Gulf Business - November 2010

CEO EXCLUSIVES: ETISALAT BATELCO & OMANTEL
Vol. 15 Issue 7 November 2010
TOP
COMPANIES
IN THE GCC
Can the UAE go nuclear Oman’s healthy
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How to lead your firm, Harnessing Saudi’s

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Oman................ RO 1.0
Qatar.................. QR 10
Saudi Arabia.......SR 10
UAE.................. DHS 10 post-recession unemployed youth
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CONTENTS
Vol. 15 Issue 7 November 2010
REGULARS
32
The top 100
Letters
42
companies in the
TOP
Executive moves
111
Books
GCC
113
Hotels
COMPANIES
115
Data monitor
120
IN THE GCC
Events
122
In your shoes
The wounds of the last two years are dying
hard as sentiment remains sheepish and
GCC NOW
12
The round-up
44 liquidity thin, but signs of life point to renewed
buoyancy of the markets in the medium-term.
News, numbers and people from

around the region.
ANALYSIS 40
The business of F1
COMMENT 34 TOURISM How the Grand Prix is
Playing it safe fuelling Abu Dhabi’s economy.
22 FINANCE Super-rich focus on cash
French opinion riles assets and bonds.
MISHAL KANOO FEATURES
36
24 Transatlantic fights 59
UAE banks gain AVIATION The East/West plane
New leaders
MATEIN KHALID credit debate heats up.
LEADERSHIP It’s time for an honest
hands-on strategy.
26 38
The CEO exodus Signs of life
TOMMY WEIR PRIVATE EQUITY The world is
62
waking up to a slew of new deals. Power trip
28 ENERGY Local talent is the UAE’s
QE round two 89 OFFICE SPECIAL top challenge as it goes nuclear.
MICHAEL PREISS
Working spaces 66
Special supplement on GCC
30 Betting on Oman
office growth and how to create
Making mergers work a happy workspace.
OMAN Savvy investors look closely
PHILIPPE DE BACKER at the sultanate.
November 2010 gulfbusiness 9

F
70
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Contributors
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Arab angst
KSA Can Saudi transform its young
and jobless into a powerful asset?
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10 gulfbusiness November 2010

IN THE NEWS SULTAN QABOOS BIN SAID
Oman celebrates On July 23,1970, his
its 40th national father abdicated and
day this month, marking Sultan Qaboos bin Said
Sultan Qaboos bin Said’s took the throne. Today,
assumption of power Oman has become the
in 1970. most economically and
Sultan Qaboos, 70, is set politically stable country
to play host to the British in the Middle East.
Queen and her husband Going forward, Sultan
between the 25 and 28 Qaboos’ successor must
November as part of the be a male descendant of
celebrations. Turki bin Said Sultan, ruler
Born in Salalah in of Muscat and Oman from
Dhofar on November 18, 1871 to 1888, the Financial
1940, Sultan Qaboos was Times reported. But it
the only son of ruler, is unclear exactly who
Sultan Said bin Taimur. this will be.
He spent the first 16 years In 1996, Sultan Qaboos,
of his life in Salalah, who has no children
where he was educated, and is in good health,
until his father sent him The Oman ruler is set amended the constitution
to a private educational to celebrate 40 years so that his Albusaidy
in power this month,
establishment in England. family should choose a
no clear successor is
Reuters
At the age of 20, he chose in place. successor when he dies.
to enter Sandhurst Royal In the event of a family
Military Academy as an
officer cadet.
appointment with the
British Army. After
Islam and the history of
his country and people.
F dispute, he has left a
letter that names his
He joined a British hanging up his military It was during that time preferred choice. One copy
Infantry battalion on boots, he turned his focus that he became awakened is lodged in Muscat, the
operational duty in to learning and spent the to the country’s poverty, capital, and a second rests
Germany for one year, following six years in this set the tone for his in Salalah in Dhofar in
followed by a staff Salalah quietly studying policies. the south.
SOAPBOX
There is no defined way to Europe has made a great mistake We were left out by the Middle East
happiness. Happiness is within in cutting money for long-term competition because our balance
yourself, it is not somewhere else. economic drivers. sheet wasn’t strong enough.
Sheikh Esko Aho, former Munir Majid,

Mohammed prime minister of chairman of
bin Rashid Al Finland, expresses Malaysian Airlines,
Maktoum, Vice his dismay over tells Gulf Business
President and Europe’s failure how the airline
Prime Minister to increase is now back in
of the UAE and education expansion mode
Ruler of Dubai, investment, after much-needed
gets earnest with during a forum balance sheet
Bloomberg TV. in Ras Al Kaimah. restructuring.
GCC AND THE WORLD
400
The fourth sequel of than any of the other cement its status as a
action blockbuster international cities in the regional movie hub.
Mission Impossible starring movie series. Dubai Media
Tom Cruise will be partly Dubai hopes the filming Incorporated will provide
filmed in Dubai this month. will boost the emirate’s The number of cast technical and staff support,
With filming lasting around position as a favoured and crew in the filming while Dubai Studio City will
three weeks, the city will destination for international of MI4 in Dubai assist with technical and
host the crew for longer movie production and logistic support.

UNITED ARAB EMIRATES
Emirates Airline celebrates India tops Dubai
25 years of growth trade list

Dubai-India direct trade
transactions from January
to July 2010 reached
Dhs85 billion or 26 per
cent of the aggregate
Dubai trade rate with the
outside world. Statistics
from Dubai Customs
showed that the value of
Dubai imports from India
stood at Dhs39.7 billion
while Dubai exports to
India stood at Dhs16.8
billion and the value of
re-exported goods to India
at Dhs28.5 billion.
Emirates Airline profits and launch new In October 2008, Emirates

celebrated its 25th destinations – 105 to date moved all operations at UAE leads
birthday on October 25 – as much of the global Dubai International Airport
this year. The Dubai aviation industry struggles to Terminal 3, a building acquisitions
The UAE was ranked
government-owned aviation in the recession. exclusively dedicated to
as the most acquisitive
company has successfully For the financial year Emirates to sustain its
Middle Eastern country
cemented its international to March 31, the airline rapid expansion and
for the first nine months
reputation, becoming reported net profits of growth plans.
of this year. The country
the world’s sixth largest $964 million, an increase Sheikh Ahmed bin Saeed
accounted for 57 per
international airline today. of 416 per cent over the Al Maktoum launched the
cent of total mergers and
In 2009, the company flew previous 12 months. airline in 1985 and still
acquisitions, according
25.9 million passengers Revenue for the year stood leads today as chairman and
to a report from Thomson
and continues to post at $11.8 billion. chief executive.
Reuters. Meanwhile,
Kuwait is ranked as the
COMPANYFOCUS most acquired Middle
Dewa bonds receive vote of confidence Eastern country.
Dubai Electricity and October 2020 at the initial five-year bond in a deal Brits search for
Water Authority (Dewa) price of 7.375 per cent.The widely seen as reopening
accessed the international issue, largely subscribed the debt capital markets career upgrade
About 71 per cent of
debt capital markets last by European and US for Dubai.
British expats living in
month, raising $2 billion, investors, represents That issue was the
the UAE have chosen to
split across two tranches Dewa’s second foray into first bond issued by the
leave the UK in search of
of $500 million maturing in the US dollar debt capital emirate since Dubai World
a better career or salary,
October 2016 at the initial markets this year. announced a standstill on
results from a survey
price of 6.375 per cent, and The first was in April, its debt-service payments
commissioned by Lloyds
$1.5 billion maturing in when it issued a $1 billion, in November.
TSB International showed.
INNUMBERS About 69 per cent of
those who are motivated
2.4% Dhs6 bn
by career and salary are
aged 35 to 44 years old.
Once the expatriates have
moved, a third of this
UAE’s GDP growth this year, Dubai’s public finance deficit this year,
group do not plan to move
according to the International down from last year’s Dhs12.9 billion
home. Around 39 per cent
Monetary Fund’s forecast. The shortfall. About 30 per cent of the budget
of expats now living in
country’s GDP contracted 2.5 per is earmarked for infrastructure projects
the UAE have no plans to
cent last year. and development.
return to the UK.

