Global Investment House assigned 'BBB/A-3' ratings; outlook stable

"The ratings on Global reflect its strong capitalization, good market position, consistent strategy, and high although potentially cyclical profitability," said Standard & Poor's credit analyst Paul-Henri Pruvost.

The ratings also reflect Global's stand-alone creditworthiness and do not factor in potential external support from shareholders or authorities. Negative rating factors include the company's short track record, small size by international standards--with a reliance on a limited number of key individuals, weak funding and liquidity profile as a wholesale entity, and high investment in private equity.

Global is an investment company headquartered in the State of Kuwait (AA-/Stable/A-1+) that focuses on the Middle East and North Africa. It is a small institution by international standards, with total assets of $5.2bn and assets under management of $9.5bn at mid-year 2008. However, the company enjoys a leading regional status and benefits from a large and increasingly diversified investor base. Global intends to enlarge its regional footprint through the expansion of its office network and the acquisition of strategic stakes into regional financial institutions.

"The stable outlook balances our expectation that Global will be able to enhance its business franchise amid growing competition with its high investment and related risk in private equity,"

added Mr. Pruvost.

We also expect Global to maintain a relatively strong capitalization. Should the company's appetite for leverage be stronger than expected--leading to a higher-than-expected net debt-to-ATE ratio, for instance--—the ratings would come under pressure.

The ratings would also come under pressure if the funding profile was to deteriorate; or if the private equity portfolio profile was to weaken and there was a failure to conduct private equity acquisitions and exits in line with Global's business model; or if key manager risk was to materialize.

An upgrade would require a higher recurring fee income generation and a stronger funding and liquidity profile, assuming capitalization remains at a strong level.