The EFG-Hermes Middle East and Developing Africa (MEDA) Fund - May 2008
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The EFG-Hermes Middle East and Developing Africa (MEDA) Fund
May 2008Agenda
I. Executive Summary
II. Investment Opportunity
III. EFG-Hermes MEDA Fund
IV. Outlook and Strategy
V. Investment Process
VI. Terms
-2-Executive Summary
The Middle East and North Africa (MENA) region is currently undergoing an economic transformation fueled by
windfall revenues of over USD500billion annually, making it one of the fastest growing economies in the world
Oil revenues are being re-invested in large-scale infrastructure projects estimated at USD2 trillion and therefore
creating an internal investment boom across the MENA region benefiting developers and suppliers
Higher growth is spurring increased consumer spending with a marked impact on imports Î merchandise imports
have grown to USD200billion by 2007 making the region a significant engine of global growth in trade
Investment MENA countries are boasting strong balance sheets amidst the global credit crisis with the GCC’s foreign assets
Opportunity
pp y reaching USD2 trillion by end of 2006. With net capital outflows of USD200billion the GCC has now joined China as
the world’s largest source of net capital outflows
Most GCC currencies are pegged to the USD, but are coming under pressure to revalue and therefore offering
investors a one-time potential revaluation gain
The MENA universe is composed of largely under-researched markets trading at attractive valuations of 14.1x 2008
earnings
i coupled
l d with
ith EPS growth th off 20% andd ROE off 23% therefore
th f presenting
ti investors
i t with
ith a unique
i investment
i t t
opportunity in countries exhibiting low correlation to the global economic slowdown
USD1 billion+ open-ended fund investing in the Middle East and North Africa; monthly liquidity
Excellent performance versus markets and peersÎ The Fund returned 51% last year out-performing its peers and the
MSCI Arabia Index Î In 2006 when the regional index fell 40%, MEDA Fund was up 6%, successfully avoiding the
The Fund severe correction in the GCC markets
EFG-Hermes is one of largest regional asset managers with over $7.6 billion under management; offices in Dubai,
Cairo Riyadh and Doha and the largest investment team in the Middle East
Cairo,
Source: Deutsche Bank, Bloomberg, EFG-Hermes Asset Management, HSBC, IMF, Goldman Sachs, Merrill Lynch, MEED
-3-I. Executive Summary
II. Investment Opportunity
III. EFG-Hermes MEDA Fund
IV. Outlook and Strategy
V. Investment Process
VI. Terms
-4-Investment Opportunity
Economic Drivers
The countries of the GCC (Gulf Cooperation Council) have earned USD1.5 trillion in oil export revenues in the past 5 years creating windfall
revenue and accumulating a current account surplus of roughly USD750 billion
With oil prices surging above USD100 per barrel, global wealth transfer in the GCC region is increasing with annual oil export revenues over
USD500 billion; even at USD50 per barrel, the GCC states would earn a cumulative USD5trillion by 2020
With strong balance sheets supported by large current account surpluses of between 15% and 40% of GDP, abundant liquidity, and low debt, the
region is relatively insulated from the ongoing credit crunch. In 2006, GCC states had net capital outflows of USD200 billion, joining China to
become the world’s largest source of capital
Historical and Projected Oil Prices GCC Exports, Imports, Current Account Balance
1980 – 2008, Brent Crude USD per barrel 2003 – 2008F
Oil hits $100/barrel mark
700 Current Account Exports
p Imports
p
120
Israel’s invasion of Lebanon 600
100
500
80 • OPEC raises production triggering a price war
USD per barrel
• Iran/Iraq tensions
400
Saudi Arabia Khobar
60
Attacks 300
40
200
U.S. invasion of Iraq
20 100
Gulf War Asian Financial Crisis
0 0
2003 2004 2005 2006 2007 2008
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2005
Dec-07
Jan-06
Feb-08
Apr-06
Oct-07