SAUDI ARABIA
Saudi GDP to grow 3.7 per cent SAMA’s foreign

assets rise
Strong oil prices averaging
$77 a barrel in August
enabled the Saudi Arabian
Monetary Agency (SAMA)
to replenish its net foreign
assets to SAR1.57 trillion
($419 billion) – the highest
since February 2009.
State spending continues
to be the motivating
force behind economic
growth, but Saudi Arabia’s
monetary outlook remains
KSA’s economy is guarded, with modest rates
heavily cushioned of growth in lending and
by spending money supply likely to
Intermedia
on government continue for the remainder

infrastructure.
of 2010.
Saudi Arabia’s cent in 2009, when growth that continues to absorb

economy is forecast was dragged down by oil a large proportion of
Wheat security
to grow by an average production cuts. job market entrants. reviewed
of 3.7 per cent a year in
2010 to 2014, a slowdown
The Economist
Intelligence Unit said the
Government spending will
rise in 2010 to 2011 before
F The food security
committee at the Riyadh
from the annual average economy will be heavily falling slightly in the Chamber of Commerce and
of 4.9 per cent during the supported by extensive remainder of the forecast Industry has approved the
2003 to 2008 oil boom, but government spending period as private-sector preparation of a study on
a recovery from 0.6 per and by a public sector growth accelerates. the possibility of wheat
production in Saudi
SPOTLIGHT areas rich in renewable
water resources. Saudi
Aramco chief eyes unconventional gas earlier planned to halt
wheat production by 2016
Struggling to discover of cubic feet of because of concerns about
new gas reserves, unconventional resources the desert kingdom’s
Saudi Arabia has repeatedly such as shale gas, more scarce water resources.
experienced power than doubling its proved
shortages. To address reserves.” Saudi mulls
this, Saudi Aramco’s
chief executive Khalid Al
Aided by $130 billion
investment funds, his
tariff hikes
Saudi Arabia may consider
Falih plans to develop the plan involves attainment another power tariff hike
kingdom’s unconventional of a new technological for non-residential users
gas potential. He said skill set – a costly and in the future, Abdulrahman
the kingdom could hold huge task in a completely Al Ibrahim, vice governor
”hundreds of trillions nationalised sector. for consumer and
service provider affairs
INNUMBERS
at the Electricity and
SAR1,000 $1billion
Co-Generation Regulatory
Authority, said. In June,
Saudi Electricity Co said
its board of directors had
decided to increase power
The average monthly salary in Saudi The amount Saudi Aramco and France’s
tariffs for the government,
Arabia’s private sector last year, down Total plan to raise through a sukuk in Q4
commercial and industrial
from SAR1,335 in 2008, according to the to build a crude refinery in Jubail with
sectors effective July 1.
Ministry of Labour. 400,000 barrels daily capacity.

QATAR
N-power report
by year-end
Results of the feasibility
study on Qatar’s
nuclear energy plan are
expected by the end
of the year, Essa bin
Hilal Al Kuwari, acting
managing director of
Qatar General Electricity
and Water Corporation
Qatari Diar, a sovereign (Kahramaa) said. Qatar’s
wealth fund developer,
electricity consumption
is using its financial
might to develop has increased at an
average rate of 10.5 per
iStock
Chelsea in London.
cent in the last 10 years
Qatar branches out with

while demand for water
increased by 264 per cent,
during the same period.
London’s Chelsea Barracks Rents in smaller

Qatari Diar, the Qatari Diar, backed by kind for the UK. Stephen units stable
sovereign wealth the Qatari Investment Barter, chief executive Smaller units in
developer, will fund
the multibillion-pound
Authority, has bought out
the loan of more than $12
of Qatari Diar, told the
paper that the company
F Doha’s established
neighbourhoods led
development of the former billion that had been used had drawn a line under the country’s property
Chelsea Barracks through to acquire the 12.8 acre the previous financial market during Q3 of
its own cash as it uses site for a record-breaking structure, which was 2010, according to the
the deep pockets of its price, the Financial Times partly owned by the Candy latest data from Asteco
oil-rich sponsor to create reported. brothers’ CPC Group. property management. Al
an upmarket London The Islamic financing Qatari Diar has projects Saad and Bin Mahmoud
neighbourhood. deal was the largest of its in more than 20 countries. districts have stabilised
with the price of one-
COMPANYFOCUS bedroom units unchanged
from Q2 at QAR 4,500
QInvest eyes Qatar IPO next year and QAR 4,000 per
month, respectively. This
contrasts with new-
Private investment days but we are looking on the Qatar Exchange build apartments, which
bank QInvest, which at the fourth quarter of would give the company’s were subject to price
was established in 2007 next year or maybe even shareholders an option adjustments of between
with paid up capital of early 2012,” said CEO to capitalise their stakes. five per cent and eight
$750 million, could list on Shahzad Shahbaz. “We have a lot of investors per cent.
the Qatari bourse late next The company hasn’t including banks and high
year or early 2012. yet appointed banks to net worth individuals –
“This is part of our advise on a potential IPO. this would give them a QFC tax regime
strategy. It’s very early Shahbaz added that listing chance to sell,” he said. comes into effect
The Qatar Financial
INNUMBERS Centre Authority (QFC
Authority) said new tax
15.9% 6%
regulations for the QFC
have been enacted. Under
the new regime, all QFC
registered companies
Qatar’s GDP in 2011, down from Qatar’s slated population growth in are subject to 10 per
19.4 per cent in 2010, according 2010 and 2011, down from its peak of cent corporation tax that
to Energy Intelligence Unit. 17.9 per cent in 2007. is chargable on locally
sourced profits.

KUWAIT
Kuwait launches
bourse system
The new system for
Kuwait Stock Exchange
(KSE) will be launched
next year and will work
at full capacity by 2012,
said Kuwait’s Minister of
Commerce and Industry
Ahmad Rashed Al
Haroun. “The time period
to develop the system
Kuwait Energy is three years, with one
Company held 51.2 year down and two to
million barrels of oil
go,” he said. The new
reserves at the end
KWD18.3 million-system
iStock
of 2009.
is expected to increase
trade operations at KSE
KEC targets Kuwait or London IPO up to 50,000 daily.
Kuwait Energy end of 2010 but delayed Kuwait Energy’s capital

Company plans to these plans given weak will rise to KWD127
Sponsorship
launch an IPO within eight international market million ($448.4 million) system scrapped
from KWD 103.6 million Kuwait’s labour and
F
months. Kuwait Energy said conditions.
its shares may be listed The privately held after the rights issue of social affairs minister
on the London and Kuwait company’s shareholders 198.3 million shares at pledged there would
stock exchanges, subject to also approved a plan to 155 fils per share. Kuwait be no reversal of the
market conditions. increase its authorised Energy operates in Egypt, decision to scrap the
The company originally share capital through a Yemen, Oman, Ukraine, controversial sponsorship
mooted an IPO for the rights offering. Russia and Pakistan. system. “The ministry
is moving forward with
SPOTLIGHT the cancellation of the
sponsorship system in
Kuwait national oil company gets new chief February,” Mohammad

Al Afassi said. One of the
The Kuwaiti cabinet not to re-appoint. The oversee the emirate’s proposed alternatives
has approved a US-educated Zanki has oil industry at home is the establishment of
decree to appoint Faruq been the head of KNPC, the and overseas. a shareholding public
Al Zanki as the new CEO KPC’s refining subsidiary, The fifth largest corporation to sponsor
of Kuwait Petroleum since 2007. producer in the OPEC oil all employees employed
Corp. Zanki replaces Before that, he served cartel, Kuwait currently within the country’s
outgoing CEO Saad Al as head of Kuwait Oil Co., pumps around 2.3 million public sector.
Shuwayeb who completed KPC’s exploration and barrels per day.
his three-year term in production arm, for several Oil income accounts for $22bn owed in
September, and whom years. KPC was established about 94 per cent of the war reparations
the government decided in the early 1980s to country’s total revenues. Iraq still owes Kuwait
$22.3 billion in
INNUMBERS reparations from its
invasion of the Gulf state
KWD20 bn $6 billion
two decades ago and the
Gulf War that liberated
it, a Kuwaiti official
said. Mansour Hayat,
The value of the oil projects The amount the US military in told reporters that the
in Kuwait’s development plan, Kuwait generates for the annual payments were due to
whether in the production or economy via logistics services the government and the
refining sector. provided by local firms. oil sector.

BAHRAINOMAN
30
Seconds to
make sense
of… hotel
investment
Kaan Ferhatoglu,
Senior executive officer, Ata Invest Dubai
Is it the right time to invest in real estate?
Orange not licensed Yes. People are now looking for distressed assets,
such as projects which stalled mid-construction,
in Bahrain
so these are the most popular investments now.
Is the UAE the best place to put your money?

