Mumtalakat 2018 Annual Report

Our
Investments

Our Portfolio

We hold stakes in over 60 companies across various sectors and multiple geographies. Our portfolio is valued at US $8.7 billion and our total consolidated assets are valued at US $16.8 billion.

OUR INVESTMENT SECTORS

AVIATION

A critical consumer service, aviation is an indispensable and growing market force. With air passengers increasing globally by 5% annually, efficiency and coordination within supply chains is rising, leading to improvements in productivity and a steady decline in costs. These are interesting prospects for us, guiding our approach.

PORTFOLIO UPDATES

As part of our co-investment programme with RDIF, we invested in Aeroflot, the largest airlines group in Russia. The company operates four brands: Aeroflot (premium), Rossiya (mid-price), Aurora (Far East flights) and Pobeda (low-cost). From its hub in Moscow’s Sheremetyevo International Airport, it flies to over 140 destinations domestically and internationally. Aeroflot is also part of Skyteam, an alliance with several airline operators around the world that includes Air France and Delta Airlines.

Following the consolidation of our local aviation portfolio under a single umbrella, the Gulf Air Group Holding Company’s Board of Directors approved its 5-year strategy. The Group plans to become a sustainable aviation group that contributes to Bahrain’s economy by supporting its aviation ecosystem, providing connectivity to the country and delivering the optimum balance of profitability and macro-economic impact.

Education

With the world’s growing population, the education sector continues to be one of our key target sectors locally, regionally and internationally. It encompasses the wider industry of preschool, junior, secondary and tertiary education, training and education support services. Education is witnessing industry-wide innovation, which has disrupted traditional education delivery and allowed for personalised learning, higher engagement and increased access.

We believe in the high value and sustainable growth opportunities that the sector provides as well as its economic and social impact. By investing in education, we are investing in the future leaders of tomorrow.

PORTFOLIO UPDATES

We successfully exited our investment in Nobel Learning Communities, one of the largest providers of private preschool to secondary education services in the USA. Throughout our investment period, Nobel’s network grew significantly through several M&A initiatives as well as greenfield investments, adding a total of 34 new schools to their network which, in addition to other value creating initiatives, resulted in an EBITDA growth of over 50% during the period.

FINANCIAL SERVICES

The Financial Services sector is being impacted by clusters of innovation. Incumbents in the sector are faced with empowered consumers with changing preferences, a drive towards a cashless world, distributed capital raising and the complete penetration of Fintech across the value chain.

In light of the evolving landscape, we focused on value-creating initiatives within our existing portfolio while continuing to seek commercially viable investment opportunities.

PORTFOLIO UPDATES

We subscribed to Al Waha Funds of Funds, a US $100 million venture capital fund which aims to provide access to funding to Bahrain’s start up community, ultimately boosting the start-up ecosystem in the . Focused on technology, Fintech, and smart cities, the Al Waha Fund aims to bring Bahrain and the region to the forefront of global technological advances making it a hub for VCs, startups and technology companies.

Al Waha Fund of Funds is managed by Bahrain Development Bank. We are one of several subscribers to the fund, alongside the National Bank of Bahrain, Batelco Group, Tamkeen (Labour Fund) and Osool Asset Management.

General Services

Global growth in demand for business services is mainly driven by the positive impact of technology, increasing global competitiveness, the growing usage of professional services, emerging market growth and the increase in new business start-ups. In both developed and emerging markets, businesses will seek cost-saving and efficiency-enhancing solutions in order to focus on their core competencies. As such, we continue to seek investments in established, innovative, and technology-driven companies in the business services sector.

PORTFOLIO UPDATES

PRO Unlimited maintains its position as a leader in the business services space. PRO continued to develop its highly recognised and multi-award-winning Wand Vendor Management System and introduced the Wand Mobile Supplier App for the iPhone – the industry’s first app designed for suppliers to manage their workflows.

Industrial manufacturing

Not only does the industrial manufacturing sector enhance and diversify our portfolio, but it also helps improve people’s lives and supports our economy. The sector remains resilient despite uncertainty around tariffs and ongoing trade negotiations in addition to skilled talent shortages and straining supply chains. Our investments continue to grow as we are targeting companies that have a potential for expansion within subsectors.