Apr-08
Source: Energy Information Administration, Merrill Lynch, EIU, McKinsey & Co, OPEC Annual Report
-5-Investment Opportunity
Economic Drivers
Real GDP growth in 2007 is rivaled only by the fastest growing parts of Asia and is projected to grow at more than 6% in 2007 vs. 3% for
the rest of the world. Over the past five years, GCC economies have grown at 7.2 percent annually, faster than Brazil, Russia, Singapore and
South Korea
Recent reductions in US interest rates have generated upward pressure on inflation and asset prices, given the mismatch in growth cycles
between the US and the GCC, and rendering a one-time revaluation of GCC currencies likely
Real GDP Growth GDP per capita Inflation Rate (CPI)
2006 – 2007F, % 2007F, USD 2007F,, %
6.4
5.9 10.1
5.5 20,763
5.1
7.6
6.7
6.1
10,528
6,977 7,184
Latin America Eastern Southeast MENA Latin Southeast Eastern M ENA Southeast MENA Eastern Latin
Europe Asia America Asia Europe Asia Europe America
Source: Economist Intelligence Unit, IMF, Goldman Sachs
-6-Investment Opportunity
Economic Drivers
The Middle East has one of the youngest, fastest growing populations in the world with more than 65% of the population younger than the age
of 25 years
Higher growth is spurring higher spending on consumer goods with a significant impact on imports; pent-up consumer demand is being
unleashed and merchandise imports stood at USD200 billion in 2006, while regional consumer spending (as a % of GDP) remains low versus
other emerging markets
Since 1993, GCC domestic investment rates have averaged 20% of GDP – on par with the US and Europe but 25% lower than BRIC countries,
but set to be boosted significantly over the next decade to accelerate development of local economies
Accumulated wealth is being re-invested into large-scale infrastructure projects (USD1.3 trillion projects underway), driving GDP growth and
di
diversifying
if i local
l l economies
i away from
f hydrocarbon
h d b dependence
d d
Population Current Account Balance
2007F,, million 2007F,, % of GDP
511
478 18
8
1
180 Eastern Latin Southeast MENA
139 Europe America Asia
Eastern MENA Latin Southeast
Europe America Asia
-34
Source: Economic Intelligence Unit, Deutsche Bank, Goldman Sachs, CIA
-7-Investment Opportunity
Market Capitalization and Liquidity
The MENA region’s market capitalization currently rivals that of Southeast Asia, and boasts a daily trading value which is higher than Latin
America, Southeast Asia and Russia
Saudi Arabia’s daily traded value is higher than Brazil, Russia, and India, making it the second most liquid emerging market globally after
China
MENA Market Capitalization Comparative Market Capitalization
USD billion, 2007 USD billion, 2007
2,784
1,290 1 296
1,296
888
1,369
622 1,296
996
361
209 456
282
2002 2003 2004 2005 2006 2007 Turkey South Africa Russia MENA Southeast Asia Latin America
MENA Average Daily Traded Value Comparative Average Daily Traded Value
USD million USD million, 2007
4,279
6,739
5,741
4,279 2,415
2,177
, 73
2,273
974 1,005
921
261 276
2002 2003 2004 2005 2006 2007 Turkey South Africa Russia Southeast Asia Latin America MENA
Source: Bloomberg, HSBC, IMF
-8-Investment Opportunity
Overview of MENA Capital Markets
Real GDP Growth Market Capitalization Avg. Daily Traded Value ROE
2007, % 2007 (USD billion) 2007 (USD million) (%)
Lebanon 0.5 4
9.0 4
Morocco 3.1 71.2 N/R 27
Kuwait 5.0 182.8 520 22
Saudi Arabia 4.8 499.2 2,736 28
Oman 53
5.3 21 4
21.4 21 8
Jordan 5.7 37.9 61 20
T unisia 6.0 5.2 2 15
Bahrain 6.6 27.8 4 18
Egypt 7.1 120.0 201 21
Qatar 7.8 90.1 121 18
UAE 8.2 202.6 608 20
Brazil 4.3 1,362.0 1,726 19
T urkey 5.2 275.4 745 16
Russia 7.0 980.4 2,006 17
India 9.4 1,796.0 1,080
, 23
Source: Economist Intelligence Unit, Bloomberg, Deutsche Bank
-9-Investment Opportunity
The Information Gap
Six GCC companies rank among the FT Global 500 while 150 companies in the MENA region have a market capitalization of over USD1
billion, yet only a small number of investment banks and research houses devote any coverage to the region