In light of recent rumours generated by the In terms of tourism, the UAE is the most promising
public that Orange Telecom is providing place. Dubai not only serves as the regional hub for
mobile telecommunications services in Bahrain, the business and tourism, it is also a transit hub.
Telecommunications Regulatory Authority (TRA) has
clarified that Orange Telecom has not been licensed to Which real estate segment is most attractive
provide mobile services in Bahrain and that licensing
another mobile company to operate in the kingdom is
to investors? F
They used to be involved in land development
not on the agenda of TRA in the near future. projects. That was the hot topic three to four years
ago. Now what we see is more hotel investment.
Alba to raise $541 million

Residential used to be first priority but now hotel
investments account for 60 per cent and 20 per
cent of commercial and residential, respectively.
Aluminium Bahrain (Alba), the operator of an
850,000-metric-tonne-a-year smelter, plans to raise Is there an increasing appetite from Turkish
as much as BHD204 million ($541 million) from an initial investors to invest in the hotel industry here?
share sale as Gulf markets recover from the global credit Yes, because of the great potential in tourism.
crisis. Mumtalakat Holding Co., Bahrain’s sovereign They are interested in hotel investments. Our
wealth fund, plans to sell as many as 163.3 million clients think there is not enough capacity in terms
shares in the IPO. of four-star hotels or lower to middle end hotels
here. They would prefer Greenfield projects –
Oman airports on time buying or leasing the land from the government to
build hotels, especially in Abu Dhabi.
The construction of four Oman airports is How important is the trade relationship between
progressing as per schedule, with the remaining the UAE and Turkey?
packages reaching different stages of design and There are about 7,000 Turkish residents in the
tendering, Oman’s Ministry of Transport and UAE and the majority of them own real estate. In
Communication, said. The four airports – Sohar, Al addition, the UAE and GCC are Turkey’s 11th and
Duqm, Ras Al Hadd and Adam – will link interior regions sixth largest exporting partners, respectively.
with Muscat, and are part of a larger plan to meet the In terms of opportunity, Turkey’s infrastructure
increasing travel demand. and contracting companies have considerable
experience, significant economies of scale, and are
INNUMBERS second only after China in this sector.
2,700
They could emerge as a major player in the
GCC infrastructure sector. The larger and more
experienced Turkish infrastructure and contracting
companies could collaborate with the UAE’s
The number of funds in Bahrain. Of those, 137 relatively young contracting industry.
are Bahrain-domiciled and 59 are part of the
growing Islamic finance market.

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COMMENT
FRENCH OPINION HAS

GONE ONE STEP TOO FAR
While the French independent stance and their business nous is
admirable, the banning of the burka is nothing but an own goal.
MISHAL KANOO
I
love the French lifestyle and their culture of taking as no-one accepted it as a real reason. The other, going
a stand no matter what others think. What’s more, against what is French, is nothing more than a hidden
some French companies are some of the best the message to the 10 per cent population of France that they
business world has ever seen. Giants such as AXA in are not wanted (the ban would apply to no more than
insurance, TOTAL and Technip in oil and gas, Dessault 2000 French citizens).
in Aeronautical, JCDecaux in outdoor advertising, Now we get to the problem. Over 70 million people
Publicis in total advertising, Renault/Peugeot/Citroen visit France a year. If 10 per cent of that were from
in Cars, SUEZ and Vivendi in water treatment, L ‘Oreal Muslim countries and 10 per cent of that wore the
and Garnier are but a few global names that pop to mind burqa that would mean a ban for over 700,000 visitors
when one talks of excellence in business management. to France. If you consider the amount of money that
They even have two of the world’s they spend per day and if you
greatest universities in the Sorbonne How many key consider that most of them would
and INSEAD. Yet for all their great
business sense, the French seem to
players have wives be from the Gulf with a high
disposition to spend, that would
have an uncanny ability to shoot who might be be a horrendous loss in economical
themselves in the foot. offended by the terms, as well as politically.
Prior to the economic crisis, Who knows for sure what that
anyone silly enough to believe that French burka law? will cost French companies in the
he or she would enjoy great service Do not discount Muslim world in terms of contracts
in a Parisian hotel just needed to - some of which are quite lucrative,
visit one to discover that it was an this as a factor in I might add? While no-one would
exercise in futility. The look that decision making. publically say that this was the
said, “why are you bothering me?” reason a French company might
and that classical French expression “pffft!” that needs lose out on a contract, how many key players have wives
to be seen to be believed were part and parcel of Parisian who might be offended by this law and may ask their
life. I am told that this is not true of the rest of France but husbands to “think twice” before signing? Please do not
I have always heard the French say that France is Paris, discount this factor just because it doesn’t show on the
so go figure. After the crisis, the French hoteliers quickly company’s chart.
adjusted themselves faster than any of their European Yes, indeed, the French have a great ability to make
counterparts and, as a result of that were quick to reap themselves persona non-grata to the world without
the benefits of tourists still flocking into their capital of anyone’s help.
culture. People smiled and even talked English; a rare I do hope that better sense will prevail and that such a
possibility in the pre-crisis era. ludicrous law that suggests that women are too stupid to
Now, after this fantastic progress, where even I - a solid choose for themselves and need the nanny state to show
Anglophile - sang their praises, I then had to stop and them the way will be rescinded.
ponder what happened. As I am sure you know, the French The French, quite rightly, pride themselves on their
parliament have resoundingly passed a law banning the recent past, as the bastion of good sense and human
burqa on the basis of either security or the silly idea of rights. I do hope that they will live up to it.
non-integration. The issue of security was a non-starter Mishal Kanoo, deputy chairman, Kanoo Group.

COMMENT
THE DUBAI BOND AND

UAE BANK SHARES
As the Dubai World restructure is finalised and bonds are placed,
the battered UAE banking sector is the biggest beneficiary.
MATEIN KHALID
T
he debt restructuring of Dubai World, the money markets. It was only the swiftness with which
successful placement of the Dubai dual tranche the UAE government guaranteed local bank deposits
sovereign bond and the fall in five-year Dubai and interbank loans, injected $20 billion into leading
credit default swaps has eased funding pressures banks, created emergency finance facilities and slashed
in the UAE interbank market. It is no coincidence that the central bank repo rate to one per cent that averted
three month dirham EIBOR is 2.25 per cent, the lowest a funding Black Death for the Gulf’s most leveraged
since last spring. Commercial banks in Dubai will clearly banking system, with loan/ deposit ratios that exceeded
benefit from the drop in funding costs as they deleverage 150 percent.
and derisk their balance sheets. The IMF estimates that UAE economic growth will
With a $15 billion exposure to Dubai World, exceed 2.4 per cent in 2011, thanks to high oil prices and
according to Moodys, the UAE banking system is the Dubai’s return to the financial markets. UAE banks are
natural beneficiary of the successful Dubai World debt still saddled with exposure to distressed borrowers and
restructuring and the dramatic fall in Dubai’s sovereign bankrupt speculators in a property market where prices
credit risk. After all, the five year are still 50-70 per cent below their
Dubai swaps traded as high as For now, it is still bubble peaks in 2008. While the
600 basis points after the Nakheel premature to bottom Dubai sovereign bond and the DP
standstill announcement. However, World debt settlement eases funding
the five year Dubai CDS has now fish in UAE bank pressures and provides balance
fallen to 382 basis points, one of shares until credit sheet flexibility for UAE banks,
history’s most dramatic U- turn provisioning woes will continue
in investor sentiment about the growth turns positive to haunt the local banking system.
perceived credit risk for a Middle and NPL ratios peak, a Bank mergers, as in the 1980’s, could
East sovereign borrower in the be the natural endgame. This is the
international bond market.
prospect that is at least reason why even leading government
This is not to suggest that the six months away. controlled UAE banks trade at deep
local credit markets or banking discounts to fundamental metrics
system exhibits the best of all worlds. The UAE Central such as tangible book value.
Bank has estimated that loan provisions in local banks It is still premature to bottom fish in UAE bank
have almost doubled in the past year to 37 billion AED. shares until credit growth turns positive and NPL
UAE banks had allowed their loan books to rise by 30- 40 ratios peak, a prospect that is at least six months away.
per cent during the 2004- 8 credit bubble and financed As in Kuwait, structural issues will inhibit a valuation
their funding gap not by generating low cost deposits rerating in UAE banking. In contrast, Qatari banks exhibit
via branch networks but by raising high cost wholesale 15 per cent loan growth, no systemic asset quality issues,
funding by issuance of Euro- medium term notes (Euro a 20 per cent valuation discount to their peers in the
MTN’s). This dependence on wholesale funding proved emerging markets and major sovereign support from one
catastrophic when the failure of Lehman Brothers led to a of the world’s wealthiest emirates. UAE banks are cheap
spike in the cost of counterparty risk as the Treasury bill- at a mere 7 times forward earnings, far below Qatar,
Eurodollar spread (TED) soared to a stratospheric 450 Saudi, Kuwaiti and even Omani bank peers. However,
basis points. With systemic risk in international banking price is not value. Use the current rally to book profits in
at its highest since the 1980’s Latin American sovereign UAE bank shares.
debt crisis, it was only natural that several UAE banks Matein Khalid, fund manager in a royal investment
were unable to fund their loan books in the interbank office and writer in finance and geopolitics.

