Oman wealth fund ramps up local investments

The State General Reserve Fund (SGRF), a sovereign wealth fund of the Sultanate of Oman, continues to play a pivotal role in the nation’s socioeconomic development, having supported a number of strategic investments in partnership with local and international investors. Exemplifying its commitment to advancing the Omani government’s economic diversification objectives are three strategic investment initiatives that promise to support capital and technology inflows, job creation, and local content development. Notable among these initiatives, which were all formalised in 2016, is the establishment of Escribano Middle East LLC, representing the Oman base of the Spanish aerospace and defence specialist Escribano. Set up in partnership with Oman National Investment Development Co (TANMIA), Escribano will cooperate in the field of research, as well as explore promising investment opportunities in the Middle East. “This agreement comes in the wake of the share-holding agreement signing with the mother company Escribano, to replicate its business model in Oman. The newly formed company has started bidding in local tenders, and SGRF will be assisting the company to secure a plot of land to establish its factory, and acquire local talent to start operations,” SGRF said in its 2016 Annual Report. Equally prestigious is an investment that will result in the establishment of the largest GCC table-egg company in Oman in partnership with Oman Flour Mills Company SAOG (OFM), Gulf Japan Food Fund (GJFF), IFFCO Group (IFFCO) and the Japan-based Ise Foods, the wealth fund said. The investment strategy calls for the acquisition of a stake in Modern Poultry Farms, currently the largest egg producer in the Sultanate, while enhancing its egg production capacity with the aid of sophisticated Japanese technology. Also envisaged is a new plant in Ibri anchored by a high-tech egg production hub. TANMIA itself will pursue a number of direct investment opportunities across a number of economic sectors, including industry, logistics & services, tourism, real estate development and mining. This has been made possible by a substantial contribution in the capital of the company by SGRF, a principal shareholder. The licensed capital amounts to RO 250 million, with SGRF owning 34.6 per cent of the paid-up capital. Significantly, the SGRF continued to perform admirably despite the protracted fiscal and economic downturn triggered by the global oil price slump. Summing up the Fund’s overall performance in 2016, Darwish Ismail al Balushi, Minister Responsible for Financial Affairs, and Chairman of SGRF, said: “The Fund’s management has dealt with the crisis wisely, and managed to achieve good returns on investment, in spite of all circumstances. Its prompt strategies helped maintain the average annual return estimated at 7 per cent since the Fund’s inception. It continued to benefit from its strategic partnerships and global network to support local business projects, especially from the Sultanate’s membership in The Asian Infrastructure Investment Bank — represented by SGRF — to approve loans to finance various vital projects in the country.” Abdulsalam Mohammed al Murshidi, Executive President, credited the Fund’s Board of Directors and the strength of its in-house competencies for its “continued good performance and the positive returns on its investments”. The year 2016 ended with a “better performance, leading to the opening of new investment fields and bigger sector and geographical expansion”, he said. “The goal was not only to withstand the various challenges in light of this global crisis, but to utilise opportunities, expand and strengthen our global and local investments and boost returns for Oman’s sovereign wealth fund, putting the well-being and prosperity of future generations at the forefront of our objectives and priorities. This is what SGRF has succeeded in achieving by entering into new partnerships across its real estate, public and private markets’ portfolios,” he stated in the Annual Report. SGRF’s key direct investments as of end-2016: ■ SGRF acquires 20.4 per cent stake in joint project of Mumbai’s Bharat Port with Singaporean PSA International Pte Ltd, billed as one of the world’s biggest port management firms. ■ 32.2 per cent stake in Spain-based Mecanizados Escribano. ■ 29 per cent stake in Kenmare Resources, the Irish mining company working on titanium exploration in Mozambique. ■ 18.1 per cent stake in Australian Kore Potash specialised in the exploration and production of potash in the Democratic Republic of Congo. ■ Investment in Cadence Education with Morgan Stanley Private Equity (MSPE). ■ SGRF has exited from Service Master company, with an IRR of 13 per cent, and total returns of 2.6x the initial investment. The Fund also partially exited from Wallgreens Alliance Boots recording substantial gains. Investment Funds: In 2016, a total of 8 commitments were made with investment funds in different sectors. They include: ■ Commitment to invest in the Ares Corporate Opportunities Fund V, which invests in companies that have potential for growth. ■ Commitment to invest in the Founders Fund VI, specialising in technology ■ Commitment to invest in Vista Equity Partners VI, specialising in the acquisition of investment opportunities in technology in the US. “SGRF partners with a total of 78 different investment funds covering most sectors and is geographically distributed among most world continents., the Fund said. Real Estate Portfolio — key updates in 2016: ■ SGRF acquired another building in the city of London under the programmatic investment plan in strategic partnership with CIT. ■ SGRF acquired the 5-star Des Andes hotel in The Hague, The Netherlands, in partnership with the Westmont Hospitality Group. This was SGRF’s first investment in The Netherlands and forms part of the Hilton Portfolio that was acquired by SGRF in 2015. ■ The refinancing of the bank debt for Heron Tower was successfully completed. ■ SGRF also successfully managed to refinance the bank loan for Four Seasons, Budapest. ■ SGRF exited from two investments, namely, Grand Angle building in sub-urban Paris and Mitsubishi Portfolio co-investment in Japan. ■ SGRF committed to a new Real Estate Fund launched by Lone Star and also Starwood Capital. ■ The Hilton Europe Portfolio and the Marriott Ambassador (Paris) that were acquired in 2015 performed reasonably well. Conrad Prabhu