Omani State Reserve Fund, the secret partner, and the Balkan Investments - part 2

Who is The Omani State General Reserve Fund's mystery partner?


When Oman's State General Reserve Fund snapped up control of Equest Investments Balkans Ltd, their UK listed partner in a 600 million euro Bulgarian Ski resort deal (see previous post), while conveniently outside the reach of the UK's Code of Takeovers & Mergers (which would oblige disclosure of owners I bet),

The Board notes that State Street (Nominees) Limited, as nominee for SGRF, currently holds 5,894,834 ordinary shares of no par value in the Company ("ordinary shares") (representing 32.27% of the issued share capital of the Company) and funds managed by Kairos own 3,743,866 ordinary shares in the Company (representing 20.50% of the issued share capital of the Company). SGRF and Kairos together control 52.77% of the issued share capital of the Company.

The Company is incorporated, and has its registered office, in the British Virgin Islands and has its ordinary shares only admitted to trading on the AIM Market of the London Stock Exchange. Accordingly, the Directors do not believe that the Company is subject to the provisions of The City Code of Takeovers and Mergers.

it still meant that according to the AIM stockmarket rules, the new Directors had to list their other Directorships and post a very short bio, which makes interesting reading (see end of post).



Before we dive into those detailed directors interests filings, to me it does look like Oman got a very interesting company in the firesale of the crisis, and as their partner in the ski deal, it probably had to be rescued anyway. After all, whats 20 mln euro against a 600 mln deal, for the SGRF? Bargain!!!

Here's a synopsis of EIB ( in their own words):

Equest Investments Balkans Limited (EIB) currently has ten companies – in Financial Services, Retail, Waste Management and Land and Property Development, predominantly with majority equity holdings. Its principal focus is on Bulgaria and Romania, but considers appropriate investments in the rest of the Balkan region.

Unfortunately, their super-cunning investment strategy was to leverage everything like crazy.

As part of our investment strategy, Equest borrows from commercial lenders as we anticipate that higher returns are achievable through investments than the cost of debt financing.

Ooops.

Still, a cheapish punt on Eastern Europe if you're looking for one. But I digress.

Here's the AIM stock exchange filing entry describing the new, non-exec director of Equest Investments Balkans Ltd (and majority shareholder representative) Mr Al Kharusi, head of SGRF:

Mr Al-Kharusi, a resident of Oman, joined the SGRF in 1985 as the Director General and is now the Chief Executive Officer of the SGRF. He holds a Diploma in Business Administration.
Mr Al-Kharusi (aged 55) holds or has held the following directorships, and is or was a member of the following partnerships during the past five years:

Current Directorships / Partnerships:
Eagle Properties (L.P.) No.3
Eagle Properties (L.P.) No.4
Eagle Properties (L.P.) No.6
The European Acquisition Company S.a.r.l.
The European Acquisition Company 2 S.a.r.l.
Bulgarian Acquisition Company VI S.a.r.l.
Wopac No.1 Limited
Palm Properties
Sprint (GP) Limited
Normandy (GP) Limited
SEE Capital Sarl
Eagle Properties 7
Spartak Tours AD
Vietnam Oman Investment Company
Advent International
Migros
National Investment Funds Company
Grand Angle Holding France SAS
Le Trema France Property S.A.R.L.
Bulco Acquisition AD

Past Directorships / Partnerships:
None

A very nice list of all the companies SGRF have obviously been investing in! This is not something you find in the business section of the incisive and hard hitting Times of Oman, or even on Google very easily.

Even though many of them are holding companies, I think you'll find some reward for random googling and cross-referencing of the companies above. Let us know what you find.

(There are also cloak and dagger reports of the SGRF trying to take part in a highly secret multi-billion leveraged hostile buy-out of Dow chemical, if you're interested in such things. Dodged a bullet when that one fell through, eh guys? You'd have been down a few billion there already!). And Bulgaria is apparently being looked at for further investment by Oman Oil Company in a huge fertaliser company investment.

Should young Omani's be busy learning Bulgarian, German and Serbo Croat?

Plus you can take a look at the partners bio too:

The newly re-appointed Exec Director, Mr Krumov, owns 3.17% of the company, and is a well connected Bulgarian businessman, who as it happens is also an equity partner with the Omani SGRF in another real estate business in Bulgaria:

SEE Capital Management SARL, which is owned as to 40% by Mr Krumov and 60% by SGRF, is involved, through its Bulgarian subsidiary, in providing management, consultancy and development services in relation to property projects in Bulgaria.

That must all get complicated, eh? Plus there are a slew of other companies, like Equest Capital Management Limited and Equest Property Management Limited, also involved in the development property market.