Market restrictions have historically limited foreign institutional capital participation in the MENA markets rendering them less efficient
with
i h a higher
hi h “information
i f i gap”
MENA companies in the FT Global 500
Market capitalization end 2007, USD billion
Company Country Market Capitalization
Saudi Basic Industries (SABIC) Saudi Arabia 132
Al Rajhi Bank Saudi Arabia 47
S di Telecom
Saudi T l S di Arabia
Saudi A bi 45
Etisalat United Arab Emirates 31
Samba Financial Group Saudi Arabia 29
Emaar United Arab Emirates 25
Source: Financial Times
- 10 -Investment Opportunity
Market Performance
Retail-dominated equity markets across the GCC have been typically guided by speculative rumor, and a combination of high liquidity
and leverage leading up to the 2006 equity market bubble
Since 2007, foreign investor interest in GCC markets has increased dramatically as global liquidity is finding its way into “frontier
markets” given the historically low correlation with developed markets. Foreign participation in GCC markets has approached 20-25%
markets 20 25%
from being non-existent in 2006 rendering MENA markets more institutionalized
MENA Market Performance MENA Market Performance
2004 – April 30th, 2008 YTD % change as of April 30th, 2008
30%
Abu Dhabi
Oman,
Dubai 25% 24.1%
Oman
20% Qatar, Kuwait,
Egypt 17.8% 17.0% Jordan,
15.9% Tunisia, Morocco,
Kuwait 14.1%
15% 13.3%
Saudi Arabia Lebanon, Egypt,
10.6% 10.4% Abu Dhabi,
Qatar 10% 9.6%
Return
Bahrain,
Bahrain
%R
5%
3.1%
0%
Dubai,
-5% -3.3%
-10%
Saudi Arabia
Arabia,
-9.9%
-15%
January-04 January-05 January-06 January-07 January-08
Source: Bloomberg
- 11 -Investment Opportunity
Country Valuations
Following a sharp correction in 2006, regional equity valuations are at attractive levels relative to global peers trading at a 2008 PE of 14.1x
Domestic liquidity is significantly higher than other emerging markets, coupled with high ROEs (23%) and 2008 EPS growth (20%), the region
could justifiably trade at a premium in the medium to long term to emerging market peers
MENA Valuations vs. BRIC Countries MENA Markets
Price to Earnings Ratio (P/E),
(P/E) 2008F Valuation vs.
vs Growth (MENA vs.
vs BRIC countries)
25 35.0%
Qatar
30.0% China
20 19.3 India
17.1 25.0%
15.8 15.7 15.4 15.3 UAE Brazil
14.6 14.3
15 13.9 13.9 Bahrain Egypt KSA
owth 2008
12.9 20.0% Russia
12.1
11.5 11.1
10.5
Lebanon Tunisia
15.0%
EPS Gro
10 Kuwait
Jordan
Morocco
10.0% Oman
5
5.0%
0 0 0%
0.0%
7 10 13 16 19 22 25
P/E 2008
Source: EFG-Hermes Asset Management, Morgan Stanley * As of April 30th, 2008
- 12 -Investment Opportunity
Investment Considerations
Country Foreign Shareholding Limits Taxes Currency Peg
Egypt No limits None No peg
M
Morocco N li
No limits
i 5% withholding
i hh ldi tax N peg
No
Tunisia No limits N/R No peg
Lebanon No limits 10% withholding tax on unlisted securities; Pegged to USD
5% withholding tax on listed securities
Jordan Varies with sectors, but generally no limits 5% on income from credit interest on deposits Pegged to USD
Saudi Arabia Maximum ownership level for GCC nationals is Provided that a sale transaction has been Pegged to USD
25%; closed to foreigners except through Saudi- carried out according to market regulations,
domiciled mutual funds capital gains are tax exempt; dividend
payments to foreign investors are subject to
5% withholding
i hh ldi tax
Kuwait Restricted to a maximum foreign ownership of Corporate tax rate of 25% recently repealed Pegged to a basket of
40% in banks, 49% in other listed companies by the Kuwait government currencies
United Arab Emirates Restricted to a maximum of 49% of a listed None Pegged to USD
company
Bahrain Restricted to a maximum of 10% of a company's None Pegged to USD
share capital; total foreign ownership cannot
exceed 49%
Oman Restriction ranges from 49% to 70% None Pegged to USD
Qatar Restricted to a maximum of 25% of the traded None Pegged to USD
shares of each company listed on DSM, unless a
lower amount is specified