COMMENT
CEOS SAY GOODBYE FOR

‘PERSONAL REASONS’
In the last year, around 50 per cent of UAE CEOs exited their companies.
There’s normally only one reason why: non-delivery.
DR. TOMMY WEIR
G
lobally speaking CEO turnover rates are as the market has more countries represented than the
dropping to their lowest point in five years, yet United Nations does. To date, the success rate of driving
here in the UAE it is speculated to be nearer a performance throughout workforces comprising 30
staggering 50 per cent. This alarming statistic plus nationalities has not been at the level that the
is a matter of concern for companies, employees and the boards desire. This is a challenge for both expat and
economy, in general. national leaders.
Many of the CEOs cited “personal reasons” but what What should a company do when their CEO leaves
does this mean? Does it mean they need to take care of suddenly? They should hire a CEO who accurately
personal matters at home as it implies? We all know understands the market and can drive performance
better that than that. The cited ‘personal reasons’ is amongst a diverse workforce in this fast-growth yet
definitely a euphemism and usually a cover up for one ambiguous environment. This is easier said than done.
or more of a multitude of reasons for the unexpected or So what are the actions that a board can take to ensure
at times even expected chief executive departure. The success in their next hire?
primary reasons for non-planned departures are: Spend time as a board understanding and articulating
A polite way for the company to cover up under what you are looking for in a CEO. This needs to move
performance by the CEO beyond looking for experience
A mutual understanding by the CEO The teething troubles and a track record of success and
and board that they are lacking
chemistry
of leading companies in encompass the requisites needed to
lead in the UAE.
A difference in desired direction the UAE are immense Ensure the CEO matches the
between the board and the CEO for many imported, profile that you are looking for. This
The CEO being terminated by the is achieved by selecting against
board, yet the board working to experienced CEOs. a detailed profile and gathering
preserves his/her honour This market is young, evidence through experience
The CEO having had enough of the based interviews, personality
local market and opting to get out mobile, fast-moving profiles, detailed reference dialogue
of town. and ambiguous. and preferably observation of
The teething troubles of leading performance.
in the UAE are immense for many imported, experienced When the CEO joins, provide him/her with a coach
CEOs. This market is young, mobile, fast-moving and who can help with leading in the young, fast-growth
ambiguous. These dynamics are unlike the stable, environment inclusive of a diverse workforce.
calculated and controlled markets where most CEOs were Create a partnership between the board and CEO for
educated and gained their experience. Now, comes the ongoing success.
complication, when a CEO is hired he/she is expected to
deliver results immediately so the chief executive jumps Globally, CEO turnover is very costly for an organisation
right in with both feet and does what he/she did in the and it is imperative that the boards work to mitigate
past. Unfortunately, recent history reveals that this is the risk of turnover and the success of the CEO and
not what is needed in the UAE market as what got the organisation. Here in the GCC, boards would be wise
CEO here in the first place, might not necessarily keep to spend time on the CEO selection process to identify
him/her here. potential leaders who possess potential for long-term
The cosmopolitan nature of the workforce and local triumph in this exceptional but professionally challenging
customer base is a tricky situation that most leaders local market.
are not prepared for. Even for an executive with diverse Dr Tommy Weir, vice president of leadership solutions at
global experience, the realities in the Gulf can be daunting Kenexa and author of The CEO Shift.

COMMENT
QE2 AND HOW IT AFFECTS

YOUR STOCKS PORTFOLIO
Confidence is rising as investors predict the US economy will be buffered by a
second quantantive easing move, but caution is still advisable.
MICHAEL PREISS
T
he dilemma of quantitative easing is clear from attention on QE2 being unveiled by the Fed in early
the correlated rally in all “risk” assets, and the November. The comments of a former Fed member, speaking
corresponding rapid decline in the value of the US at the IMF/World Bank meeting in Washington, summed it
dollar. Global financial markets increasingly seem up: “Monetary policy is the only game in town.”
to think that we got the best of both worlds for risk assets. Given the politics, unemployment is figuring prominently in
If the US economy normalises and grows again above par, discussions about the US. Bernanke mentioned unemployment
equities and risk assets will rally. If the US economy falters, as a key early point in all his speeches. It would be no surprise
then equities will also rally as the market increasingly if the Fed engaged in QE3 over the next year but there are a lot
believes it will be saved by the next round of QE2. of sceptics who question whether QE actually works.
Quantitative easing (QE) describes a monetary policy Clearly it does, as unconventional monetary policy has
used by central banks to increase the supply of money allowed normality to return to most markets. But therein
by increasing the excess reserves of the banking system. lies the challenge, which still concerns most policy makers
This policy is usually invoked when the normal methods to in Washington, as well as most central bankers around the
control the money supply have failed, i.e the bank interest world. While the additional QE might not provide much
rate, discount rate and/or interbank direct further boost, stopping it might
interest rate are either at, or close to, zero. While the US be detrimental.
A central bank implements QE by first There is real risk that current
crediting its own account with money it
needs low rates, conditions could lead to a repeat of the
creates ex nihilo (“out of nothing”). the emerging commodity price-driven phony inflation
It is this creating money out of scare world markets last experienced
nothing that is potentially the problem.
markets are in 2007 and early 2008. Any repeat of
While the US needs low rates, the experiencing a such a market dislocation will lead to an
emerging markets are experiencing a
QE-led boom and potential bubble.
QE-led boom and overshoot in commodity prices, driven by
financial investors in commodity indices
Western countries led by the US potential bubble. and resource stocks, and ultimately
are growing below par and emerging resulting in a violent sell-off. That sell-off
markets are growing above par, leading to more global will again could likely be characterised by a violent rally in
imbalances and potential asset market bubbles in the the US dollar as the carry trades are liquidated.
future. America and other developed economies will suffer There is a risk that recent sentiment regarding the
from sluggish growth and potentially stagflation in the certainty and magnitude of future QE2 may have stretched
coming year because of budget cuts. However, emerging to extremes. For example, some Fed officials statements
markets and, in particular, frontier markets are expected to may be an attempt to dampen market expectations that the
continue to boom. Fed will announce a mega QE2
Liquidity is focusing on scarce and expensive “growth” Instead, the Fed may increasingly favour a more gradual
within global equity markets. The most expensive equities and measured approach. This could set the stock market up
are seeing the greatest upward pressure on price. Too for disappointment. With currencies war talk intensifying,
much money is chasing too few investable emerging the Fed announcing a mega QE2 would not be in the
market stocks. The barometers are Turkey, Indonesia, the interest of most politicians let alone central bankers.
Philippines, Sri Lanka and Mongolia. In the medium-term, it hence seems that upside to US
The World Bank recently lowered its outlook for growth stock is limited after the +12 per cent surge in the S&P500
next year in China and across East Asia, urging officials in the over the last few weeks. Over a 12 month view, however, we
region to curb inflation by raising interest rates and ward off maintain “over-weight” equities for 2011 as risk aversion
asset bubbles to avoid a repeat of the Asian financial crisis. recedes and investors turn to the economic prospects and
As recently as July, the Fed was talking of exit strategies, ample liquidity provided by QE.
with the market then looking towards upside surprises. Michael Preiss, chief equities strategist, Standard
Now, the consensus is that QE will be needed, with much Chartered bank.

COMMENT
KEY STEPS TO MAKING

MERGERS WORK
While deals made in turbulent times are often top performers, integration
and retention strategies are vital.
PHILIPPE DE BACKER
A
s the fragile economic recovery picks up integration missteps. Many acquirers forfeit large amounts
momentum, many GCC companies are emerging of value by failing to execute in three key areas:
from the downturn in a strong competitive Defining and hitting the right targets. The failure to define
position: they are cash-rich. Even at the height a deal’s investment thesis – and risks – in crystal-clear terms
of the worldwide financial crisis, the top companies on the shows there are no clear integration priorities, leading to
Dubai Financial Market, Abu Dhabi Securities Exchange missed targets. Understanding whether deals are to boost
and NASDAQ Dubai were sitting on a cash pile that totaled ‘scope’ or ‘scale’ is vital. Scope deals require fostering some
$578 billion in 2009. This spells good news for GCC banks capabilities of the acquired company and integrating where
whose relatively unleveraged balanced sheets put them it matters most. In contrast, scale deals focus on combining
in a position to both support and grow with the region’s two similar companies for maximum efficiency.
consumers and businesses. Retaining key people. When it comes to HR issues, many
The competition will be stiff, however, as financial companies delay organisational and leadership decisions. In
institutions in the region race to achieve the scale the interim, key personnel are at risk of being hired away by
and breadth required of market leaders. Mergers and rivals. Experienced acquirers earn a reputation for retaining
acquisitions are one path to realising greater economies the best people – and creating opportunities for them.
of scale and expanding into Linking integration to the business.
attractive business lines that are still Mergers and Poor performance in the core
nascent in the region, such as asset
management, investment banking
acquisitions are one business occurs when integration
soaks up too much energy or drags
and private wealth management. path to realising on, distracting managers from the
Deals made during turbulent periods greater economies of core business. Typically, at least 90
often are top performers. Bain & per cent of the organisation should
Company recently analysed 24,000- scale and expanding be focused on its core, with clear
plus transactions in the 10-year period into attractive business targets and incentives to keep those
between 1996 and 2006. This analysis businesses humming. The 10 per cent
shows that acquisitions completed lines that are still that is focused on integration needs
during or just after the 2001-02 nascent in the region. to be tuned in and adaptive to the
recession generated almost triple the needs of the business.
excess returns of acquisitions made during the preceding boom Veteran acquirers have the best track record for avoiding
years. Excess returns refer to shareholder returns from four these missteps. Our studies show that frequent acquirers
weeks before to four weeks after the deal, compared with peers. consistently outperform infrequent acquirers by getting the
This was true regardless of industry or deal size. integration process right and making it a core competency.
Meanwhile, many companies also are getting better If you had invested $1 in each group, the returns from the
at M&A. In 1995, about 50 per cent of US mergers frequent-acquirer group would be 25 per cent greater than
underperformed their industry index. Ten years later, the infrequent group over a 20-year period.
the figure was about 30 per cent. We think this is due to With cash-flush banks and relatively low regulatory
more experienced frequent acquirers and the increasing barriers, we expect the pace of consolidation to increase
use of cash – instead of stock – to finance deals, which across the spectrum of GCC financial institutions,
seems to encourage better due diligence and more realistic especially amongst retail banks, brokerage houses and
prices. Seasoned acquirers know that the non-recurring asset managers. The winning institutions will be those that
costs of acquisition and integration can be very high, a work quickly and effectively to ensure smart acquisitions
consideration which they factor into deal pricing. live up to their potential.
Even when deals are strategically sound, many fail to Philippe De Backer, partner, Bain & Company Dubai, with
live up to expectations. Often, the fault lies in post-merger contributions from Julien Faye.

