Markaz posts KD 18.51 million net profit in H1 2007

Mr. Diraar Y. Alghanim, Chairman & Managing Director of Markaz, said: "Markaz's results for the first half ending June 30, 2007 is a net profit of KD 18.51 million and 44 fils per share compared to a net loss of KD 1.46 million and a loss of 3 fils per share for the first half of 2006. This represents an increase of 1368% in the net profit and 1567% in the EPS. Assets under Management totalled KD 1.40 billion as of the end of Q2 2007."

Markaz net profits for the first half 2007 resulted in KD 5.93 million unrealized gains compared to KD 9.16 million unrealized loss of the same period last year. Fees generated from Markaz's asset management and investment banking activities reached KD 5.80 million.

Asset management

In terms of Asset management achievements in the first half of 2007, Markaz launched its IPO and Pre-IPO Program which participates in IPOs and Pre- IPOs predominantly focused on Emerging Markets. Markaz is also launching an Islamic Money Market Fund, in Q3 2007.

For H1, MSCI-GCC index posted returns of 9% and GCC markets showed overall healthy market fundamentals and good levels of liquidity. As per the Kuwait Stock Exchange, the KIC index performed at 30% for H1 and the options market in Kuwait performed impressively during this period, with volume of traded shares over KD 465 million shares and a total value over KD 24.0 million.

Markaz Local and GCC investments funds captured the performance of the GCC markets in the first half of 2007 and showed stellar performance in respect to their benchmarks. Our flagship local product, Markaz Fund for Excellent Yields "Mumtaz" with Year-To-Date performance in excess of 44%, won two Lipper - Reuters awards earlier in the year for Best Equity Fund in Kuwait for the periods (3 years) and (5 years) while Markaz Gulf Fund achieved YTD returns of 21%.

Global markets, for the half year ended 2007, produced the best returns in a long while with all major market indices recording higher single digit or double digit positive gains. In this scenario of favourable market conditions, Markaz adopting tactical asset allocation methodology which emphasized more on emerging markets and thematic investments.

Markaz's international products outperformed their respective benchmarks where Markaz' flagship international product, Atlas Diversified fund achieved YTD returns of 12.92 %, relative to the indices of S&P500 (6%) and MSCI World Index (8.01%).

Markaz's portfolio of third party private equity investments achieved 15.92 % returns during the first half of 2007.

Investment banking

In terms of corporate finance achievements in the first half of 2007, Markaz successfully completed its USD 100 million note issue which was received by strong regional and international demand. Markaz was appointed as Listing Manager of Vending Networks Company.

During the first half of this year, Markaz Energy Fund participated in the capital increase of Kuwait First Transportation Company (KFTC), which is established by Markaz and has a capital of KD 15 million. The company plans to engage in financing and leasing of heavy equipment focused on energy related construction projects with major international and local contractors.

In terms of real estate activities, Markaz launched Markaz Real Estate Opportunities Fund which invests in developmental projects in the MENA region. The Fund invested in the private placement of Lusail Waterfront Investment Company, where Markaz has been designated as the Co-Lead Manager. On an international level Markaz wholly owns Mar-Gulf, the US real estate arm subsidiary of Markaz in the USA which manages Markaz US Real Estate Funds. Markaz's sale of Markaz BBK US Retail Realty Investment Unit II, a portfolio of retail properties, for approximately US $245 million, generated a gross IRR of 27%, a net IRR of 20% to end investors, as well as performance incentive and management fees to Markaz. The company is also in the process of launching the Markaz Multifamily Real Estate Investment Unit IV, a US$ 60 million Sharia'a compliant fund that will selectively invest in the development of apartment properties in the US to generate attractive risk-adjusted returns.