Source: Deutsche Bank
- 13 -I. Executive Summary
II. Investment Opportunity
III. EFG-Hermes MEDA Fund
IV. Outlook and Strategy
V. Investment Process
VI. Terms
- 14 -EFG-Hermes MEDA Fund
Firm Organizational Structure
Cairo Office Dubai Office
EFG-Hermes is the Arab world’s premier investment banking
Established 1994 Established 2002
firm and is the largest investment bank in the region by number
of employees, market capitalization and fee revenue Services Securities Brokerage Services Securities Brokerage
Investment Banking Investment Banking
EFG-Hermes is the market leader in the field of privatization,
Asset Management Asset Management
mergers & acquisitions, equity and debt finance raising. Since
Private Equity Research
1995, EFG-Hermes has raised around USD11 billion for its
Research Employees 130
clients and advised on more than USD20 billion worth of M&A
E l
Employees 480
transactions
Beirut Office
The firm employs more than 700 individuals, up from 30 in
1994, and is expanding rapidly to accommodate for the Established 2006
expected growth of the Middle East capital markets Services Investment Banking
EFG-Hermes went public through a GDR offering in July 1998 Asset Management
and has a market capitalization over USD4.6 billion, a book Research
value of USD1.7 billion (as of 31st December, 2007) and is
listed on the London and Cairo and Alexandria Stock
Exchanges Ri dh Offi
Riyadh Office
Established 2006
Doha Office
Services Securities Brokerage
Investment Bankingg Established 2007
Asset Management
Services Investment Banking
Offices in: Research
Asset Management
Employees 50
- 15 -EFG-Hermes MEDA Fund
Asset Management Overview
The EFG-Hermes Asset Management Team is part of the EFG-Hermes Group
Has a 14-year track record in regional markets since the Firm’s establishment in 1994
Currently managing approximately USD8 billion:
Equity & money market funds across the MENA region
Private Equity funds across countries/sectors
Discretionary portfolios and segregated mandates for institutional and ultra high net worth clients
Product Range
Equities, Fixed Income and Money Markets
Specialized (e.g. Islamic, sector specific etc.)
Indexed and absolute return
Private Equity
Top performing funds in the regional market over the last 5 years
Experienced Team of 25+ investment professionals across four countries (Egypt, the UAE, Lebanon, Saudi Arabia and
Qatar) making it the largest on-the-ground team of any investment manager in the Middle East
- 16 -EFG-Hermes MEDA Fund
Fund Performance Overview
Long-only Regional Funds 2003 2004 2005 2006 2007 2008*
EFG-Hermes MEDA Fund 33.2% 52.7% 60.9% 6.2% 50.5% 8.7%
EFG-Hermes Telecom Fund 34.5% 46.8% 67.3% 5.8% 32.5% -4.2%
* NAV as of April 30th, 2008
Long-short Regional Fund 2003 2004 2005 2006 2007 2008*
MENA Opportunities
O t iti F Fund
d ** N/A N/A N/A N/A 19 7%
19.7% 8 4%
8.4%
•NAV as of April 30th, 2008 ** Launched September 1st, 2007
Long-only Country Specific Funds 2003 2004 2005 2006 2007 2008*
EFG-Hermes Egypt Fund 32.7% 113.1% 130.7% 8.6% 61.9% 10.9%
* NAV as of April 30th, 2008
* All figures represent net performance
- 17 -EFG-Hermes MEDA Fund
Relative Performance*
Global MSCI Indices vs. MEDA Fund
2004 – 2008 YTD
61%
53%
51%
47%
37%
30% 29%
22%
19%
13%
9% 10% 9%
6%
-5% -4%
-2%
2004 2005 2006 2007 2008
-40%
MEDA Fund MSCI World MSCI EM MSCI Arabia
* Performance from December 31st, 2003 to April 30th, 2008 **MSCI Arabia was launched in June 2005
- 18 -EFG-Hermes MEDA Fund
Performance vs. Regional Peers
2006 2007 YTD as of April 30th, 2008
10% EFG-Hermes 10% MEDA Fund, Shuaa Arab
MEDA Fund, 8.7%
6.2% 60% Gateway Fund,
EFG-Hermes 8.1%
MEDA Fund, Shuaa Arab
8%
50.5% Gateway Fund, Algebra Alpha
0% 49.3%, MSCI Arabia,
50% MENA Fund,
47.4% Makaseb
NBD MENA
ArabTigers
6% 5.5%
Fund,
41.6%
Fund,
Arab Bank 40 0%
40.0% Makaseb
M k bA Arabb
-10% MENA Fund, Makaseb 40% 4% Tigers Fund, Arab Bank
-6.9% Arab Tigers 2.9% MENA Fund,
Fund, Arab Bank 2.2%
-8.8% MENA,
28.8%
2%
30%
-20% NBD