Its also curious how both of the 2 representatives on the board from the mysterious Kairos Investment fund, (representing a co-owner of 20.50% of Equest Investments Balkans Ltd and clearly takeover partners of the company along with Oman) are also directors of unusually named 'Foundations', probably for Corporate Charity work:

Mr Brera (aged 39) holds or has held the following directorships, and is or was a member of the following partnerships during the past five years:
Current Directorships / Partnerships:

Kairos investment Management SpA
Kairos investment Management Limited
Oliver Twist Foundation

Past Directorships / Partnerships:
None

Mr Azizjoined Kairos in January 2006 ...Previously Mr Aziz has specialised in Telecoms research and he held a number of senior research positions at securities houses in London and Karachi...
Mr Aziz (aged 43) holds or has held the following directorships, and is or was a member of the following partnerships during the past five years:

Current Directorships / Partnerships:
Little Lord Fauntleroy Foundation

Past Directorships / Partnerships:
None
...

Does anyone else not find that curious? What's going on with that?
Ahh, here... via the Italian site. Nice.

And who owns the 20%??? Remember these guys just represent "funds managed by Kairos"... In fact:

Kairos Asset Management is a boutique investment firm focusing on customized investment solutions for institutional and affluent investors.

The Kairos Vision
Kairos Asset Management, LLC was formed to provide individual and institutional clients with access to customized and unique investment solutions without the inherent conflicts of interest at traditional Wall Street firms and Commercial Banks.

At Kairos Asset Management, we maintain an independent perspective. We have invested in state of the art technology and research to enhance our client offering. Having spent several years managing one of the most successful teams at a global wirehouse firm, we believe there is a better way to serve clients and we seek to offer that solution.

Still, I wonder who the secret investor is?



The extra boring bit...

RNS Number : 8573N
Equest Investments Balkans Ltd
25 February 2009

Equest Investment Balkans Limited
(the "Company")
Appointment of Directors

Further to the announcement on 4 February 2009 that the Company's two largest shareholders, namely the State General Reserve Fund of the Sultanate of Oman ("SGRF") and Kairos Investment Management Limited ("Kairos"), had requested the appointment of representatives of SGRF and Kairos as directors of the Company, the board announces that today:
• Mr Warith Mubarik Al-Kharusi;
• Mr Faisal Amur Mohamed Al-Riyami;
• Mr Guido Maria Brera; and
• Mr Kalim Aziz
have each been appointed a Non-Executive Director of the Company and that:
• Mr Georgi Krumov
has been re-appointed an Executive Director of the Company.
SGRF currently holds 5,894,834 ordinary shares of no par value in the Company ("ordinary shares") (representing 32.27% of the issued share capital of the Company) and funds managed by Kairos own 3,743,866 ordinary shares in the Company (representing 20.50% of the issued share capital of the Company). SGRF and Kairos together control 52.77% of the issued share capital of the Company.

Enquiries:
Equest Investments Balkans Limited
Tel: + 44 20 7240 7600
Petri Karjalainen
Naomi Kora
Financial Dynamics
Tel: + 44 20 7831 3113
Nick Henderson
David Cranmer
Collins Stewart Europe Limited (Nomad)
Tel: +44 20 7523 8350
Hugh Field KBC Peel Hunt Limited (Broker)
Tel: + 44 20 7418 8900
Capel Irwin
Disclosures under AIM Rules

Mr Al Kharusi
Mr Al-Kharusi, a resident of Oman, joined the SGRF in 1985 as the Director General and is now the Chief Executive Officer of the SGRF. He holds a Diploma in Business Administration.
Mr Al-Kharusi (aged 55) holds or has held the following directorships, and is or was a member of the following partnerships during the past five years:
Current Directorships / Partnerships:

Eagle Properties (L.P.) No.3
Eagle Properties (L.P.) No.4
Eagle Properties (L.P.) No.6
The European Acquisition Company S.a.r.l.
The European Acquisition Company 2 S.a.r.l.
Bulgarian Acquisition Company VI S.a.r.l.
Wopac No.1 Limited
Palm Properties
Sprint (GP) Limited
Normandy (GP) Limited
SEE Capital Sarl
Eagle Properties 7
Spartak Tours AD
Vietnam Oman Investment Company
Advent International
Migros
National Investment Funds Company
Grand Angle Holding France SAS
Le Trema France Property S.A.R.L.
Bulco Acquisition AD