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F LETTERS
LETTER OF THE MONTH
EXCLUSIVE REPORT: TOP DEALS AND MARKET DATA Majali’s flight

I think Samer Majali has been doing a great job at Gulf Air. I didn’t
Vol. 15 Issue 6 October 2010
realise just how tough it was at the top until I read your article
last month. The CEO has been very brave with his new strategy of
One year on, Gulf Air
boss tells all cancelling routes and starting new ones to second-tier, underserved
RBS denies Dubai
World firesale destinations. It was also refreshing to read an interview with a boss
Will KSA mortgage
law save market?
who is honest about the very serious challenges that the aviation
world is facing. I know Majali managed to turn around Royal
RAK SPECIAL REPORT
Jordanian airline and privatise it, but I can’t help but think the
The man who sold
the world: RAKIA
world of aviation was a less harsh one then, even in 2001. It would be
CEO sells global assets a shame to lose the region’s oldest airline and I remember when Gulf
KHATER Air was the jewel in the crown in the eighties. The going is getting
more tough and simply putting out more planes on international
MASSAAD Bahrain..............BD 1.0
Kuwait............... KD 1.0
Oman................ RO 1.0
Qatar.................. QR 10
routes wasn’t going to cut it. Majali is right not to do what other
airlines airlines are doing, especially following his competitors who
Saudi Arabia.......SR 10
UAE.................. DHS 10
GB Regional OCTOBER 2010 copy.indd 1 10/18/10 11:32:57 AM
have much deeper pockets. But will high-frequency, low-yield flights

work? I, for one, will be watching with baited breath. If anyone is up
to the job, it is someone as fearless as Majali. I wish him all the best.
Jassim Nami, Dubai, UAE.
Opague messages Arabia for one and a half years and state-backed is still a matter of
I did like your Ras Al Kaimah feature, I have already saved enough to buy debate. Tim Clark has been very
which highlighted the emirate’s a sedan car in cash. My point is, bold in his response to allegations
move to reduce debt, a very sensible life in Dubai is driven by too much of government support, which rivals
thing to do. However, although a consumerism – no wonder malls are claim has enabled Emirates to offer
number of senior officials have been mushrooming and entertainment lower prices. In my opinion, business
quoted backing the deleveraging spots are still booming, as featured in is about gaining marketshare and
plan, there are recent reports that your article. But let’s not fail to realise there’s never been anything ‘fair’
the RAK government is planning that this same driver of growth was about that.
a bond issue worth at least $500 also the main driver of the crisis. Here Adel Yasin, Abu Dhabi, UAE.
million. Arrangers for the reported in Saudi, we don’t have that kind of
benchmark-size bond issue have also extravagant city life but I’m happy
been named. I understand this kind not to end up miserable either way. Email: Write to the editor,
of confusion happens a lot in this John Ilagan, Riyadh, Saudi Arabia
Gulf Business, alicia@motivate.ae
region but I thought RAK, which has
and the letter of the month wins
been named the most transparent by Plane business
a reputed credit agency, is different. Gulf Air and RAK Airways woes reflect an Alessi watch.
Not that I am really directly affected, the fact that the airline business is
but I just thought if governments perhaps the most difficult on this
here are serious on transparency planet. I had a chat with the chairman
then they should not say one thing of a loss-making Asian carrier and
and act otherwise. I learned that airlines operate at
Sanjay Singh, Muscat, Oman a two per cent margin, this means
unpredictable events like SARS, 9/11
Leisure or pressure? and the ash cloud can easily erode
I lived in Dubai for eight years in hope this marginal profit.
of richer times, yet I wasn’t able to Seeing a number of airlines fail,
save anything. Due to the high cost I could not help but admire
of living, I needed four credit cards companies such as Emirates. Whether
to survive. I have now lived in Saudi or not Middle Eastern airlines are

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ANALYSIS FINANCE
Playing it safe
Stung by the recession, the
rich are focusing on cash
assets and bonds, writes
KAREN REMO-LISTANA.
D
uring the boom times,
investors and their wealth
managers acted as if the cash
tap would never stop flowing.
But just three months after the
Lehman Brothers crash, $20 trillion
was wiped off the global system in
what was described as the largest
decline in world wealth since the
Second World War.
Today, wary investors have shifted
their focus to wealth preservation and
are allocating heavily on cash assets
and simple financial instruments.
According to the latest World Wealth
Report by Merrill Lynch Global Wealth
Management and Capgemini, high net
worth individuals (HNWI) favoured
predictable returns and cash flow, as Walter Berchtold, CEO of private banking, Credit Suisse.
in their minds, investors remain

Asset allocation is similar across the globe. cautious. Private banks are also not
You will see 35 per cent in cash, expecting a full recoup anytime soon.
The Swiss lender’s private banking
25 per cent in bonds, 20 per cent in equities unit itself witnessed $200 billion
and the rest in alternative assets. worth of wealth destruction in 2008.
Its assets under management
evidenced by the rise in allocations to The investment scenario is similar dropped from the peak of CHF995.4
fixed-income instruments, to 31 per in the Gulf, says Bruno Daher, billion ($1 trillion) in 2007 to
cent from 29 per cent. managing director of Credit Suisse CHF788.9 billion ($818 billion) in
“Clients are still very cautious,” and co-CEO of the Middle East. “Our 2008, before going up to CHF914.9
says Walter Berchtold, the chief Middle Eastern clients are generally billion ($15.5 billion) in 2009.
executive of Credit Suisse’s private very sophisticated and global in Berchtold says recovering all of
banking division. their investment outlook. Typically, the loss will take time. The bank
“Asset allocation is very similar local clients favour growth areas recorded a four per cent growth
across the globe and across and other emerging markets. They in net new assets last year and is
competition. You will see 35 per cent also tend to hold a high percentage targetting a six per cent growth
in cash, 25 per cent in bonds, 20 per of foreign currency.” this year.
cent in equities and the rest are in The World Wealth Report indicates “Credit Suisse has been the fastest
other assets such as alternatives.” that HNWIs have remained cautious bank to recoup the shortfall,” he said.
In terms of complexity, Berchtold and list effective risk management (90 “We have added over CHF100 billion
says clients tend to shy away from per cent), transparency and simplicity ($104 billion) in net new assets since
highly leveraged instruments and (93 per cent), and specialised advice the outbreak of the crisis.”
opt to invest in simple transparent (93 per cent) as top priorities in the The bank expects to derive its
products like equities and exchange- current environment. With memories biggest growth in new assets from
traded funds. of monetary casualties still fresh emerging markets (15 to 20 per cent)