MENA Fund, Shuaa
-17.8% Arab Gateway 0%
Fund,
-19.7%
20%
-30%
-2%
MSCI Arabia ,
-1.9%
10%
-4%
-40% NBD
MSCI Arabia, MENAFund,
-40.4% -4.0% *
0% -6%
EFG-Hermes Shuaa Arab MSCI Arabia NBD Makaseb Arab Arab Bank
-50% MEDA Fund Gateway Fund Tigers Fund MENA Fund
* NBD MENA Asia Fund YTD as of March 31st, 2008
- 19 -EFG-Hermes MEDA Fund
Country Allocation*
Country Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Apr-08
Eg pt
Egypt 16 0%
16.0% 30 9%
30.9% 34 2%
34.2% 29 4%
29.4% 23 6%
23.6% 19 6%
19.6%
Morocco 8.8% 12.8% 1.3% 0.0% 1.0% 0.4%
Lebanon 0.0% 0.0% 11.8% 7.0% 0.0% 0.0%
Tunisia 5.1% 5.4% 0.6% 1.0% 0.0% 0.0%
Jordan 5.4% 2.1% 0.0% 0.0% 3.2% 1.4%
Non-GCC 35.3% 51.2% 47.9% 37.4% 27.8% 21.4%
Kuwait 8.3% 11.0% 30.7% 16.1% 8.0% 9.8%
O
Oman 16 5%
16.5% 14 1%
14.1% 8 0%
8.0% 6 4%
6.4% 6 2%
6.2% 4 3%
4.3%
Bahrain 18.5% 12.5% 6.2% 9.5% 0.0% 0.0%
Qatar 9.1% 6.7% 3.1% 9.0% 10.8% 16.0%
UAE 5.6% 0.0% 0.0% 10.3% 22.0% 25.4%
Saudi Arabia 0.0% 0.0% 0.0% 0.0% 22.8% 14.5%
GCC 58.0% 44.3% 48.0% 51.3% 69.8% 70.0%
Total Exposure 93.3% 95.5% 95.9% 88.7% 97.6% 91.4%
Average Exposure 88 0%
88.0% 92 3%
92.3% 95 1%
95.1% 93 6%
93.6% 94 2%
94.2% 93 7%
93.7%
* As of April 30th, 2008
- 20 -I. Executive Summary
II. Investment Opportunity
III. EFG-Hermes MEDA Fund
IV. Outlook and Strategy
V. Investment Process
VI. Terms
- 21 -Outlook and Strategy
Public Markets – Valuations vs. MEDA Fund
Country Valuation MEDA Fund Valuation
EPS EPS EPS EPS
PE08 Growth 08 PE09 Growth 09 PEG PE08 Growth 08 PE09 Growth 09 PEG
UAE 12.9 22% 10.6 23% 0.71 13.3 42% 9.9 34% 0.51
Saudi Arabia 15.7 21% 13.4 17% 0.99 14.3 22% 12.6 14% 0.96
Qatar 14.6 30% 12.5 17% 0.82 15.1 36% 12.9 17% 0.86
Oman 14.3 10% 12.8 12% 1.41 14.1 13% 12.8 10% 1.38
Bahrain 11.5 19% 9.7 19% 0.72 N/R N/R N/R N/R N/R
Egypt 13 9
13.9 19% 11 8
11.8 16% 0 93
0.93 12 9
12.9 22% 10 7
10.7 21% 0 71
0.71
Tunisia 13.9 17% 11.5 21% 0.81 N/R N/R N/R N/R N/R
Jordan 15.4 14% 13.4 15% 1.01 10.9 19% 9.8 11% 0.62
Kuwait 12.1 16% 10.5 15% 0.90 12.2 15% 10.9 13% 0.89
Lebanon 11.1 18% 9.6 16% 0.73 N/R N/R N/R N/R N/R
Morocco 19.3 13% 17.2 12% 1.19 N/R N/R N/R N/R N/R
Average 14.1 20% 12.1 17% 0.90 13.4 28% 11.0 22% 0.77
Prices asas
ofofDecember st, 2007,
Prices April 30th31
, 2008 * Price to Earnings Growth Ratio
- 22 -Outlook and Strategy
Key Themes
Construction and Infrastructure GCC surpluses are fueling construction and infrastructure boom across the region
Currently a massive infrastructure deficit in the MENA region
GCC countries are expected to spend upwards of 5.5% of GDP on infrastructure through
2012; USD2 trillion in projects are currently underway or in the pipeline
Consumer and corporate demand for property vastly outstrips current supply
Financial Services Financial sector is beneficiary of region’s excess liquidity and economic transformation as
well as negative interest rates
Capital markets are rapidly expanding with more IPOs and higher daily trading volumes
Retail banks will enjoy activity from GCC’s developing and rapidly expanding mortgage
markets
k
Infrastructure and construction activity will fundamentally drive demand for project financing
Consumer There is escalating consumer wealth across the region coupled with high population growth
MENA per capita income is above USD20,000 which is 80% higher than five years ago
The demand for consumer goods, services, property, telecommunications, hotel and transport
continue to rise exponentially
Companies seeking to capture this pent-up consumer demand are trading at compelling
valuations
l i comparedd to global
l b l peers
- 23 -Outlook and Strategy
Directional Trends
Outlook
We remain positive on MENA markets on the back of a persistently high level of oil prices, abundant liquidity and an ongoing large-scale
investment drive across the region
Positive catalysts for 2008/2009 would be the inclusion of the GCC/MENA markets in the MSCI Emerging Markets (EM) Index
UAE and Saudi Arabia represent the best combination of value coupled with high earnings growth and healthy liquidity. Saudi Arabia would
