GMFA Global Mena

 

TIDMGMFA 
 
RNS Number : 9504C 
Global MENA Financial Assets Ltd 
23 November 2009 
 

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, IN OR INTO OR 
FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE 
RELEVANT LAWS OF SUCH JURISDICTION IN PARTICULAR THE UNITED STATES, CANADA, 
AUSTRALIA OR JAPAN 
23 NOVEMBER 2009 
GLOBAL MENA FINANCIAL ASSETS LIMITED 
(THE "COMPANY" OR "GMFA") 
ACQUISITION OF AN INDIRECT EQUITY INTEREST IN AL FAJER RETAKAFUL INSURANCE 
COMPANY K.S.C.C. 
Summary 
  *  The board of directors of the Company announces that GMFA, through its indirect 
  subsidiary, Financial Assets Bahrain W.L.L., has entered into a conditional sale 
  and purchase agreement to acquire approximately a 20 per cent. effective 
  interest in the equity of Al Fajer Retakaful Insurance Company K.S.C.C. ("Al 
  Fajer") from Global Investment House K.S.C.C. ("Global") (the "Transaction"). 
  *  Al Fajer is a retakaful and Shari'ah compliant reinsurance products and services 
  provider. It is the first Kuwait-based retakaful company and has a licence to 
  operate reinsurance business for all kinds of takaful insurance. Al Fajer has 
  been established to take advantage of the rapid growth of the takaful market. It 
  operates four main business sectors: property, marine, accident and motor. Its 
  primary operating focus is on clients in the MENA region. 
  *  The agreed consideration will be the waiver of amounts owing from Global to GMFA 
  under the Islamic finance contracts entered into between GMFA and Global (the 
  "Global Financing Contracts"). As a result, the Company's exposure to Global 
  under the Global Financing Contracts will be entirely eliminated. The Directors 
  believe that this would be a very positive outcome given concerns over the 
  recoverability of these amounts. 
  *  As Global holds 29.99 per cent. of the shares in the Company, and certain of the 
  Directors are also directors of Global, the Transaction is a related party 
  transaction pursuant to Chapter 11 of the Listing Rules of the Financial 
  Services Authority in the UK. Accordingly, the Transaction is conditional, inter 
  alia, on the approval of the Company's shareholders (excluding Global and its 
  associates) at an Extraordinary General Meeting of the Company. 
 
