Kuwait Investment Authority's decision to participate in the deal or not will depend on a "study" of the IPO

DUBAI- Saudi Aramco met investors in Dubai on Sunday to market its initial public offering (IPO), after trying to secure demand from Kuwait's sovereign wealth fund for the deal, worth up to $25.6 billion, which relies heavily on local and regional buyers.

Top executives of the Saudi state-owned oil giant, including Aramco's Chief Executive Amin Nasser, met officials of Kuwait's sovereign wealth fund weeks ago, a source familiar with the matter said, confirming an earlier report on Sunday in the Kuwaiti newspaper Alrai.

Meanwhile, Aramco's management including its finance head and advisers met with institutional investors at an IPO roadshow in Dubai on Sunday, the second outside Riyadh after the company decided to cancel all roadshows in developed markets.

The Kuwaiti newspaper said the Kuwait Investment Authority's (KIA) decision on whether to participate in the deal would depend on a "study" of the IPO.

Aramco said in an email it did not comment on specific investor meetings.

The KIA did not immediately respond to a Reuters request for comment. In late October, the KIA's managing director Farouk Bastaki said Aramco had not approached the fund then, but that the KIA would look at the IPO like any other investment. 

Talks have taken place with sovereign investors including the Abu Dhabi Investment Authority, Singapore's GIC and other funds, sources have told Reuters. 

DUBAI ROADSHOW

Aramco has struggled to attract a major cornerstone or anchor investor for its IPO, which could be potentially the world's biggest.

An executive at a London-based fund, who attended the roadshow in Dubai, told Reuters he was interested in the IPO, but declined to provide more details.

Some investors asked Aramco about the sustainability of its dividend policy.

Aramco has set a base dividend of $75 billion for five years.

A second executive at an investment firm said Aramco did not say whether that base level might grow.

The meeting was led by Aramco's senior vice president of finance, strategy and development, Khaled al-Dabbagh, and Yasser Mufti, the company's vice president of strategy and market analysis, sources said.

"The only thing left for comfort is the Saudi government, it’s fiscal policy and ability to sustain the dividends," said a fund manager. "If you’re OK with that, you’ll invest."

Over 20 people, wearing suits, walked into the presentation area at a luxury hotel in Dubai's financial district, but hotel security restricted entry for reporters.

Another roadshow is planned in Abu Dhabi on Monday.

"Looks like there's a lot of interest both from retail investors and institutions." K. V. Vijay Raghavan, group finance director at Dubai-based investment firm Arenco told Reuters after attending the roadshow.

"I wish it was more like $1.4 trillion to $1.5 trillion, but this is what it is," he said, referring to the company's aim to achieve a valuation of $1.6-$1.7 trillion.

However, he also said that looking at the investor interest, the IPO could hit the top end of the valuation range.

Aramco plans to sell 1.5% of the company. The deal is the centrepiece of Crown Prince Mohammed bin Salman's plans to diversify the Saudi economy away from its reliance on oil.

Saudi Arabia's central bank governor told Reuters on Sunday in Riyadh that it was monitoring banking indicators on a daily basis and was not seeing any impact on liquidity from the IPO.

source: zawyazawya

From 2013 to 2018, the GCC insurance industry grew at a CAGR of 8.9%

The GCC insurance market is projected to grow at a moderate pace of 4.3 percent compound annual growth rate (CAGR) to reach $36.1 billion in 2024 from $29.2 billion in 2018, Alpen Capital said in a report.

The outlook for the GCC insurance industry remains positive, “primarily led by a sustained economic growth, diversification of the economy, increase of the population as well as the implementation of mandatory insurance,” Krishna Dhanak, Executive Director at Alpen Capital said during a media roundtable.

From 2013 to 2018, the GCC insurance industry grew however at a higher CAGR of 8.9 percent from $18.4 billion to $28.2 billion, the Alpen report showed.

The market share of each GCC country is expected to remain constant through 2024 according to Alpen Capital. The UAE will continue to maintain its position as the largest market in the region.

The gradual slowdown of the insurance industry that was witnessed in the last two years as various players adapted to new regulations such as solvency requirements, minimum capital requirements and pricing policies, is likely to continue until 2024, Dhanak said.

Dhanak said that M&As in the sector remained active over the past two years as companies sought to build stronger balance sheets to sustain the stringent reserve and solvency requirements.

“In addition to interest from foreign players, we expect to see continuing M&A activity as companies develop technological capabilities to broaden their product offering and improve profitability,” he added.

According to the report, insurance penetration (ratio of total insurance premiums to GDP) in the region is expected to remain between 1.8 percent and 1.9 percent from 2019 to 2024, below the global average of 6.1 percent, offering scope for growth in the sector.

Insurance density (ratio of premium underwritten to total population) in the GCC is expected to increase from $502.9 in 2019 to $555.8 in 2024. Life insurance gross written premium (GWP) is projected to grow at a CAGR of 4.9 percent to reach $4.7 billion in 2024.

The non-life segment will continue to comprise 86.9 percent of the total insurance market at $31.4 billion in 2024, the report noted.

In the next 5 years, the UAE’s insurance market is forecasted to grow at a CAGR of 4.2 percent while the Saudi Insurance market will grow at a CAGR of 5 percent and the Kuwaiti insurance market is anticipated to grow at the fastest annualized average pace of 8.2 percent.

In 2018, the UAE recorded the highest insurance penetration and density at 2.9 per cent and $1,194.7 respectively, the report said.

One of the challenges facing the sector is its exposure to risky assets according to Alpen Capital, as insurance firms in the region have a relatively high exposure to capital markets, making them more prone to volatility in equity markets.

Another challenge is weak profitability. With 200 insurers operating in the region, the sector remains highly fragmented, pushing companies to face profitability pressure due to mounting competition, high regulatory costs and strict accounting standards, the report said.

source: zawya