The Business Year

Issam Z. Al Tawari

KUWAIT - Finance

World of Potential

Former Chairman & Managing Director, Rasameel Structured Finance Company

Bio

Issam Z. Al Tawari is the Former Chairman and CEO of Rasameel Structured Finance Company, a capital markets-focused investment company, and Chairman of Rasameel Investment Bank, a Dubai-based DIFC-regulated bank. He started his career with the Arab Banking Corporation (ABC), Bahrain, and ABC Islamic Bank. He joined The International Investor (TII), Kuwait in 1998 in the area of structured finance. His last position with TII was COO, and he was also a partner in the structured finance group. He served on the board of directors of a number of companies and funds. He regularly speaks in Islamic Banking industry conferences and seminars. He is a member of the Young Arab Leaders (YAL) and the Kuwaiti Economics Society. In addition, he is both Harvard University and Henley Management College Alumni and has also received his MBA from the University of Hull England in 1998, as well as a Bachelor’s degree in both economics and business administration from Kuwait University in 1987.

Can you tell us about your investment expertise and the type of investing activities that Rasameel focuses on? We are licensed both for banking and investment banking. We do asset […]

Can you tell us about your investment expertise and the type of investing activities that Rasameel focuses on?

We are licensed both for banking and investment banking. We do asset securitization, sukuk issuances, structuring, arrangement, placement, capital restructuring, and investment advisory. Our activities are largely focused on the debt-side of things—debt capital markets and debt instruments—rather than equity, and we are the only company in Kuwait that has such a specialization. Most investment companies in Kuwait do asset management and equity trading, but we are unique in our field.

In 2014 and 2015, Rasameel was awarded Best Islamic Structured Finance House in the GCC. What makes the company a leader in its field?

It is our focus and our specialization in being an Asset Structuring House that sets us apart. Banks lend their balance sheets and underwrite according to their lending and credit criteria. Our budget is about $330.8 million) which is relatively small when it comes to lending activity. Where we come into play is putting together structuring capability so our clients can respond without burdening their balance sheet. We do off balance sheet funding based on the strength and the quality of their assets and cash flow. Companies are used to going to banks and borrowing to create assets. We buy the assets off the balance sheets, creating equity for them so they can continue doing their business. We acquire portfolios of receivables and leases. We like income generating assets so we acquire them and sell them in the form of investment instruments that give annuity. That is the kind of different approach that we have at Rasameel compared to the rest of the market.

What is your criteria when it comes to targeting the type of clients that you work with?

We go after clients that have income generating assets, namely consumer asset companies, auto leasing companies, aviation, and companies that have long-term contracts of supply, such as contracts with the government over a period of three to five years. We can put financing packages around that stream of income because it is predictable. That is what we go after. Our investors on the other side are mainly institutional investors, sometime banks, and those who are looking for income generating assets rather than putting their money away and waiting for it grow. People aspiring to make huge gains would go for private equity, but our side of the business involves more calculated risk with manageable predictable yields in the range of 4-7%. Certain clients like to invest in such products because their capital is relatively secure and they have an identifiable source of income that will generate for a period of three months, six months, or a year. They like to play it safe.

What trends are you seeing in the sukuk market?

Mainly for consumer financing companies because they have an ongoing need for funding. They are willing to do Mudharabah sukuk and Musharakah sukuk. There is a growing trend for Green sukuks, sukuks that go into funding environmental friendly projects, which is basically directing funding towards an ethical part of the economy. It falls under the same structure as either Wadiah, Musharakah, Leasing, or Mudaraba. Our commercial paper program for Alghanim which won an award for innovation. We then bought on their behalf on a third party basis, and they deferred all their sales to our account with a yield up to a certain limit. Anything over and above was their profit. They made a huge profit without having to commit their capital. For the investors, they were happy to see the cash coming in and the short-term nature of the transaction for the client. They were happy to see an increase in sales and notwithstanding that, they were getting a substantial amount of profit at the back end, because we only took 7% and the balance was for their account. It is win-win, for the client, for the investors, and for us.

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