followed by the US (six per cent) and likely to continue working
slates Western Europe will register post-retirement age.
no growth at all. “This represents a step change
Berchtold shares a popular belief for wealthy people,” says Soha
with other wealth managers that the Nashaat, chief executive of Barclays
BRIC nations, as well as the GCC, are Wealth Middle East. “While previous
expected to be the drivers of HNWI generations looked to create their
growth for their respective regions wealth early on in life with a view
in the coming years. In Asia-Pacific, to enjoying it when they retired, this
China and India are slated to continue report reflects a different attitude,
to lead the way, with economic with people wanting to continue to
expansion and HNWI growth likely challenge themselves well beyond
to keep outpacing more developed the traditional retirement age.”
economies. Asia-Pacific HNWI Another unique attribute of the
expansion is likely to be the fastest GCC is its priority on succession
in the world as a result. In Latin planning compared with the rest
America, Brazil is similarly expected of the world. Nearly 100 per cent
to remain an engine of growth. Russia of respondents in UAE and Saudi
is expected to display strength due to Arabia feel financially responsible
its commodity-rich resource base. for their children.
The Middle East is also considered However, wealthy individuals in
an area of expansion. And the 7.1 per developed economies do not feel
cent increase in the region’s total Soha Nashaat, Barclays Wealth, CEO. that they are financially responsible
HNWI population (7.1 per cent to for the next generation, with
400,000) and wealth (5.1 per cent The bank found that out that Switzerland (38 per cent) and Japan
to $1.5 trillion) last year is a HNWIs in Saudi Arabia (92 per (41 per cent) at the bottom of the list.
testament to that. cent), UAE (91 per cent) and Qatar As the region’s wealth continues
“The rebound has been, and will (89 per cent) have the largest desire to grow, the fact that bankers are
continue to be, driven by emerging among global respondents to keep scrambling for a slice of the pie
markets – especially India and working in later life. Even though is a no-brainer. However, many
China, as well as Brazil,” said the “Never tirees” concept is a global clients are still emotionally reticent
Yasar Yilmaz, regional head of phenomenon, it is true to a lesser to invest as the recession dies
sales, Middle East, global financial extent in developed markets, with down. The biggest job for wealth
services, Capgemini. Switzerland (34 per cent) and managers will be convincing the rich
The GCC also is an ideal field for Spain (44 per cent) respondents least otherwise. ■
private banking expansion because
the region’s HNWIs are the most While previous generations looked to
active in wealth management.
According to Barclays Wealth, GCC create wealth early on in life, people now
HNWIs spend a ‘significant’ amount want to challenge themselves beyond
of time managing their portfolios,
in comparison to other nations, and the traditional retirement age.
this trend is extending to later life.
IN NUMBERS
$20trn 400,000 $1.5trn

The value of wealth destruction The number of HNWIs The value of wealth held
in 2008, the biggest decline in the Middle East by the regions’ HNWIs
since World War II

ANALYSIS AVIATION
Transatlantic fights
As the credit row heats up between airlines in the Gulf and the West, MARTIN MORRIS explains
why the debate over ‘unfair’ export lending to rival carriers is not set to cool anytime soon.
W
hen it comes to courting
controversy, British
Airways CEO Willie Walsh
is never far from centre
stage. Taking time out from his ongoing
skirmishing with the trade unions
in the UK, he used a recent speech in
Brussels to tackle head-on a wider
issue now pre-occupying boardrooms
at many major Western airlines;
namely commercial favouritism
being shown to Middle East and other
carriers at the expense of their own.
At issue are loan guarantees designed
to help Boeing and Airbus sell more
planes and preserve manufacturing jobs
in their host countries. Willie Walsh, British Airways. Paul Griffiths, Dubai Airports.
Export financing, usually in the
form of Government guarantees Association (representing US airlines), For its part, Emirates has dismissed
underpinning commercial loans, has recently wrote to US Treasury claims it benefits from government
been a feature of the aviation landscape Secretary Timothy Geithner noting subsidies, arguing it pays the same
for a number of years and now accounts that the level of Ex-Im (US Export- landing fees and fuel prices as
for an estimated 35 per cent of Boeing Import) Bank support to foreign everyone else at Dubai International
and Airbus sales. This is almost double airlines has been roughly matched by Airport, for example. And as Paul
the estimated 20 per cent seen prior to credit supplied by the export credit Griffiths, CEO of Dubai Airports,
the credit crunch in 2008. agencies (ECAs) of the UK (ECDG), says: ‘’ The only thing Dubai is guilty
However, under a 1986 side France (Coface) and Germany of is providing an environment that
agreement between the US and Europe, (Euler Hermes). actually supports aviation. ‘’
airlines in the five countries where He added that the foreign airline Since 1996 the airline has raised $22
Airbus and Boeing have a major beneficiaries of these Ex-Im Bank and billion for new aircraft purchases and
manufacturing presence (the UK, ECGD subsidies compete directly with other corporate finance requirements
France, Germany, Spain and the US), are US airlines for US passenger traffic and – the financing coming from a variety
of sources, including operating leases,
ECAs and commercial asset-backed
To date, US and EU export credit has debt, as well as non-conventional
supported around 24 per cent of UAE-based sources such as Islamic funding.
To date US and EU export credit
Emirates airline’s financing needs. agencies have supported 24 per cent of
Emirates’ aircraft financing.
denied access to this form of funding. include nine of the 10 most profitable The airline contends that ECAs
In a thinly veiled attack on airlines based outside of the US, UK, are ‘’a legitimate and internationally
Emirates, Walsh told officials at the France and Germany. accepted support mechanism to boost
European Aviation Club: ‘’We believe ‘’With the growth of their fleets manufacturing sectors and exporters
these guarantees are not operating supported by US government in Europe and the US.’’
in the way they were intended – and financing, our foreign competitors Given Emirates is now the largest
therefore urge the EU to amend the have been taking market share away airline in terms of scheduled
rules to remove the competitive from our airlines on routes to and international passenger-kilometers
distortions that have developed.’’ from the United States, where foreign flown, it should come as no surprise
Meanwhile, James May, President airlines now operate more than 50 per that Walsh and his US/European
and CEO of the Air Transport cent of the capacity.’’ colleagues are cranking up the heat.

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ANALYSIS INVESTMENT
Private equity splutters to life

Following near-death in 2009, the investment world is stirring as new exits and
funds come online, writes KAREN REMO-LISTANA.
L
ast year, private equity (PE)
executives agreed that exit
avenues – the routes to finally
cash in on their investments
– were unequivocally shut. Popular
options like public market offering
and trade sales were weak. With
uncertainty as the main theme, fund
raising and investment deals were
also dry.
Due to lack of liquidity, there
was only one exit in the region, the
trade sale of Reliance Petroleum,
by the Global Opportunistic Fund 2
for a value of $49 million against a
purchase price of $33 million.
This year, there have been five IPOs
(excluding insurance listings), an
80 per cent drop from the 21 deals
seen in 2008. However, PE firms are
more bullish now, with some exit
strategies already planned over the
next few months, senior executives
told Gulf Business at the Super
Burger King was sold for $3.62 billion to 3G Capital in September.
Return conference in Abu Dhabi.
sale of Burger King to an investment
company in September for $3.62
Gulf private equity firms are more billion, against a purchase price of
bullish now, with exit strategies already $1.5 billion in December 2002; and
the sale of Sunrise Communications,
planned over the next few months. a Swiss subsidiary of Denmark’s Tele-
Denmark Communications, for $3.3
Saudi-based Amwal AlKhaleej is increase Taqa Arabia’s electricity billion in September.
looking at a Saudi IPO by the end of production capacity. Exit activity during Q3 represents
this year and another IPO in Egypt “We will list the company around the most active quarter for exits in the
in the first quarter of 2011. Ammar April or May because the company post-financial crisis landscape, with
AlKhudairy, managing director needs access to capital. We also have the aggregate exit transaction value
of Amwal, says the firm expects another potential exit in the first half matching pre-downturn levels.
good returns despite relative low of next year but I cannot discuss that In terms of fundraising, however,
valuations thanks to the “growth one,” Ahmed Heikal, chairman and the landscape remains challenging.
stories” of its portfolio companies. founder of Citadel Capital said. Last year, the sector only raised 20
Cairo-based Citadel Capital plans The increase in exit activity per cent of what it raised in 2008,
to raise about $175 million from the mirrors a global trend. Figures from according to Gulf Venture Capital
initial public offering of its portfolio alternative assets data provider Association’s (GVCA) 2009 annual
company, Taqa Arabia, during the first Prequin show that Q3 2010 saw 190 report. Of the six new funds in 2009,
half of 2011. The firm, which owns PE-backed exits worth $57 billion, only two were able to make a first
34 per cent of Taqa Arabia, will use 22 per cent up from the previous close and this barely makes up a
the proceeds from the share sale to quarter. Notable exits include the quarter of the announced amount.