Past Directorships / Partnerships:
None

Mr Al-Riyami
Mr Al-Riyami, a resident of Oman, joined the SGRF in June 2007 as the Section Head of Direct Investments of the SGRF.
Mr Al-Riyami was previously the Finance Director of Railtech Solutions Limited ("Railtech Solutions") (see further below), a company located in Portsmouth in the UK specializing in IT software for principally road and rail networks in the transportation sector (2005 to 2007), Financial Controller of Nawras Telecom (2004 to 2005) and an Internal Auditor at Bank Muscat (1999 to 2004).
Mr Al-Riyami holds an MBA (Finance) from the University of Leicester and is a member of the Chartered Financial Analyst Institute and the Chartered Alternative Investment Analyst Association.
Mr Al-Riyami is a director of Borovets Invest EAD, which is a joint venture between a subsidiary of the Company and the SGRF.
As noted above, Mr Al-Riyami was appointed the Finance Director of Railtech Solutions (a company incorporated in England & Wales with registered number 03973036) on 1 November 2005. At the time of his appointment, Railtech Solutions was in financial difficulties and Mr Al-Riyami joined in that knowledge and with the express intent of trying to restructure and turn around Railtech Solutions. He resigned as a director of Railtech Solutions on 6 March 2007. On 29 March 2007 joint administrators were appointed to Railtech Solutions, under the floating charge, under Paragraph 49 of Schedule B1 to the Insolvency Act 1986. The winding up of Railtech Solutions commenced in June 2008 and Railtech Solutions was dissolved in January 2009. The secured creditor was paid in full and the shortfall for unsecured creditors was approximately £1 million.

Mr Al-Riyami (aged 32) holds or has held the following directorships, and is or was a member of the following partnerships during the past five years:

Current Directorships / Partnerships:
SEE Capital Management Sarl
Spartak Tours AD
Borovets Invest EAD

Past Directorships / Partnerships:
Railtech Solutions Limited

Mr Brera
Mr Brera, who is Italian, is a co-founder of Kairos. He graduated from Universita La Sapienza, Rome and qualified as a Dottore Commercialista (the equivalent of a chartered accountant) in 1993. In 1994, he joined Fineco SIM, concentrating on relative value trades, calendar spreads, stock index futures arbitrages and the establishment of structured products for institutional clients. In 1996, he joined Cisalpina Gestioni as manager of the Cisalpina Bilanciato and Cisalpina Indice funds. In 1997, he joined Giubergia Warburg as director, Head of Proprietary Trading, leaving to establish Kairos in early 1999. Mr Brera has been co-manager of Kairos Fund Limited since its inception in June 1999.
Mr Brera (aged 39) holds or has held the following directorships, and is or was a member of the following partnerships during the past five years:
Current Directorships / Partnerships:

Kairos investment Management SpA
Kairos investment Management Limited
Oliver Twist Foundation
IMATION (Italy)

Past Directorships / Partnerships:
None


Mr Aziz
Mr Aziz joined Kairos in January 2006 and is the co-fund manager of the Kairos Eurasian Fund with Guido Brera and is the primary analyst at Kairos for stocks in the Eurasian markets. Before joining Kairos, he was Head of Equity research for the EMEA Region at UniCredit Banca Mobiliare in London (2004 to December 2005). Previously Mr Aziz has specialised in Telecoms research and he held a number of senior research positions at securities houses in London and Karachi. Mr Aziz holds a Masters in Business Administration from the University of Karachi.
Mr Aziz (aged 43) holds or has held the following directorships, and is or was a member of the following partnerships during the past five years:
Current Directorships / Partnerships:
Little Lord Fauntleroy Foundation

Past Directorships / Partnerships:
None

Mr Krumov
Mr Krumov was previously appointed an executive director of the Company on 23 June 2008 and resigned on 7 November 2008.
Mr. Krumov has more than thirteen years of experience in executive positions in multinational companies operating in Bulgaria and the region such as Cable & Wireless (UK), Burmah Castrol (UK) and British Petroleum (UK). Mr. Krumov is an owner of a diversified group of companies operating in Bulgaria, one of which is Electron Progress AD, one of the country's largest suppliers in the defence communication sector.
Mr. Krumov, together with Mr. Kari Haataja and Mr. Petri Karjalainen (who are also directors of the Company) are the owners of Equest Capital Management Limited. Prior to the reorganisation of the management structure of the Company earlier in 2009, the Company had delegated the day-to-day management of its investment portfolio to Equest Capital Management Limited, which acted as the Investment Manager to the Company.
Mr. Krumov previously owned an indirect interest in 20 per cent. of the issued share capital of Avto Union AD (which is a subsidiary of the Company).
Mr Krumov (aged 46) holds or has held the following directorships, and is or was a member of the following partnerships during the past five years:
Current Directorships / Partnerships:

Avanti Capital EAD
Avto Union AD
Axes Europe OOD
Boyana Residence OOD
Burma Oil TP
Companies Management International Centre AD
Equest Capital Management Limited
Equest Property Management Limited
GBK EOOD
Gransport Auto EOOD
IQuest EAD
Mejdunaroden Tzentar Po Firmeno Upravlenie AD
National Board of Tourism Association
Novera AD
Rila-Samokov 2004 AD
SEE Capital Management AD
SEE Capital Management Sarl
Spartak Turs AD
Uniqa Health Insurance AD
UNIQA Insurance Company AD
Nigo 62 SD
VIP International Services OOD

Past Directorships / Partnerships:
Atia Holidays EAD
Banya Holiday AD
Bellevue Property Management EAD
Borovets Investments EAD
Castrol Italiana
Cherno more- Belvue OOD
Equest EAD
Electron Progress AD
EPM Holding EAD
Equest Investment Balkans Limited
Equest Partners Limited
Hastings EOOD
Insurance Company Vitosha AD
Lexington EAD
Star Motors EOOD
Strategicle defencive systems AD
Union Properties EAD

Mr. Krumov has a beneficial interest in 579,517 ordinary shares in the Company (representing 3.17% of the issued share capital) and 188,308 warrants in the Company.
SEE Capital Management SARL, which is owned as to 40% by Mr Krumov and 60% by SGRF, is involved, through its Bulgarian subsidiary, in providing management, consultancy and development services in relation to property projects in Bulgaria.
There are no further disclosures required under paragraph (g) of Schedule Two of the AIM Rules for Companies in respect of Mr Al-Kharusi, Mr Al-Riyami, Mr Brera, Mr Aziz and Mr Krumov.

Oman State General Reserve Fund in Bulgarian rubbish stand-off

From Mad Dogs and Englishmen in the noon sun to classic trash journalism!

A little, itty bitty article in the Bulgarian news - about the rubbish piling up in their streets - revealed part of the investment strategy of the somewhat secretive Omani State General Reserve Fund today.

At News.bg you will find the latest articles, news, interviews and comments from today's Bulgarian press, and this tale caught my avatar's attention

(well, in addition to the story about the Bulgarian Playboy model who's also in the press and little else):



Photo: Julia Lazarova

As quoted from the popular Trug newspaper, HM gets a mention:

The Trud daily

"Sofia terminated the concession for waste collection", "Trud" writes in its main feature "the Topic". Sofia municipal council decided yesterday to terminate unilaterally and prematurely the contract with the firm "Novera" for the cleaning of 19 regions of the city beginning April 1 2009. The motive is criminal non-performance on the part of the concessioner. The offer by mayor Boyko Borissov was unanimously supported by the advisors of all political groups at an emergency session of the municipal council. In its front material "Trud" points out that the sultan of Oman Qaboos ibn Sa'id controls the Sofia waste, because in January the owner of "Novera" (the British fund "Inquest Investment Balkans") changed its owner. Now the major investor in it is the sultan of Oman.

Its true folks!

Well, sort of true. Its a bit of a shaggy dog tale this one...

The publicly listed British Company Equest Investments Balkans Limited, was floated a while ago to invest in the Balkans, and especially Bulgaria and other east European areas. It was tipped by some investment Einstein - at the peak of market exuberance last year - to be heading for a doubling of its share price to more than 25 pounds , according broker KBC Peel Hunt who valued the shares at a whopping 2628p – significantly above the then current price of 1032.5p (floated at 300p).

It seems the Omani State General Reserve Fund [aka the SGRF] were then already partners with Equest in a massive ski development scheme called Borovets. Check it out.



Borovets - a 600 million Euro Ski village development in the Bulgarian mountains.




The SGRF also recently bought a big piece of a Bulgarian Commercial Bank, coincidentally.

Meanwhile, in a venture I believe unconnected at the time to their relationship with Oman's SGRF, Equest Investments Balkans Limited went off and bought up the 3 main rubbish collection agencies in Sophia (the capital of Bulgaria), and under the company name Novera won a concession to get the contract for collecting the trash.

That magic EIB "growth stock" tanked in October as their leveraged real estate and Balkan-growth dependent investment strategy went down the gurgler. It went down more than 80%, from 1071p to under just 210p. What a stock tip!



BUT! In late December last year, probably in exchange for around 20 million euro, Oman's SGRF stepped in after the plunge in stock price and became the majority shareholder, with over 30% [32.27% actually] of the company. They placed Mr Warith Mubarik Al-Kharusi (head of the SGRF) and Mr Faisal Amur Mohamed Al-Riyami (young UK trained beancounter) on the board in January.