A summary of the principal terms of the Transaction will be set out in a 
circular to be posted to the Company's shareholders shortly. The Company has 
been advised by its investment manager, Global Capital Management Limited, that 
the transaction is expected to complete in December 2009, subject to the passing 
of the resolution approving the transaction at the EGM. 
Information on Twenty Fourth Project Management Company W.L.L ("TFPM Company") 
Financial Assets Bahrain will acquire a 49 per cent. shareholding in TFPM 
Company which has a 40.83 per cent. holding in Al Fajer. The Company will 
therefore have an effective interest in approximately 20 per cent. of Al Fajer's 
shares. 
TFPM Company, is a limited liability company incorporated in the State of Kuwait 
on 29 June 2005 for the sole purpose of holding shares in Al Fajer. TFPM Company 
does not engage in any trading activities. 
Information on Al Fajer 
Al Fajer is the first retakaful company based in Kuwait and commenced its 
operations in April 2008, with a paid up capital of KD50 million ($175.1 
million), and a licence to operate reinsurance business for all kinds of takaful 
insurance. Al Fajer is currently owned by Dubai Islamic Investment Group, a 
subsidiary of Dubai Group (a Dubai based diversified financial services company 
focusing on banking, investments and insurance), as to 51 per cent., TFPM 
Company as to 20.83 per cent. and Global as to 20 per cent. (which it holds as 
custodian for TFPM Company). The balance of the shares, being 8.17 per cent., is 
held by other minority shareholders. 
None of the Directors has any interest in the shares of Al Fajer, save that Maha 
Al-Ghunaim is the chairperson and managing director of Global and a 0.02 per 
cent. shareholder of Al Fajer. 
Al Fajer was established to take advantage of the growth of the global retakaful 
market. It operates in four main business sectors: property, marine, accident 
and motor. Al Fajer's underwriting portfolio includes retakaful business written 
on a facultative (reinsurance of specific policies) and treaty (reinsurance of a 
basket of policies) basis. 
Al Fajer's primary operating focus is on clients in the MENA region, which 
comprised the majority of its contributions for the period ended 31 December 
2008. Al Fajer also generates business from clients based in Europe and Asia. Al 
Fajer's management is currently expanding its operations to other Islamic 
countries around the world, in particular South East Asia. Management is also 
considering expanding operations into Iran. 
Recently, Al Fajer obtained an operating licence from the Labuan International 
Financial and Business Centre, Malaysia, and intends its newly established 
Labuan operation to provide a base from which to grow its presence in Malaysia 
and South East Asia. 
A.M. Best has provided Al Fajer with a financial strength rating of "B++" (Good) 
and an issuer credit rating of "bbb+". The ratings remain "under review with 
negative implications". 
Current trading 
Al Fajer commenced operations in April 2008. Given that Al Fajer is still in an 
early phase of development, its shareholders' income is mainly derived from 
investment income. Al Fajer's shareholders' audited income for the period from 
establishment to 31 March 2009 was KD3.1 million ($10.7 million) and its profit 
for that period was KD0.3 million ($1.2 million). 
In the period from establishment to 31 March 2009, Al Fajer's participants' 
operations generated gross retakaful contributions of KD10.4 million ($36.6 
million) and incurred a deficit of KD1.8 million ($6.4 million), which was met 
through the provision of an interest free "Qard Hasan" loan which is repayable 
when the participants' fund moves into surplus. Al Fajer's management is 
projecting a significant growth in contributions derived from underwriting 
business, to approximately KD20.6 million ($72.2 million) for the year ending 31 
March 2011, as the company becomes more established. 
Balance sheet 
Al Fajer's initial capital of KD50 million ($175.1 million) was invested with a 
number of different financial institutions in accordance with Al Fajer's 
investment policy. The Al Fajer shareholders' audited financial statements as at 
31 March 2009 disclosed shareholder equity of KD50.3 million ($176.3 million) 
and gross assets at the same date of KD50.8 million ($177.8 million). 
As at 31 March 2009, KD48.6 million ($170.1 million), representing approximately 
95.7 per cent. of the Al Fajer shareholders' gross assets was invested in short 
term assets and money market instruments. Due to the turmoil that has impacted 
financial markets recently, Al Fajer faces counter-party risk in relation to 
some of these investments. Al Fajer has made a provision of KD2.5 million ($8.9 
million) in respect of these investments in its 31 March 2009 financial 
statements. As at 30 September 2009 approximately KD20 million ($69.9 million) 
of Al Fajer's investments were subject to a freeze on redemption. Since this 
time, approximately KD0.58 million ($2.0 million) has been received and the 
balance is currently in the process of being restructured. 
Key management of Al Fajer: board members 
Marwan Al Khatib (Chairman) 
Mr Al Khatib is the managing director of Dubai Banking Group, which is the 
global Shari'ah compliant investment company of Dubai Group. Mr Al Khatib is 
also a director of Bank Islam Malaysia and Estithmaar IRE GP Limited. 
Previously, Mr Al Khatib was the director of Islamic banking at Dubai Financial 
where he was responsible for building the Islamic banking portfolio with 
particular focus on South East Asia. Mr Al Khatib has over 15 years' experience 
in the fields of corporate finance, audit and risk management and strategic 
business planning and corporate banking with blue-chip companies such as 
Al-Futtaim Group, Mashreq Bank, Dubai Chamber of Commerce and Deloitte Touche 
Tohmatsu. 
Omar El-Quqa (Vice Chairman) 
Mr El-Quqa was formerly advisor to the chairperson and managing director of 
Global. He has over 25 years of experience in banking, finance and investment in 
the Middle East and GCC region. He has experience in asset management and 
investment banking, principal investments and has been involved in establishing 
several companies in the Kuwaiti market. In 1998, he founded Global along with 
members of its current management. Mr El-Quqa received his MBA from Sul Ross 
University in 1982 and his CFA in 1989 and holds positions as chairman and 
director of several companies in MENA region and Asia. 
Darius Framroze (Director) 
Mr Framroze is executive director of Dubai Group, a Dubai Holding company, and 
has over 35 years' experience in the financial services industry with 
multinational and regional institutions. He began his career with ICICI Bank in 
India, and then joined Banque Nationale de Paris from where he was posted to 
various senior positions in its global network in Asia, the Middle East and 
France. He subsequently moved to Lazard Creditcapital Ltd, India, a Lazard Group 
company from where he was deputed to its subsidiary, Creditcapital Asset 
Management Company Ltd to set up the first private sector asset management 
company in India in a joint venture with IFC and Edinburgh Fund Managers, of 
which he was the president & CEO and then managing director. Subsequently he 
joined National Bank of Oman as head of investment banking, and later Oman 
National Investment Corporation Holding, one of the leading investment holding 
companies in Oman as its chief investment officer. 
Ahmed Mahmoud Abdallah (Director) 
Mr Abdallah is a director and head of organisation development and monitoring at 
Global Capital Management Ltd., a wholly-owned subsidiary of Global, and an 

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