also benefit from a potential opening of its capital markets to foreign non-GCC investors given its size and depth
Kuwait has the potential to benefit from another catalyst, namely the implementation of a new tax law that would remove capital gains on
foreign investments
Currency issues
In spite of the large external surpluses most of the GCC currencies remain pegged to the USD; as a result imported inflation is putting pressure
on governments to allow currencies to strengthen
Inflationary pressures are now emerging within MENA countries, but they are taking pro-active measures such as the application of rental caps
and the revaluation of their currency against the USD (e.g. Kuwait); additionally, a one-off revaluation and/or a move to a peg against a basket
of major currencies is likely in the medium term
- 24 -I. Executive Summary
II. Investment Opportunity
III. EFG-Hermes MEDA Fund
IV. Outlook and Strategy
V. Investment Process
VI. Terms
- 25 -Investment Process
Investment Philosophy
We b
W believe
li that
th t long
l term
t outperformance
t f is
i generally
ll achieved
hi d byb investing
i ti ini companies
i which
hi h
offer the following:
operating in countries with sound macroeconomic fundamentals
strong management
high and/or improving quality of earnings
trading at attractive valuations
- 26 -Investment Process
Approach
Stock selection based on Companies with strong management are more likely
fundamental analysis to deliver consistent returns to shareholders
Complemented by macro overlay Country risk matters in Middle East & North African
economies
Investment committee debate Fundamental approach to company valuation
drawing on independent buy-side enabling us to spot inefficiencies
research
h
Employing a sound risk Our risk positions are regularly monitored
management framework
To form tailored approach following a rigorous asset allocation process
- 27 -Investment Process
Fundamental Bottom-Up Analysis
What we generally do What we generally look for
Bi-annual meetings with Senior Management Leading market position
In-house financial analysis by buy-side High and/or improving returns
analysts
Benefiting from structural growth
Multiple
M ltiple valuation
al ation techniq
techniques
es incl
including
ding IC D
Debate
b t
Successful track record
absolute and relative valuation
Interests aligned with shareholders
Attractive valuation
- 28 -Investment Process
Top-Down Analysis
What we generally do What we generally look for
Leverage EFG-Hermes’ research capabilities Stable or improving country fundamentals
Economic Strategy Acceleration of economic growth
Macro Analysis Structural changes leading to macro stability
Country & Sector Analysis IC Debate
- 29 -Investment Process
Risk Management
Portfolio Manager weighs positions based on Internal Guidelines
Maximum
M i weighting
i h i per company in
i
Top down macro view portfolio ≤ 10%
Valuation Maximum position in company ≤ 10% of
outstanding shares
Quality/Transparency
Q y p y
Minimum
i i $100 Mn. market
k capitalization
i li i
Liquidity Analysis per company
Conviction Minimum $0.5 Mn. daily liquidity per
company
Currency exposure unhedged
- 30 -I. Executive Summary
II. Investment Opportunity
III. EFG-Hermes MEDA Fund
IV. Outlook and Strategy
V. Investment Process
VI. Terms
- 31 -Terms
EFG-Hermes MEDA Fund
Size: USD 1.3 billion Benchmark: 10%
Subscription & Redemption: Monthly Management fees: 1.4% of the average net asset value
Investment Universe: Middle East & North Incentive fees: 15% above benchmark
Africa
Dividend Payment: Net income
Inception Date: July 1999 at the discretion of the Board of Directors
Incorporation: Bermuda Administrator: Apex Fund Services
Listing: Dubai Financial Market Auditor: Deloitte & Touche
Structure: Open Ended Financial Year End: 30 June
- 32 -Team Biographies
Organizational Chart – Investment Team
Head of Asset Management
(Hashem Montasser)
Sr. Portfolio Manager Sr. Portfolio Manager Sr. Portfolio Manager Sr. Portfolio Manager
