The National Investor announces 2006-2007 financial results
Abu Dhabi, UAE, 27 June 2007: The National Investor (TNI), one of the leading investment houses in the region, has just published its Annual Report and Accounts. The report detailed the achievements of the firm across its businesses for the fiscal year ended March 31, 2007.
Introducing the report, Chairman Abdullah M. Mazrui said the past year witnessed difficult capital markets across the region, which for most investment banks translated into weaker earnings. “Despite this, we have made important strides in establishing TNI as a full-service firm and becoming amongst the premier providers of advisory and investment services in the region,” he added. TNI achieved consolidated revenues of AED 162.3 million for the year ended March 31, 2007 and net profits attributable to equity holders of AED 79.6 million.
TNI shareholders gathered for the firm’s Annual General Ordinary and Extraordinary Meetings on June 21st evening at the Intercontinental hotel in Abu Dhabi. Business conducted included the approval of a cash dividend distribution of AED 0.5 per share for the 2006-2007 financial year, a cash equivalent of five per cent of the par value of outstanding shares.
TNI’s CEO Orhan Osmansoy told shareholders that the firm’s ambition today is to grow in its home markets and abroad. “We embarked during the year on an initiative to help our business grow by expanding our operations within GCC borders,” he pointed out. TNI set up a new, private equity office at the Dubai International Financial Center (DIFC), one of the world’s latest global financial hubs, and partnered with Saudi Arabia’s Al Rajhi Investment Group (ARIG) to establish a closed joint stock company in Riyadh.
Mr. Osmansoy provided details about the results of each of the firm’s divisions. “We achieved these results despite the impact of a weakening capital market, which squeezed industry profit margins,” he highlighted in his speech.
TNI’s Investment Banking Division recorded revenues of AED 82 million, an increase of 37% over the prior year. Net results for the year under review have been affected nonetheless by limited equity capital market investment banking revenues and falling GCC stock markets. “However, we have made significant progress in building on the strategic direction set out for the division in the previous year. To this end, we have successfully enhanced our product range and geographical reach beyond our market reputation as a UAE IPO advisory powerhouse,” he explained.
Mr. Osmansoy highlighted the firm’s strides in this area. “During the year, our Investment Banking Division continued to help clients raise capital despite a quiet IPO market, and the investment banking team completed several private placements including the structuring and joint lead management of a US$ 300 million private placement for Thuraya Satellite,” he said. As a testament to these achievements, and for the second consecutive year, the firm was voted “Best Equities House in the UAE” by Euromoney in June 2006.
The firm’s Private Equity activities were equally notable. TNI’s PE Group closed the first round of capital raising for the TNI Growth Capital Fund (GCF) in July 2006. The fund has been designed to provide superior risk-adjusted returns by targeting late-stage growth capital investments in the GCC, North Africa and the Asian Subcontinent. “GCF, which we consider to be our flagship private equity product, is already off to a very good start. The fund partially exited its first private equity investment, Depa United Group, in the last quarter of 2006 at an IRR above 300 per cent,” pointed out Mr. Osmansoy. “This outcome underlines our ability to exit investments even in difficult markets,” he added. For the year under review, private equity revenues stood at AED 0.6 million.
Despite unfavorable market conditions as witnessed by the negative performance of most GCC and Arab markets indices, TNI was relatively successful in preserving assets under management, while launching new product lines adapted to market changes. “Our Asset Management Division is well positioned today to grow in the coming years,” highlighted Mr. Osmansoy. In the year ending March 2007, revenue contribution from the Asset Management Division amounted to AED 9 million.
TNI’s flagship UAE Blue Chip Fund (BCF) currently stands as best performer amongst UAE equity funds, beating the MSCI UAE Index by 15 per cent with much lower volatility. Similarly, the firm’s Middle East and North Africa Real Estate Active Fund (MENA REAF) also stands as best performer in its class, beating the MSCI Arabia Index by over 20 per cent. “The strong performance of both regional equity funds has attracted interest from foreign institutional investors, strengthening and further diversifying our client-base,” stressed Mr. Osmansoy. “During the year, we launched new product lines, which will help us cover a wider range of clients and risk profiles. Our innovative structured products are gaining momentum, amassing nearly AED 30 million in subscriptions during the second half of the year,” he said. TNI’s Asset Management Division was awarded Banker Middle East’s “Best Asset Management House” Award for 2006.
Revenue contribution from the Real Estate Division to TNI’s activities in investment banking, asset management, and development amounted to AED 2 million. “From mid fiscal year, our real estate strategy focused on the buy-side. As a result, we acquired the Mafraq Hotel and two plots of land in Abu Dhabi,” he emphasized.
In June 2006, the firm’s Real Estate Division launched a new close-ended fund, the TNI Real Estate Development Fund (REDF). The fund invests in new property developments and the repositioning and refurbishment of existing properties across the Middle East and North Africa region. Another new initiative, the TNI Real Estate Investment Fund of Funds (REIFF), was launched to make equity investments primarily in closed-ended private equity real estate funds from around the world that are managed by top-tier managers. To date, REIFF has made three investments and is expected to close one more in the coming months. In recognition of its achievements, TNI’s Real Estate Division received in 2006 the London-based ICG Award for “Best Investment House” in Real Estate.
The firm’s revenues from principal investments amounted to AED 28.1 million. Principal revenues were generated from money market instruments, direct investments and capital markets activity. “During the year, we decided due to excessive market volatility, to wind down our proprietary portfolio of listed UAE equities. Our defensive stance has yielded positive results as we minimized the effects of market uncertainty. The contribution to consolidated revenues of the firm’s principal capital markets investments decreased from 78% two years ago to -9% today, underscoring the firm’s improved business mix,” he explained.
As part of the firm’s Investment Research Department mission to offer investment recommendations to all of TNI’s clients, it has issued more than a dozen reports since its launch in mid June. “To date, our reports have covered five main areas including real estate, industrials, transportation, technical research and strategy,” said Mr. Osmansoy. “Our sales team has been streamlines and is now better focused on understanding our clients and their needs, and on offering creative idea generation,” he added.
TNI’s ability to commit its own capital remains an important long term differentiator. “As our firm expands into new geographies and broadens its product scope, we will carry-on growing our principal investment activity, as part of our overall strategy of diversifying our business mix.
“We continue to believe that our strategy is a promising one. As we look forward to 2007 and beyond, we see additional areas that would benefit from our capabilities as well as opportunities to significantly increase our market share in our existing markets. Whilst doing so, we will maintain our focus on execution, and at the same time continue to grow our core businesses by capitalizing on the opportunities that lie ahead. We have a strong foundation in place, and through continuous incremental efforts and prudent growth we can transform TNI into a full-service regional firm that is a leader in the markets we serve,” he concluded.
About The National Investor: The National Investor (TNI) is a privately owned regional investment banking group. The firm comprises six strategic business units covering investment banking, private equity, asset management, real estate, investment research, and principal investments. In addition, the firm has an associate company, GNSC, which provides brokerage services as a registered member of the Abu Dhabi Securities Market (ADSM) and the Dubai Financial Market (DFM).