PORTFOLIO UPDATES

Mueller Middle East, the first copper tube manufacturing facility in Bahrain and the region, began its operations at the Bahrain International Investment Park, manufacturing and marketing copper tubes for the air conditioning and refrigeration industries in the region. The facility was created to address the increasing demand for quality copper tubes, and will create approximately 200 jobs locally.

Alba took its final steps towards becoming the world’s largest single-site smelter in December 2018, as the Line 6 Expansion Project produced its first hot metal ahead of its expected production date, originally scheduled to take place in January 2019. Designed to boost Alba’s annual production capacity by 540,000 tonnes when the project is fully completed in 2019, Line 6 will bring the company’s total production capacity to 1.5 million metric tonnes per year.

McLaren Automotive, part of the McLaren Group, opened a new £50 million McLaren Composites Technology Centre (MCTC) in Yorkshire, United Kingdom. The facility occupies 7,000 sqm of building space and is expected to create over 200 new jobs when fully operational by 2020.

Real Estate and Tourism

Our real estate portfolio is growing and diversifying as we continue to invest internationally in high quality long-term yielding properties in cities with solid economic and market fundamentals, especially in the United States and Europe.  We continue to look for value-add investment opportunities in various subsectors including offices, industrials, multifamily and student/senior housing.

PORTFOLIO UPDATES

Our first real estate investment in 2018 was made in partnership with Sentinel Real Estate Investment Corporation (Sentinel) with the acquisition of a state-of-the-art office campus in North Carolina, USA. Located in the heart of Research Triangle Park, a 7,000 acre (over 28 sqkm) dedicated scientific research park that houses over 250 companies in which more than 50,000 people work, the office campus is occupied by Lenovo, a leading corporation and rapidly growing technology and innovation firm.

We then acquired the office campus of The Lash Group, a leading pharmaceutical and healthcare service provider and a subsidiary of AmerisourceBergen – one of the largest pharmaceutical services companies in the USA, which currently ranks 12th on the Fortune 500 list and is rated A- by Standard & Poor’s. The 421,863 square foot (39,192 sqm) best in class property consists of two LEED Silver Certified buildings which are occupied by The Lash Group.

As we continue to monitor the real estate market where we invest, we only consider exits when we see positive returns. That is why we successfully exited part of a diverse portfolio of office buildings in Phoenix and Dallas achieving an attractive exit price and profits.

We successfully completed a merger between Southern Tourism Company and Southern Area Development Company, which first commenced in 2017, to streamline and create synergies between the two companies and further align their existing operational strengths.

Gulf Hotels Group opened its first 4-star hotel in Dubai, The Gulf Court Hotel Business Bay, featuring 270 rooms and other facilities. In 2018, the Group established a strong foothold, enabling it to expand into other attractive markets in the Arabian Gulf.

Telecommunications, Media and Technology (TMT)

With the global economy in the midst of a technological revolution, we are looking to invest in a number of sub-sectors within the broader field of TMT. These include a variety of software-based, technology-enabled businesses across Fintech, Edutech, Medtech and others. We are also looking at cloud businesses providing SaaS (software as a service) and IaaS (infrastructure as a service) solutions. Other areas that we are interested in are e-commerce, cyber security and technology in media.

PORTFOLIO UPDATES

We invested alongside RDIF and a consortium of sovereign wealth funds in WayRay, an innovative technology company that develops holographic augmented reality (AR) technology hardware for cars. Its holographic AR solutions for vehicles create a true augmented reality experience where virtual objects are seamlessly integrated into the real world, serving drivers and passengers alike. WayRay’s technology is wide-serving as it can be applied to any glass surface, supporting smart homes and enhancing office spaces.

Bahrain Telecommunications Company (Batelco), the regional telecommunications group operating in 14 countries, saw an increase in its revenues, profits and dividends in 2018 as a result of its strategic initiatives and key investments in targeted services.