Sr. Portfolio Manager
Fixed Income
(Karim Nehma)
(Khalil El Bawab) (Rana Adawi) (Abdel Monem Omran) (Dalia Shafik)
Portfolio Manager Portfolio Manager Portfolio Manager Vice President
Portfolio Manager
(Saleem Khokar) (Mazen El Kerdany) (Sherif El Haddad) Illiquid Investments
(Hashim Omran)
(Amr Rezk)
Trader Assistant Portfolio Manager Trader Assistant Portfolio Manager Assistant Portfolio Manager Assistant Portfolio Manager
(Tarek
(T k Ayman)
A ) (Majed Kabbara) (Islam
(I l Al B
Batrawy)) (Ahmed El Alfy) (Radwa El Sharkawi) (Ola El Shawarby)
Investment Analyst Investment Analyst Investment Analyst Investment Analyst Fixed Income Analyst Investment Analyst Investment Analyst Investment Analyst Investment Analyst
(Mahmoud Tarif) (Hany Bassiouny) (Omar Anis) (Imran Khan) (Yehya Abdellatif) (Mostafa Abdel Aziz) ((Mostafa Amer)) (Bassam Slim) (Karim Arabi)
KSA UAE Egypt
- 33 -Team Biographies
Organizational Chart – Business Development
Head of Asset Management
(Hashem Montasser)
CEO, Beirut Office Senior Vice President Director Senior Vice President
(Nayla Abou Sleiman) (Mohamed Abdel Halim) (Praveen Jagwani) (Francois Rensburg)
Vice President
(Ahmed Al-Hammadi)
Assistant Vice President Assistant Vice President
(M i Mounir)
(Mai M i ) (M
(Marwan Farag)
F )
Financial Analyst Financial Analyst
(Rami Sarafa) (Dina Karam)
Lebanon Egypt UAE Qatar
34Team Biographies
Key Members of Investment Team
Hashem Montasser
Head of Asset Management
Hashem Montasser heads EFG-Hermes Asset Management Team out of Dubai, UAE, overseeing all of the Group’s funds and portfolios. Mr. Montasser is
responsible
ibl ffor th
the overall
ll iimplementation
l t ti off the
th Investment
I t t Management
M t Team’s
T ’ assett allocation
ll ti strategy
t t andd chairs
h i its
it investment
i t t committee.
itt
Most recently, he worked at JPMorgan & Co in London where he had coverage responsibilities for Middle East financial institutions and central banks
focusing on fixed income derivatives and alternative investment products. Prior to that, he worked at Merrill Lynch & Co in New York where he covered
corporate and sovereign clients as part of the Emerging Markets Capital Markets Group. Mr. Montasser also spent a short stint as Director of Business
Development for New York-based internet start-up Kozmo.com.
Mr. Montasser graduated from Harvard University with a dual concentration in Economics and Near Eastern Languages and Civilization and obtained his
Masters of Business Administration from Harvard Business School.
Karim Nehma
Senior Portfolio Manager
Mr. Nehma oversees the Investment Management Team and is the Fund Manager for EFG-Hermes’ flagship, long-only fund, the EFG-Hermes MEDA Fund.
p
Mr. Nehma is responsible for the dayy to dayy operation
p of the regional
g investment team in Dubai ((UAE)) and Riyadh
y ((Saudi Arabia).
)
Previously, Mr. Nehma held a position of Senior Financial Analyst in the research department of Sigma Capital, one of the leading brokerage firms in Egypt.
Prior to that, he worked at Prime Securities and Raya Holding. Mr. Nehma has been working in the equity research and investment management field for more
than nine years.
Mr. Nehma graduated from the American University in Cairo majoring in Accounting.
- 35 -Team Biographies
Key Members of Investment Team
Mazen El Kerdany
Portfolio Manager
Mazen
M El K
Kerdany
d iis one off the
th portfolio
tf li managers responsible
ibl for
f severall off the
th segregated
t d mandates.
d t He H is
i also
l a member
b off the
th Investment
I t t
Committee responsible for making investment decisions.
Mr. El Kerdany graduated in June 2003, from the Faculty of Commerce, Aïn Shams University with a Bachelor degree in Accounting and a
Maîtrise de Sciences de Gestion from the Poitiers University . He also holds a DESS-MBA from the Paris I – Panthéon Sorbonne in 2004. As an
employee with EFG-Hermes, he completed the investment banking course of Euromoney’s DC Gardner in March 2005.
