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Raport de practica Internship report Al Ahlia Holding Company

Marketing






Raport de practica

Internship report

Al Ahlia Holding Company

AHLIA holding LOGO highres

Contents

Chapter I Company Profile

Company History

Investment Strategy

Vision

Mission

Organization Chart

Board of Directors

Management Team

Marketable Securities

Chapter II My responsibilities and tasks

Chapter III Key learning points

Chapter I Company Profile

Al-Ahlia Holding Co. (AHC) 444j924e is a leading investment company in the GCC  region (Cooperation Council for the Arab States of the Gulf). AHC has a paid-up capital base of over KD 75 million (Kuwaity Dinar), and is listed on the Kuwait Stock Exchange. The Company's activities are grouped under the Direct Investments and Marketable Securities divisions.

Company History

Al-Ahlia Holding Company K.S.C.C (AHC or the Company) was established in 1974 to pursue a broad range of investment activities.  The Company was initially known as the Kuwait Trading and Industrial Investment Company and in 1982 the name was changed to Al-Ahlia Investment Company.  In 2007 the Company subsequently changed its name to Al-Ahlia Holding Company.


Al-Ahlia has demonstrated consistent growth and provided strong returns during its over 33 year history.  During this time the Company has expanded its investment horizons and continues to restructure and redefine itself so as to effectively leverage its strengths and meet the challenges of an ever emerging investment environment.

Investment Strategy

The Company has developed an investment strategy intended to maximize the returns from its proprietary portfolios and core investment activities. AHC will continue to focus upon opportunities within the local market while striving to expand regionally and internationally.  The Company will seek to bring its broad range of expertise in Direct Investments and Marketable Securities to bear with regard to new opportunities based upon a sound understanding of each business opportunity and a willingness to embrace innovative and complex investment transactions.

AHC aims to achieve high risk-adjusted returns, supported by a strategy of diversification. The Company strives to maximize shareholders' returns and to enhance shareholders' equity. In order to achieve its ambitious goals and high risk-adjusted returns, the Company is seeking to build a team of experienced professionals with commitment to its business goals and the ability to take the company to even higher levels.

Vision

To become the most progressive proprietary investment company in the GCC

Mission

We at Al-Ahlia will strive to maximize our shareholders' value through

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Opportunistically exploiting investment opportunities within an ever evolving local and global investment environment.

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Utilizing a flexible and dynamic approach in identifying and managing opportunities across a full range of asset classes.

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Enhancing our expertise and building strong alliances and relationships.

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Providing creative and proactive investment strategies that will enhance returns while effectively managing the   company's risk profile. 

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Adopting and maintaining the highest ethical standards within the workplace and throughout all our business dealings.  

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Ensuring that all investments and projects continuously satisfy the Company's requirements, its shareholders and the people of Kuwait.

Organization Chart

Board of Directors

Mr. Abdullah A. AlAwadi

Chairman & Managing Director

Mr. Abdul Hameed M. Al Sarraf

Board Member

Mr. Faisal AlAwadi

Board Member

Dr. Nabhan A. Al Nabhan

Vice Chairman

Dr. Ali H. Al Bahar

Board Member

Management Team

Mr. Abdullah A. AlAwadi Chairman & Managing Director

Mr. Sanjay Santuka

Financial Controller

Mr. Basem Ali Al Ali

General Manager

Marketable Securities

Mr. Ramez

General Manager

Direct Investment

Direct Investments

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AHC Direct Investments comprise of those companies in which it has a long-term investment. Al-Ahlia Holding its proprietary capital in its direct investment activities.

After a successful track record in local markets, the Company is now looking at an expansion of its geographic focus and is exploring high growth emerging market economies as well.

The Direct Investments team serves to:

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Analyze and evaluate new investment opportunities and provide capital for taking a business to the next level;

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Provide management support to investee companies to enhance operational and strategic capabilities so as to maximize growth and generate the highest return on investment.

The Corporate Finance team supports the Direct Investments team in evaluating exit strategies and specific opportunities that maximize return on investment.

Al-Ahlia's direct investments are in a diverse range of companies and projects in Kuwait and the Gulf Cooperation Council ("GCC") region. Investments are grouped under three sectors as shown below:

Marketable Securities

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Al-Ahlia has extensive proprietary investments in both local and international markets. The portfolio is highly diversified by both asset class and geography and great efforts are made to understand and control risk. Al-Ahlia has developed an investment approach that is intended to consistently provide positive returns without exposing its shareholders to undue risk. 

Investment Philosophy

AHC's philosophy is based upon the implementation of proactive management to generate excess returns within defined risk parameters. It seeks to identify opportunities that exhibit superior growth characteristics where such growth is not already reflected in price. The portfolio managers focus upon their core competencies so as to ensure that they provide the maximum value added to the portfolio.

Investment Strategy

The investment strategy is based upon developing an asset and geographic allocation strategy that reflects the prevailing economic and investment environment, manages selection to fulfill each component of the strategy and portfolio construction that reflects the risk profile of the company. The portfolio is not benchmark constrained and as such the managers are free to optimize the portfolio in an effort to consistently achieve positive absolute returns.

