Interview: Mahmood Al Kooheji
How have low oil prices affected investments and the regional economic forecast more generally?
MAHMOOD AL KOOHEJI: While oil price volatility may have some impact in the non-oil sector, the long-term picture in the region is strong. The effect has been minimal for Mumtalakat and will not impact our ability to make investments. We finance ourselves in the international capital markets, and do not rely on government oil revenues. Our portfolio is broad, and the sectors we invest in are increasingly de-coupled from the oil price. The non-oil sector accounts for more than 75% of GDP in Bahrain, and while this is the highest in the region, non-oil sectors are flourishing across the Gulf. Importantly, the drivers behind growth in these sectors are increasingly divorced from government oil revenues. Continued investment in these areas will ensure stability.
To what extent has Bahrain’s credit rating downgrade influenced the behaviour of investors?
AL KOOHEJI: Bahrain’s financial position remains strong. Through our active involvement in many sectors, we have seen strong interest from investors in Bahrain, especially in the tourism, real estate, and industrials and manufacturing sectors. Organisations such as Mumtalakat, with strong balance sheets and revolving credit facility programmes, have ample finance available to implement strategies that will mean high long-term payoffs if they continue to invest through the downturn.
How is Mumtalakat encouraging the companies in which it holds a stake to reduce inefficiencies?
AL KOOHEJI: As a shareholder, Mumtalakat is focused on implementing effective corporate governance practices at the holding company level, and supports and encourages its portfolio companies to do the same. Our oversight and influence over a portfolio company is exercised through the representative directors appointed to its board of directors, so our influence is generally determined by the size of our ownership stake. Mumtalakat is focused on managing its business in a sustainable manner on a stand-alone basis. The expectation is that directors and management teams run their respective companies in an independent manner based on long-term sustainable operating and financial practices. Each portfolio company is expected to manage its own funding needs. By instilling such principles in its portfolio companies, Mumtalakat believes that directors and management will be encouraged to embark on commercially viable and attractive projects that are likely to secure third-party funding.
What role should government bodies play in efforts to improve corporate transparency?
AL KOOHEJI: Government has a role in creating institutions that can help to ensure greater transparency, and develop clear frameworks within which business can operate. Multilateral institutions have a role in helping to develop capacity in markets and in promoting international best practices. Ultimately it comes down to companies themselves, ensuring the quality of governance and transparency that gives investors confidence in their business. The private sector needs to focus on selective partnerships, with business practices that promote transparency. We aim to work with partners who share our values and are committed to high standards of transparency and corporate governance.
How is Mumtalakat formulating its strategy for acquisitions abroad in an unstable global climate?
AL KOOHEJI: We are looking for commercially attractive investment opportunities both locally and internationally with partners who share our values. Our strategy is focused on investing in companies with growth potential across sectors and geographies. Many high-quality companies are interested in partnering with Mumtalakat. Our long-term perspective allows us to identify investment opportunities, even if the economic backdrop appears uncertain in the short term.
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