Sherif El Haddad
Portfolio Manager
Mr. El Haddad is a Portfolio Manager responsible for several of EFG-Hermes’ segregated mandates which focus on the MENA and the GCC
region. His areas of coverage include financial services, real estate and building materials.
Prior to joining EFG-Hermes Asset Management, Mr. El Haddad worked in the Credit and Marketing Department in Arab African
International Bank in Cairo, Egypt.
Mr. El Haddad holds a bachelor degree in Accounting from the American University in Cairo. He completed the Investment Banking Course
of Euromoney, DC Gardner and is a candidate of CFA level II, June 2008.
- 36 -Team Biographies
Key Members of Investment Team
Saleem Khokar
Portfolio Manager
Mr. Khokar is a Fund Manager
g at EFG-Hermes KSA specializing
p g in securities listed in Saudi Arabia.
Prior to joining EFG-Hermes Asset Management KSA, Mr. Khokar worked at Saudi Telecom Company in international mergers and acquisitions
where he worked on projects such as the issue of 3rd mobile licence in Egypt. Mr. Khokar has over twelve years of European asset management
experience having worked as an equity fund manager at the Abu Dhabi Investment Authority and Mitsubishi UFJ.
Mr. Khokar is a member of the CFA institute and holds the AIIMR qualification as well as being a qualified Chartered Accountant having obtained
his qualification from Arthur Andersen.
Hashim Omran
Portfolio Manager
Mr. Omran has been a Technology, Media and Telecommunications specialist at EFG-Hermes Asset Management since 2006, analyzing the sector in
the Middle East and Africa. Mr. Omran is the Fund Manager of the EFG-Hermes Telecom Fund, which specializes in investing in the TMT sector in
the Middle East and Africa
Africa.
Mr. Omran received a degree in International Business and Finance from Middlesex University. Previously, Mr. Omran was an Investment Analyst
for EGIVEST Consulting, an M&A/Private Equity advisory firm.
- 37 -Team Update
Other Key Members
Mohamed Abdel-Halim
Senior Vice President
Mr. Abdel-Halim is a Senior Vice President at EFG-Hermes Asset Management. He is also a member of the Investment Committee that decides
on the asset and sector allocations for both the mutual funds and portfolios.
p
Prior to joining the Asset Management Team, Abdel-Halim worked at Merrill Lynch Global Private Client in Dubai where he was responsible for
managing Institutional and High Net Worth Individuals’ wealth in excess of USD250 Million. He also previously worked at Morgan Stanley in
Boston covering US private client assets in the Private Wealth Management Group.
Mr.
Mr Abdel-Halim
Abdel Halim is a graduate of Boston University with a concentration in Economics,
Economics and obtained his Master of Science (honors) in
Finance/Investment Management from Boston University Graduate School of Management.
Francois
F i Jansen
J van Rensburg
R b
Senior Vice President
Mr. van Rensburg is responsible for product development within the asset management function of EFG-Hermes, based in Dubai, UAE. His
responsibilities include structuring and launching of new regional and country specific funds as well as structured products on existing funds.
Prior to joining EFG-Hermes, Mr. van Rensburg was a manager with KPMG within Financial Risk Management focusing on the financial services
industry and advising financial institutions on market risk, credit risk, and operational risk. Mr. van Rensburg worked with KPMG in both South
Africa and the Middle East as part of KPMG’s global financial services advisory practice.
Mr. van Rensburg holds a B.Acc.(University of Stellenbosch, South Africa), B. Com Hons (University of South Africa), and an International
Markets Qualification from the Securities Institute, London. Mr. van Rensburg is also a member of the South African Institute of Financial Markets
and the Global Association of Risk Professionals (GARP).
- 38 -Team Update
Other Key Members
Praveen Jagwani
Director
Mr. Jagwani is a Director at EFG-Hermes Asset Management, focusing on Product Development and Institutional Sales, having joined us in April
2008.
Mr. Jagwani started his career with the ANZ Banking Group upon completion of his MBA in 1992 and worked with them in India, Australia and
Bahrain. In 1999, he joined Standard Chartered Bank in Dubai and was instrumental in building the wealth management business throughout the
Middle East and later in Asia Pacific. In 2006, he joined Merrill Lynch in London, as Director-Alternative Investments to drive the sales of Hedge
Funds and Private Equity in Europe & Middle East.
A Chartered Financial Analyst, Mr. Jagwani also holds a Bachelors degree in Computer Science and a Masters Degree in Operations Research
from Delhi University.
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