The Business Year

Ibrahim A. AlHedaithy

SAUDI ARABIA - Finance

In the Know

Executive Board Member & Managing Director, MEFIC Capital

Bio

Ibrahim AlHedaithy is a Saudi business tycoon who is widely recognized in the Gulf Market Union and is a key figure in the investment world. Al Hedaithy is the Chairman of ESNA holdings with investments in companies of various business sectors in Saudi Arabia. He is also the Managing Director in Middle East Financial Investment Co (MEFIC) Riyadh, Saudi Arabia since 2009.

TBY talks to Ibrahim A. AlHedaithy, Executive Board Member & Managing Director of MEFIC Capital, on product development, new investors entering the Tadawul, the outlook for the local finance sector.

How is MEFIC Capital expanding and diversifying its product range?

MEFIC Capital has historically been opportunistic in terms of product development. We had our past successes due to launching products which gathered substantial interest from our esteemed clientele. We are currently known for our ability to generate income in the real estate market. We believe that this segment has plenty of room for growth. The future growth in the income-generating real estate space can be attributed mainly due to the evolving regulatory landscape in the region for this asset class. Also, in the past we have had tremendous success in terms of return generation within public assets. In specific, we are currently the market leaders in the money market segment in Saudi Arabia. Moving forward we see ourselves continuing to focus on creating product structures, which are unique and can fit the varied risk and return requirements of our clients. Working toward this, we see an increase in investments from our private equity funds. We are currently working on deals in the food and the retail sectors in Saudi Arabia. Our aim is to keep the growth momentum in our Assets Under Management (AUM) and we expect to more than double our AUMs to $1.6 billion by the end of 2015.

How do you see the entry of Qualified Foreign Investors to the Tadawul affecting the market?

In the short run, it is not expected to impact the market in a large way. The QFI group are a different set of investors and are not traders. I think their affect in the long-term will be to change the share of individual traders. In Saudi Arabia, currently more than 90% of traders are retail and individual. Therefore the institutional rates are low, and I believe this will change. The QFIs are expected to focus more on the Blue Chip companies, which will push companies to strive to reach this level of corporate governance and disclosure practices. I believe that in the short term there will be no effect; however, in the long-term I think that is what we need.

What is your outlook for the overall finance sector here in Saudi Arabia?

The finance sector is trying to add more products to the market, and we are working together with the Capital Markets Authority at this time on many committees to at least assess what we have, while suggesting new products. My dream for MEFIC is to see the MEFIC REIT fund in the market. First of all, the Saudi investor has two types of investment, real estate or capital market, which is why we allow people to invest in products similar to REITs currently and give them a fixed income on an annual basis. We have to educate the people about investment banks. Until now, most people know very little about them; hence, it is a major challenge to educate them on the difference between a bank and an investment bank, and that has not taken place until now.

What is your outlook or expectations for MEFIC Capital for the remainder of 2015?

We are targeting $1.6 billion AUM by the end of 2015, and if we achieve that, which is our expectation and hope, then we are on the right track to achieve that target. We think we can do that; we have an excellent team. We think 2015 will be better than last year.

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