And of the $32.6 billion announced Mark Yassin, National Bank Investment-wise, there were
from 2005 and 2008, only 55 per cent of Abu Dhabi’s (NBAD) senior fewer deals in the region than
has been raised. The report says that general manager of corporate and hoped for. Despite speculation that
some of the funds may never reach investment banking, is positive their 2009 would be a stellar year with a
financial closure. aviation fund will raise cash from supposed abundance of dry powder
Prequin data shows 83 PE funds institutional investors and family in the region, the period ended with
worldwide reached a final close in offices in the region. a 75 per cent decline in the total
Q3, raising $59 billion, a 20 per cent National Bank of Abu Dhbai size and 65 per cent drop in the
increase from last quarter’s figures. (NBAD), which launched its private number of investments. Investment
But these figures still fell short of the equity business in late 2008, faced deals were even less than those
$66 billion raised in the first quarter difficulty in fund raising. It solved recorded in 2005.
this year, suggesting that the fund this problem by unveiling an aviation However, the initial signs of
raising market remains challenging fund together with Germany’s DVB recovery are strong. Funds raised
for managers currently seeking Bank. The bank aims to raise $250 from the region in the first quarter
investors’ commitment. million from investors and the rest of this year almost equal the funds
“The condition for raising funds are from leverage. raised in the full year of 2009,
in the GCC is still tough,” Citadel’s “We went to the market in the figures from Zawya show. With the
Heikal said. “We administered first quarter of this year, but the exception of the $57 million close
a first closing of three funds market hasn’t been easy,” Yassin by Gulf Capital Equity Partners 2,
mainly through money from said. “Margins have dropped all capital raised were from funds
international investors like the dramatically… but we think the announced in 2010, suggesting the
International Finance Corp and other fundraising target is achievable by fund raising environment may have
developmental institutions.” the end of this year.” turned a corner. ■
WE SUPPORT THE PEOPLE WHOSE

IN NUMBERS
MISSION IS TO PROTECT THE WORLD.

ANALYSIS TOURISM
The business of Formula One

As Abu Dhabi gears up for its second F1 Grand Prix, Gulf Business takes a look
how the event is fuelling billion dollar revenues for the capital emirate.
L
ine up music legend, Prince,
rapper Kanye West and rockers
Linkin Park in an F1-themed
circuit near the world’s fastest
roller coaster and what you do you get?
The second series of the Etihad Abu
Dhabi F1 Grand Prix.
While the event is a calendar-must
for sports and showbiz enthusiasts,
the race is also a hot topic among
economists and investors around
the globe.
In its inaugural year in 2009, F1
bolstered Abu Dhabi airport traffic by
seven per cent, catapulted retail sales
and afforded the hotel industry 97.5
per cent occupancy, with rooms going
for an average rate of $606 per night.
As the only global sports event that
compares with the Olympic Games
and the FIFA World Cup in terms of
mass audience reach, F1 consistently
boosts the economy of its host country. Left to right: Abu Dhabi F1 Grand Prix, Amber Lounge VIP F1 party lounge.
Abu Dhabi to help us promote Amber

Studies show that Formula One fans Lounge and the Abu Dhabi Grand Prix,
spend twice as much as regular tourists which enables us to pull more tourists
in,” says Sonia Irvine, Amber Lounge
and stay three nights longer on average founder and sister of Ferrari F1 star,
than their counterparts. Eddie Irvine.
Last year, the event was graced by
Studies show that fans of the race And for those not going to the race, Steve Tyler from Aerosmith, Hollywood
spend twice as much as regular ADTA offers free concerts. starlet Neve Campbell and Nicole
tourists and stay three nights longer Reggae star Sean Paul, R&B artist Scherzinger from the Pussycat Dolls
on average than their counterparts. Kelis and Lebanese pop star Nancy alongside newly crowned F1 world
Indeed, the F1 is a boon for an Ajram are all set to strut their stuff on champion Jenson Button, five past
emirate that aims to increase total the Abu Dhabi corniche as part of the world champions and 11 other F1
number of visitors by 10 per cent every free “Beats on the Beach”. drivers, including Lewis Hamilton,
year from 1.5 million in 2009 to more “It’s all adrenalin-pumping stuff,” Michael Schumacher, Nico Rosberg
than 2.3 million by 2012. Lawrence Franklin, Strategy & Policy and Rubens Barrichello.
To realise these goals, ancillary Director, ADTA, tells Gulf Business. All this glitz and glamour forms an
automotive sports and entertainment “For 2010, Abu Dhabi stakeholders integral part of a serious long-term
projects, such as Ferrari World Abu have once again activated the economic plan.
Dhabi, have been built to shore up entire city and raised the bar with Staging the F1 event entails massive
increased leisure interest from all over a wide-range of off-track activities, capital spending, with the Yas Marina
the world. attractions and events.” circuit alone thought to have cost close
This year’s F1 event, for instance, The most glamourous F1 option to $800 million, while Formula One
boasts a mega entertainment line-up remains the Amber Lounge – the VIP franchise holder, Bernie Ecclestone,
where race ticket holders have the Grand Prix after-party event. reportedly received $80 million in fees.
chance to see top international acts at “We use our partners Diageo, At the moment, there are no
the end of each day’s action. Davidoff Cigarettes and Hilton Hotel definitive investment and development

figures specific to the Grand Prix, global audiences associated with the owns five per cent of Ferrari, used its
Franklin says. But when promotion, sport are enormous and should not be association with the sport to raise
original infrastructure development underestimated.” the profile of its other investments in
and other activities are taken into ADTA’s figures show that last year’s aerospace and technology.
account, he says investment reaches Grand Prix was televised in more than “By capitalising on the excitement
“billions of dollars”. 180 countries, reaching 600 million and glamour synonymous with
“Based on the extremely positive viewers in total. F1, we are seeing enhanced career
feedback we’ve received and continue ADTA is optimistic that it will uptake by UAE nationals in sectors
to receive, we believe the Grand Prix see enhanced TV viewership figures such as technology and aerospace,”
delivers strong return on investment,” this year, as well as greater visitor Franklin says, pointing out that the
Franklin says. numbers and interest. effects of hosting a Grand Prix effect
In a move to better capitalise on “There are also indirect expenditure lasts much longer than the race
the revenue potential of the event, benefits, as suppliers locally and weekend.
this year’s F1 event will be subject throughout the region purchase “We would like to see that
to a “detailed economic impact equipment and services, employees translated into increased visitor
assessment”, and the findings will spend in shops and event-specific attraction, not just around the race,
be presented after the Grand Prix. visitors travel more widely and spend but all year long,” he says.
“There are indicators of the success on accommodation and attractions,” To do that, the emirate must
of last year’s event,” Franklin says. Frankin says. continue to sustain the significant
“We know that F1 teams make Economic and cultural benefits momentum it has so far delivered
huge investments in Grand Prix go much further than the obvious, with F1. With deep pockets aided by
destinations and the dollar value of he added. For example, Mubadala, oil savings. Abu Dhabi has the ability
paid advertising to reach the massive Abu Dhabi’s investment arm, which to meet the challenge. ■
EADS DEFENCE & SECURITY IS NOW:
IN NUMBERS
AND WE WILL CONTINUE
DEFENDING WORLD SECURITY.
WWW.CASSIDIAN.COM

EXECUTIVE MOVES
Gulf Capital has named

Chris Foll, known for Global Investment House
executing M&A transactions, – Saudia (Global Saudia)
divestments and IPOs, as its has named Fahad Bin
new chief financial officer. Saleh Al Hamidi as CEO.
In his six years stint with He holds a bachelors degree
India’s Hutchison Essar as from Willamette University,
CFO, Foll helped grow the USA, and has more than
company before it was sold 22 years experience in
in 2007 for $10.7 billion to the banking sector and
the Vodafone Group. In his Saudi Financial Market.
role as CFO of Hutchison Previously, Al-Hamidi
Telecommunications was the acting CEO of the
International, he oversaw the investment arm of Bank
spin-off of the Hong Kong/Macau operation and subsequent Albilad in the kingdom. He has held positions in Riyadh
listing on the HKSE and secondary listing on the NYSE. Bank, Saudi Investment Bank and Saudi Hollandi Bank.
Qatar Islamic Bank has

named Ahmad Meshari as Enviromena Power Systems has named Amjad
acting CEO after previous CEO Bseisu as chairman of the board of directors. Bseisu
Salah Jaidah resigned last currently serves as CEO of EnQuest PLC, a UK-based
month for personal reasons. independent oil and gas production and development
“After understanding the company. In March 2010, he led EnQuest through dual
personal reasons, the board of public listings in London and Stockholm, where the
directors approved the request company became a constituent on the FTSE 250 Index.
from the CEO,” QIB said in
a statement. Jaidah will
continue to represent QIB on Link Development, a subsidiary of Egypt’s LINKdotNET
the board of directors on all and Orascom Telecom Holding, has appointed Irini Raafat
other financial institutions where QIB maintains a financial as managing director. The change follows the formation of
interest both locally and internationally. OTVentures, an Orascom Telecom subsidiary that is now
being led by Hanan Abdel-Meguid.
Leo Apotheker has been appointed CEO and president of

HP. Apotheker, who was previously the CEO of SAP, also Gulf Bank has named Grant
joins HP’s board of directors. He replaced Mark Hurd who Jackson as general manager
has joined Oracle as co-president in September. Meanwhile of treasury following the
Eyad Shihabi has been appointed managing director and approval of the Central
enterprise business leader, Middle East. He joins HP from Bank of Kuwait. He joins
Smartworld, where he served for the last two years as CEO. from Commercial Bank
International in Dubai,
where he has been head of
Park Hyatt Dubai has treasury and investments
appointed Adrian Slater as since November 2008. Prior
general manager, his new role to this, he was seconded
reflects a return to the UAE for 18 months to the Qatar
after almost 16 years. In the subsidiary of Ahli United. Jackson began his career in
early 1990s, Slater held the Australia and New Zealand, spending 13 years at N.M.
role of Banquet Sales Manager Rothschild & Sons (Australia) Ltd.
for the Hyatt Regency
Dubai before relocating to
Australia. Born in Auckland, Motashar Almurshed has been appointed CEO for
New Zealand, Slater started Merrill Lynch, Saudi Arabia. He joins Bank of America
his career in tourism and Merrill Lynch from Alinma Investment – a subsidiary of
hospitality as a Hyatt Management trainee in the late 80s Saudi Arabia’s Alinma Bank – where he served as CEO and
with the Hyatt Regency Auckland where he remained for a member of the board. Prior to that, he was a managing
nearly five years before accepting his first international director at NCB Capital, and previously worked for Alrayis
expatriate position in Dubai in 1991, staying for five years. Business Group and SABB/HSBC.

