The decision comes on the back of growing GCC based demand for investment opportunities as a result of high liquidity ratios, coupled with increasing regional investment market sophistication, all of which have influenced KAMCO's strategic decision.
"The worldwide growth of energy investments has been echoed in emerging markets and we believe the Gulf region is poised to play an increasingly active role in contributing to this growth," said Saudoun Abdullah Ali, General Manager of KAMCO.
The strong demand for energy and energy related products has been driven by the surge in developing market economies. The limited increase in the supply of oil coupled with prolonged high fuel prices and greater understanding of global warming issues have resulted in many new government policies supporting the development of alternative energy sources.
KAMCO believes this has led to a distinct demand increase in investment opportunities focusing on both ancillary energy services activities as well as alternative 'greener' energy sources and related services.
"We have seen a marked change recently in the sustainable energy industry, which is no longer dominated solely by developed market economies but has seen a rapid growth in other markets - with a fifth of total investments now occurring in the developing world," continued Ali. "Although a significant portion of these are occurring in China, the Middle East region is now at the tipping point and we expect to see an exponential growth in related market investments".
The majority of listed companies operating in the traditional energy service sector are heavily dominated by the North American market which constitutes about 50% of the market, with a smaller yet significant European sector, particularly in Norway. Presently only a few companies in this sector are listed in the Middle East or Asia.
The only recognised quoted sub-index for ancillary oilfield services companies is currently the Philadelphia Oil Service Sector Index (OSX) in the US, and which has delivered 20.5% annual performance over the last five years.
The majority of companies working in this sector include those with international deepwater technological expertise, suppliers of engineering development services and specialist equipment and seismic acquisition contractors.
The rapid growth in listed companies offering alternative energy sources has been fuelled by the impact of high energy prices and greener government policies encouraging mainstream investment in this sector.
Preferred companies operating in this sector usually demonstrate established business models with proven profitability ratings, such as in wind and bio-ethanol energy production. Alternatively, companies able to benefit from increasing and significant government subsidies, such as wind and solar energy producers, have become increasingly attractive to investors.
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GCC energy investment market reflects global shift in energy investments
- Kuwait: Wednesday, October 24 - 2007 at 15:44
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Kuwait-based KIPCO Asset Management Co. (KAMCO) has announced that it has entered the energy services investment sector due to the significant growth trend in this field sector covering both ancillary - oil, gas and coal activities and alternative energy sources.
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Posted by Lara Lynn Golden, News EditorWednesday, October 24 - 2007 at 15:44 UAE local time (GMT+4)
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According to a 2007 United Nations Environment Programme report on global trends on sustainable energy investment, renewable energy sources still only account for only about 2% of global energy production but make up a staggering 18% of world investment in power generation. They compete head-to-head with new power generation installations for coal and gas. The increase in capital investment in this sector has been more than 150% over the last two years, with $85 billion worth of investments predicted for 2007 and this trend is expected to continue in years to come.
However, many of these companies are still relatively small with a market capitalisation of less than $500 million and often operate on the periphery of the sector (such as hydro energy companies) or incorporate a significant portion of non-alternative energy business.
The WilderHill New Energy Global Innovation Index (NEX) and Clean Energy Index (ECO) are two emerging indices that increasingly being observed. They have been showing significant performance increases, with total return rates of just over 200% and 75% respective from February 2003 to March 2007, demonstrating the appeal of this sector to investors. Although there is more geographic diversity of listed companies operating in this sector compared to the oilfield services sector, North America still dominates this sector universe.
The alternative energy sector comprises wind power (having become the most established alternative energy source), bio-fuels (most notably the production of ethanol), solar energy (which is still in the development stage without extensive commercial establishment) and fuel cells (where high capital costs have limited its commercialisation).
About KAMCO:
KAMCO is a premier investment company that provides innovative and performance driven financial solutions for its clients since 1998, A subsidiary of Kuwait Projects Co. (KIPCO). KAMCO has assets of KD 1.7 billion under management or control, a portfolio of some 758 companies and individuals, and more than 112 employees throughout its operations.
KAMCO has been publicly listed on the Kuwait Stock Exchange since 2003 and provides its clients with easy access to local and international capital markets, as well as a comprehensive selection of financial services.
KAMCO focuses on asset management (including brokerage services, tailored portfolio management, forward trading, IPOs, local and international fund management etc.) and financial services comprising the full range of corporate finance advisory services (including mergers and acquisitions, underwriting, private placements, strategy development and strategic planning, project and investment evaluation and consulting as well as private equity.)
Headquartered in Kuwait, KAMCO's core operating companies include United Industries Co. (UIC) the specialized industrial investor in the oil, gas and foodstuffs sectors of the GCC and the region; as well as United Medical Services (UMSC), Kuwait's leading health care provider in dental and general health care.
Contact for Media Enquiries:
Mr. Qais Al Shatti
AGM-Marketing, Sales & PR
Tel: +965 246 0969
Fax: +965 245 8572
Dina Sabry
Media Relations Manager
Hill & Knowlton
Tel: (+965) 232 2976
However, many of these companies are still relatively small with a market capitalisation of less than $500 million and often operate on the periphery of the sector (such as hydro energy companies) or incorporate a significant portion of non-alternative energy business.
The WilderHill New Energy Global Innovation Index (NEX) and Clean Energy Index (ECO) are two emerging indices that increasingly being observed. They have been showing significant performance increases, with total return rates of just over 200% and 75% respective from February 2003 to March 2007, demonstrating the appeal of this sector to investors. Although there is more geographic diversity of listed companies operating in this sector compared to the oilfield services sector, North America still dominates this sector universe.
The alternative energy sector comprises wind power (having become the most established alternative energy source), bio-fuels (most notably the production of ethanol), solar energy (which is still in the development stage without extensive commercial establishment) and fuel cells (where high capital costs have limited its commercialisation).
About KAMCO:
KAMCO is a premier investment company that provides innovative and performance driven financial solutions for its clients since 1998, A subsidiary of Kuwait Projects Co. (KIPCO). KAMCO has assets of KD 1.7 billion under management or control, a portfolio of some 758 companies and individuals, and more than 112 employees throughout its operations.
KAMCO has been publicly listed on the Kuwait Stock Exchange since 2003 and provides its clients with easy access to local and international capital markets, as well as a comprehensive selection of financial services.
KAMCO focuses on asset management (including brokerage services, tailored portfolio management, forward trading, IPOs, local and international fund management etc.) and financial services comprising the full range of corporate finance advisory services (including mergers and acquisitions, underwriting, private placements, strategy development and strategic planning, project and investment evaluation and consulting as well as private equity.)
Headquartered in Kuwait, KAMCO's core operating companies include United Industries Co. (UIC) the specialized industrial investor in the oil, gas and foodstuffs sectors of the GCC and the region; as well as United Medical Services (UMSC), Kuwait's leading health care provider in dental and general health care.
Contact for Media Enquiries:
Mr. Qais Al Shatti
AGM-Marketing, Sales & PR
Tel: +965 246 0969
Fax: +965 245 8572
Dina Sabry
Media Relations Manager
Hill & Knowlton
Tel: (+965) 232 2976
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