Chapter II My responsibilities and tasks


During my internship at Al Ahlia Holding Company, one of my main responsibilities included analyzing Private Placement Memoranda. A Private Placement Memorandum
is a legal document that institutions and businesses use to describe the securities they are offering for participants and buyers. A Private Placement Memorandum commonly provides investors with material information about mutual funds, stocks, bonds and other investments, such as a description of the company's business, financial statements, financial forecast, biographies of officers and directors, detailed information about their compensation, any litigation that is taking place, a list of material properties and any other material information. In the context of an individual securities offering, such as an initial public offering, a Private Placement Memorandum is distributed by underwriters or brokerages to potential investors.

One main area of interest I had to focus on during each private placement memorandum analysis was assessing the risk factors. Because each potential investment has unique features, these risk factors fluctuate from one investment to the other. The majority of the Private Placement Memoranda we received came from the MENA region (Middle East and North Africa) most of the risk factors were relatively similar.

The most common risk factors that I have encountered were:

New management team and organizational structure: Since most investments require building new facilities from zero on a new market where potential futures employees do not have the necessary experience in those domains, hiring inexperienced staff may pose problems in the early stages of the business.

Limited transferability of shares: This implies the fact that shares that were purchased by a potential investor may not be able to be transferred/sold to third parties.

Political Instability: Because of the political instability in the Middle East, caused by the continuous war in Iraq and the possible war against Iran, investments in the region has to be carefully analyzed.

Currency Fluctuations: Because the return on equity is given in the domestic currency, due to currency exchange rate, depends on the size of the investment, the size of the loss may be high or low.

Reduction in consumer spending: It is possible for the market trend to change as a consequence to other changes such as consumer behavior, economical factors etc.

Competition: Over saturated markets may not permit investments.

Decision making: Decisions affecting the operation of the business is held by the board of directors and not by the shareholders. Shareholders are entitled to vote only at ordinary meetings of the general assembly.

Nature of BOT projects: Build-Operate-Transfer is a form of project financing, wherein a private entity receives a concession from the private or public sector to finance, design, construct, and operate a facility for a specified period, often as long as 20 or 30 years. After the concession period ends, ownership is transferred back to the granting entity.

Another task I had to accomplish was to analyze and research the economy of different countries. Since each memorandum has a different geographical location, it was my obligation to search for information on countries such as England, Bahrain, Kuwait, Jordan, Qatar etc. The information I gathered refers to Gross Domestic Product (GDP), Real GDP, Nominal GDP, Inflation rate per annum and other financial related data.

I, on several occasions, been required to prepare a high level financial projection to arrive at estimates of investment returns, generally expressed in terms net present value (NPV) and internal rate of return (IRR).

Further on, I had to analyze all the financial information that is given in each private placement memorandum. I had several excel files to analyze. Below is given the 5 year financial forecast for Istirahat Company in Kuwait.

Income Statement

KWD '000



Revenue:

Rental income

Total revenue and rental income

Costs and other deductions:

Maintenance expenses

Depreciation

Financing charges

Other general and administrative expenses

Total costs and other deductions

Net income

Balance Sheet

KWD '000

Assets:

Cash and cash equivalents

PPE

Total Assets

Liabilities and Stockholder's equity:

Debt

Shareholders' equity:

Share capital

Retained earnings



Total shareholders' equity

Total liabilities and stockholders' equity

Statement of Cash Flow

KWD '000

Cash flows from operating activities:

Net income

Depreciation

Net cash provided by operating activities

Cash flows from investing activities:

Additions to PPE

Sale of PPE

Construction Capex

Net cash used in investing activities

Cash flows from financing activities:

Additions to debt

Reductions in debt

Dividends paid

Increase in share capital

Net cash used in financing activities

Change in cash & cash equivalents

Cash & cash equivalents at the beginning of the period



Cash & cash equivalents at the end of the period

Summary Financial and Op. Data

KWD '000

Operating Data:

New station starts

Number of stations - Total

Selling space (sqm.)

Financial

Growth in revenues

Capex - lands

Capex - construction

EBITDA margin

Net income margin

ROE

ROA

Financing over assets

Financing over equity

Financing Coverage (EBITDA/financing payment)

NA

One Kuwaity Dinar K.D buys approx. 3.7 U.S Dollars.

Chapter III Key learning points

During my last ten days as an intern, I had the opportunity to be present in the creation of a private placement memorandum that Al Ahlia Holding Company developed. Al Ahlia Holding Company plans to establish a new investment company in Saudi Arabia, mostly dealing with the Saudi Arabian Stock Exchange. Most of the revenues will be obtained through activities such as Dealing as Agent, Mutual Funds management, Portfolio Management, Advising, Dealing as Principle etc.

Before being a part of Al Ahlia Holding Company, my knowledge of investment and finance was narrow. I had little experience regarding the stock exchange markets and everything related to it.

I had the opportunity to work under the supervision of Mr. Ramez Amoudi who acted as a mentor to me. He helped me learn the basics of finance, read, analyze and comprehend the most important financial ratios which companies work with. In a self taught manner, I started to gain knowledge about the stock exchange. In addition to this, I studied several books about finance. One of them is Principles of Managerial Finance written by Lawrence J. Gitman (2006 San Diego State University).

I consider that this internship succeeded in expanding my horizons to what my career is concerned. I would like to continue learning finance because I see it as an ever-expanding domain.





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