in and the GCC states and it operates a both life and non-life insurance segments. diversified portfolio of investments in the Today, it is the largest insurance company energy, food and basic industries sectors. in Kuwait in terms of written and retained premiums and has grown into a regional KIPCO acquired SADAFCO – the Saudi insurance solutions provider in the MENA Dairy and Foodstuff Company – that region. year. The Jeddah-based company then focused first on the production of dairy The same year saw the establishment products and has since expanded to a of United Industries Company, wider food product range. KIPCO’s industrial arm. UIC invests in the 1996 1998 KAMCO is established KAMCO, now Kamco Invest, was established in 1998 with the mission to significantly alter the local and regional investment landscape. A subsidiary of United Gulf Bank, Kamco Invest was listed on the Kuwait Stock Exchange in 2003. Kamco’s main activities are investment banking and asset management. Its Investments Division specializes in different investments, financial and advisory services, and investment research which tracks the latest directions and trends across regional and local economies as well as equity markets. 5 KIPCO SADAFCO IPO In 2005, KIPCO executed a partial exit from SADAFCO through an IPO that was oversubscribed 6.5 times. The successful IPO demonstrated the strong support and trust that Saudi investors placed in the Jeddah-based dairy company. 1999 2005 KIPCO acquires a stake in Wataniya Telecom In 1999, KIPCO was one of the 17 founding members of Wataniya Telecom, gradually building up to a controlling stake. In 2002, KIPCO’s Faisal Al Ayyar took over as Chairman and led the company to hold a 40% share of the Kuwaiti telecom market. Wataniya expanded regionally, entering into Algeria, Tunisia, Iraq and Saudi Arabia in the span of only four years. 6 KIPCO Qtel and KIPCO agree Wataniya Telecom transaction In March 2007, KIPCO closed the sale of 233,687,916 shares of Wataniya Telecom - the National Mobile Telecommunications Company (now known as Ooredoo) - to Qatar Telecom (Qtel) at a price of KD 4.6 per share. The stake acquired by Qtel from KIPCO and KIPCO-related parties represented 51% of Wataniya Telecom’s share capital. The transaction included two additional stakes of 9% in each of Wataniya Telecom’s operations in Algeria and Iraq. Total consideration for the transaction was approximately KD 1.1 billion (US$ 3.7 billion). KIPCO’s Vice Chairman (Executive), Mr Faisal Al Ayyar, always refers to the Wataniya deal as an example of KIPCO’s vision and ability to assess the right time to exit from an investment. He describes it as “KIPCO’s deal of the decade.” 2006 2007 KIPCO establishes US$ 2 billion EMTN program In February 2006, KIPCO mandated BNP Paribas, Dresdner Kleinwort Wasserstein and HSBC to act as joint arrangers of a US$ 2 billion Euro Medium Term Note (EMTN) Program and joint lead managers and bookrunners of an inaugural public offering under the program. The EMTN is part of KIPCO Group’s long term funding strategy and is used to reduce funding costs and increase the maturity profile of the company’s liabilities. 7 KIPCO KIPCO continues to increase holdings in core companies KIPCO continued to “invest in its own success” throughout 2008 by increasing its shareholdings in its core companies and the paid-up capital of each of its core companies. This included United Gulf Bank, Gulf Insurance Company and Burgan Bank, making the latter a subsidiary company of the KIPCO Group. The increase in holdings allowed KIPCO greater flexibility in the development of its business in individual countries and at a regional level. Streamlining of operations is part of KIPCO’s broad business strategy. By using some of the funds raised from the sale of Wataniya Telecom to increase core company holdings, KIPCO gained official control of the companies. 2007 2008 KIPCO exits from several investments The year 2007 saw KIPCO selling its stakes in United Aviation, Jet Aviation and United Fisheries. This exit strategy was the beginning of a Group structure evolution process that has continued since with the aim of further streamlining the Group’s operations and creating greater synergy and focus. 8 KIPCO KIPCO completes US$ 500m bond issue In October 2009, KIPCO announced that the successful completion of the issue of a US$ 500 million (KD 143 million) bond under its US$ 2 billion Euro Medium Term Note (EMTN) Program. The transaction marked the first international bond issue by a private sector corporate from the MENA region in 2009, as well as the first US Dollar bond issue by a Kuwaiti institution since August 2007. The proceeds of the issue were used to fund the company’s strategic business The seven year fixed rate note was listed on plans and the transaction extended the the London Stock Exchange. The bonds maturity profile of KIPCO’s debt liabilities. carried a fixed rate coupon of 8.875%, and The notes issued under KIPCO’s EMTN priced at a spread of 608bps over the US Program had a BBB+ rating by Standard & Dollar Mid-Swap curve. The issue was 6.6 Poors and a Baa1 rating by Moody’s.