“KIPCO acquires, scales and exits businesses when the time is opportune” says company’s Group CEO
KIPCO – Kuwait Projects Company (Holding) – announced that it has entered into a binding implementation agreement to arrange for an off-market trade with Fairfax Financial Holdings to sell KIPCO’s 46.32% stake in Gulf Insurance Group (GIG).
The price per share is KD 2 for a total of KD 263.7 million (US$ 860 million) from which will be deducted KIPCO’s share of cash dividends that may be distributed by GIG for 2022. The deal is contingent on the buyer obtaining the necessary regulatory approvals and, depending on the timing of the execution of the off-market trade, profit from the sale is expected to be in the range of KD 70-80 million.
The announcement was made by KIPCO’s Board Member and Group Chief Executive Officer, Sheikha Dana Naser Sabah Al Ahmad Al Sabah, during the company’s Annual General Assembly Meeting. The AGM witnessed the election of the Board of Directors for the next three-year term.
Commenting on the agreement, Sheikha Dana said:
“As a holding investment company, KIPCO’s strategy is to acquire, scale and exit companies when the time is opportune. This deal is the culmination of three decades of value creation and growth. Our journey in the insurance business has been a journey of success. Since becoming our partners in 2010, we have worked with Fairfax to build a strong insurance provider that operates
in 13 markets. We believe that the company will continue to grow under Fairfax and will remain a leading player in the MENA insurance market.”
Following the AGM, KIPCO’s Group CEO presented a review of the company’s activities in 2022 and its outlook for 2022 to an audience of shareholders, financial analysts and institutional investors.
2022.. The Year of Transformation
Sheikha Dana said that the year 2022 was, indeed, a year of transformation for KIPCO. Following the successful completion of the merger with Qurain Petrochemical Industries Company (QPIC), KIPCO’s portfolio is now more diversified, with new sectors including energy, foodstuff, healthcare, manufacturing and logistics. As a result of the merger, KIPCO’s capital increased 91.2% to KD 508.8 million.
The strong performance of the core companies contributed to strong results at the holding level. KIPCO’s net profit for 2022 increased 44% to KD 25.2 million (US$ 82.3 million), with total revenue from operations was up 47% to KD 1.06 billion (US$ 3.5 billion). Shareholder equity increased 81% to KD 590.5 million.
KIPCO’s milestones, besides the merger, include issuing six-year senior unsecured bonds worth KD 165 million, the largest KD-denominated issue to date. Rating agencies viewed the merger as credit positive. In line with global best practices, KIPCO issued its first Sustainability Report during the past year.
Performance of Group companies
In 2022, KIPCO’s core companies delivered positive performance. Burgan Bank’s net profit increased 15% to KD 52.1 million (US$ 170 million). Gross Written Premium for Gulf Insurance Group went up 52% to KD 831.7 million (US$ 2.72 billion).
As for SADAFCO, net profit for the nine month period ended December 31, 2022 came to US$ 58.1 million (KD 17.8 million), an increase of 50%. Meanwhile, United Real
Estate posted a net profit increase of 168% at KD 3.4 million (US$ 11.1 million). Revenue from fees reported by Kamco Invest saw a 2.5% increase.
Jordan Kuwait Bank registered a 140% increase in net profit for the year. NAPESCO’s net profit increased 18% to KD 6.8 million (US$ 22.2million), while KARO registered a 103% increase in net profit to US$ 59 million (KD 18.1 million). As for ATC, net profit was up 32% at KD 7 million (US$ 22.8 million). United Education Company, meanwhile, saw a 14% growth in profit.
Efficiency and Effectiveness
Commenting on the outlook for 2023, KIPCO’s Group CEO said:
“The positive performance delivered by our core companies during the year has contributed to our efforts to ensure that KIPCO is a streamlined investment holding company that is both efficient and effective. Moving into 2023, several measures have been taken to minimize the impact of market volatilities and high interest rates, and we are confident that we have put in place a strong base that will allow us to move towards a more promising and sustainable future.”