Just at the time the Omani fund moved in, funnily enough, a couple of likely lads from the Kairos Eurasian Fund (co-founder of the fund Mr Guido Maria Brera and a Mr Kalim Aziz) also jumped in and bought 20.50% (and possibly at a good price too it would seem, from the timing in the company filings and the shareprice graph). The Kairos Eurasian Fund, together with SGRF, thus control the company, and with the Exec Director they reinstated (a Mr. Krumov), have a majority of positions on the board (5/9).

So, it was by this round-about route that 'His Majesty' was tagged by the Bulgarian 4th Estate as now personally owning Sophia's rubbish, as the Omani State General Reserve Fund (with their partners) now control EIB, who happen to own Novera the trash company, who a couple of days ago stopped collecting the rubbish in Sophia (claiming non-payment by the city). As the trash piled up and started to stink, the Major said they'd been paid, that he wouldn't be blackmailed, and called a special meeting of the council to cancel the concession, effective in April. As Novera own all the trucks and employ all the workers, it'll be interesting to see how that goes. I can sense a phone call to Bulgaria's Ambassador proving useful.

And don't forget it's quite common for the press to link His Majesty to investments actually made by the Omani Sovereign Investment fund as if HM owned them personally, something which I don't believe is true at all (although HM obviously ultimately controls the SGRF 100%). But I guess it sells more papers and is far more interesting to report that way.

(This post is getting a bit long. In Part 2... what this actually means for the SGRF, and why this story is really interesting, soon)

Oman diversifies investment into Vietnam. Omani youth probably think they can party forever

In what I think is an excellent move, Oman's investment fund is getting into Vietnam (above), as reported in vovnews. $100 million big ones.

Excellent.

It should be a good investment.

I only wish many Omani youth, currently out partying over a regional football game, would realise the incredible competition they have in the real world to pay their way. People in other nations, like Vietnam, with sure, a few natural resources, but a need to work due to population pyramid effects. These guys WORK.

And that is what Oman is up against long term. Countres that save, rather than borrow; and work - sun up to sunset, often as families, doing business. Making money the hard way .... by working their asses off.


Photo: Vietnamese people, working their asses off.

Oman is nice, I admit. Hey, that's why I'm here.

But it is sleepy here. Omani's do not generally have much of that SE Asian zest.

Here it's more 'Inshallah, man'. And the terrible inefficiency of low paid, unskilled/low skilled Indian labour doing almost everything. Which I can handle mostly, perhaps because I'm not really a business man trying to make a buck I guess. It has in parts that Caribbean feel sometimes.

So, good luck Oman in the football. Al Habsi is a total star player, and with him you have a great chance.

But the other 100,000 of you, who won't be playing in the premiership, err, better start working. Notice how few 'Go Oman!!!!' tricked up cars are a part of the morning commute?

'Cos oil income is not going to be enough. And your Dad can't do too much more borrowing against his ex-rising house/lands/stock market to keep supporting you in the lifestyle to which you have become accustomed, ...

Vietnam hails Omani investment
Deputy Prime Minister Nguyen Sinh Hung affirmed Vietnam’s commitment to strengthening economic ties with Oman while receiving leaders from an Omani-invested company on January 5.

At the meeting, Warith Mubarak Said Al Kharusi, Chief Executive Officer of the Vietnam-Oman Investment Company (VOIC), briefed the deputy PM on the company’s activities and its plan to expand investment and cooperation.

Mr Kharusi, who also heads the Oman State Reserve Fund, said the joint venture intends to raise its registered capital to US$5 million from the initial amount of US$1.5 million. He told the Deputy PM that the Omani partners pledge to invest US$100 million in Vietnam through VOIC, which will be developed strongly to attract other investors.

For his part, Mr Hung welcomed the partnership between Vietnam’s State Capital Investment Corporation (SCIC) and Omani partners and emphasized that the Vietnamese Government always encourage Omani expansion of investment and cooperation in Vietnam.

The state leader said Vietnam strives to grow at 6.5 percent in 2009 and VOIC should prepare comprehensively before investing in the Southeast Asian markets, which have potential consumer demands.

“The Vietnamese Government is accelerating reforms to perfect the investment climate,” said Nguyen Sinh Hung, adding that cooperative investment will help enhance Vietnam-Oman relations and boost their bilateral cultural cooperation.
VOIC came into being after the Deputy PM’s official visit to the Kingdom of Oman in December 2007, during which the two sides’ leaders agreed to set up a joint investment fund for strategic projects in Vietnam.