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COVER STORY TOP 100 COMPANIES
THE TOP
COMPANIES
IN THE GCC
... and how they performed

This year saw a quieter ride for
the region’s companies after
the cataclysmic roller coaster
of 2009. As equities across
the GCC begin a sheepish
ascent and markets offer signs
of life, MOHAMMAD HAWA looks
at where the dust has settled
as the recession recedes.
iStock

T
here is one hit Dubai-based brokerage houses while financials (ex-real estate)
overarching particularly hard with 13 of the 90-odd are likely to gain at the expense of
difference between DFM registered brokers requesting telecoms and chemicals.
this year and the suspension of their licenses for a year.
last for the region’s VALUATIONS
companies: drama, PRIMARY MARKET RECOVERS GCC equities are not trading cheap vis-
or the lack of it. The UAE has not had an IPO since à-vis emerging markets. On a fwd P/E
The news flows March 2009 but now that looks set to basis, they are currently trading on-
on significant corporate or sovereign change with Axiom Telecom planning par with their emerging market peers,
defaults in the region have been quiet. to offer shares in the market. There at 11.4x P/E (2011). The valuation gap
In fact, if anything, we have seen are also further signs of a pick up has been closed from the six per cent
positive news from the Dubai World with companies such as Aluminium discount that they were trading at
debt restructuring. If 2009 was a year Bahrain BSC and Nawras due to raise six months ago. The GCC valuation
of turbulence, 2010 was a period of equity. The debt markets improved premium has also stretched against
watchfulness and cautious optimism. following the Dubai World debt the EMEA region to 17 per cent from
The wounds of the last two years restructuring. Just recently, there the 4 per cent levels six months ago.
are dying hard as sentiment remains were a slew of debt offerings from However, the region is attractive
sheepish and liquidity remains thin, but companies such as Qatar Telecom on a dividend yield perspective,
signs of life point to renewed buoyancy ($1.5 billion), Dubai government $1.25 with 2010 and 2011 dividend yields
of the markets in the medium-term. billion), Qatar Islamic Bank ($750 estimated at 3.5 per cent and 4.2 per
million) and Emaar ($500 million). cent respectively. This is significantly
STOCKING UP higher than the respective 2.5 per cent
Equities have had a rather mild 2010. NEW BENCHMARK and 2.9 per cent yields that we expect
After having outperformed global MSCI and the Saudi Tadawul from emerging markets on aggregate.
emerging markets in H1 2010, GCC exchange were unable to resolve Within the GCC, we expect Qatar and
equities have lagged behind in H2 so their differences and the former Saudi Arabia to generate the highest
far. On a year to date (YTD) basis, Qatar eventually decided to discontinue dividend yields of 5.3 per cent and 4.3
has generated the highest returns (12.4 the indices, which included Saudi per cent respectively in 2011.
per cent), followed by three per cent for stocks, effective September 31 2010. Large cap banks and Q-Tel are likely
Saudi stocks. Abu Dhabi and Kuwaiti Due to this, the region’s historical to prop up dividends in Qatar while in
stocks have been flat while Dubai’s benchmark – the MSCI GCC will Saudi we expect the same from SAFCO
stocks have declined by 3.2 per cent. On no longer be available to fund (no major capex plans), telecoms (cash-
a regional basis, the MSCI EMEA has managers. Our discussions with fund cows) and large cap banks.
been the best performing at 15.8 per cent
while global emerging markets have
returned 13 per cent. The GCC region’s Just as in 2010, we expect Saudi Arabia to
new benchmark – the S&P Pan Arab remain the fastest growing market, with
Index has returned just 7.4 per cent YTD.
earnings estimated to grow at 24 per cent.
SECONDARY MARKET FALLS
As many international investors have managers revealed that they are now PROFITABILITY
stayed away from the region and looking to switch to either S&P Pan Just as in 2010, we expect Saudi
local investors are unable to liquidate Arab Composite or S&P Pan Arab Arabia to remain the fastest growing
portfolios (unwilling to book losses), Composite LargeMidCap index. In market, with earnings estimated to
we are seeing thin liquidity in the a recent research note, we analysed grow at 24 per cent. The 34 per cent
equity markets. Trading volumes have the difference in weights between earnings growth for Saudi Arabia in
fallen significantly, with the 2010 MSCI GCC and the two S&P indices 2010 was mainly due to an estimated
YTD average going down 38 per cent, mentioned above. We highlighted 100 per cent earnings growth from
40 per cent and 57 per cent in the that the stocks likely to gain the most heavy-weight SABIC, which was
three largest markets – Saudi Arabia, on account of this switch are Samba rebounding from a steep decline in
Kuwait and Dubai respectively. The and Riyad Bank, while SABIC would 2009. Earnings growth in Kuwait
volumes were particularly bad in be the biggest loser. At a country and UAE is pegged at 23 per cent and
July and August but have rebounded level, Saudi Arabia is likely to lose a 20 per cent respectively. The high
a bit in September. The declines have bit of ground in favour of Morocco economic growth in Qatar isn’t fully

trickling down to equities due to the shying away from corporate lending. terms and this helped calm the credit
limited number of listed stocks and It is worth noting that most of the markets. However, liquidity remains
we peg 2011 earnings growth at 15.6 defaults in Saudi Arabia came from the a major worry in the market, with
per cent. On 2011 ROE terms, we peg corporate sector. Monthly ATM cash M2 growth being at low single-digit
Qatar to remain the most profitable at withdrawals and POS transactions (the levels. Real estate prices continue to
18 per cent (same as in 2010) followed best indicator of retail spending) have remain under pressure. According
by Saudi Arabia at 14 per cent. rebounded to their 2008 peak levels. In to data from Better Homes, rents in
the first nine months of 2010, consumer Burj Khalifa are currently quoting 40
MEDIUM-TERM PROMISE plays Almarai and Jarir Marketing per cent below the levels prevailing
We are of the view that GCC is a reported revenue growth of 19 per cent at the launch 10 months ago, with
reflationary trade. Given that banks and 20 per cent respectively. Almarai current occupation levels being
dominate the market cap in the region and Mobily are our preferred plays in just 80 per cent. The banking sector
(ranging from 53 per cent in Saudi the country. continues to report high levels of
Arabia to 35 per cent in Qatar), the provisioning. We remain highly
sector is the most important driver KUWAIT – LIQUIDITY ISSUES selective on UAE stocks, with our top
of stock-market performance. Given Kuwait is the only major GCC market picks being National Bank of Abu
the current high credit costs and low to see its loan growth decline this Dhabi (NBAD), First Gulf Bank (FGB)
margins (arising out of low interest year. Liquidity shortage among local and Union National Bank (UNB),
rates), we refrain from being bullish investors was a reason for the market these banks have high capitalisation,
on GCC equities. Overseas investors overhang this year. Many investors that asset quality and adequate coverage.
are likely to wait until late next year we met said that they were looking to
when credit costs ease and interest raise liquidity by borrowing against QATAR – SAFE HAVEN
rates rise on signals from the US fed. assets, which were typically real estate In recent times, Qatar has been the
assets or illiquid domestic equities. most resilient economy in the GCC.
KSA – STATE SPENDS However, we think the recently unveiled Qatari stocks are trading 38 per
The Saudi government continues to $104 billion economic development plan cent below their pre-crisis peak
focus on economic diversification and might act as a catalyst for loan growth levels, which is the least in the GCC.
in August it announced a $385 billion and improved liquidity. In late 2009 and Through 2010, inflation has been
development plan. Real GDP growth is early 2010, there was a lot of talk about virtually non-existent in Qatar with
estimated to rebound from 0.6 per cent the possibility of the Kharafi group consumer prices having actually
declined by two per cent year on
We remain highly selective on UAE year (yoy) as of August. This is
mainly due to a 14 per cent decline
stocks, with our top picks being First in housing costs. However, liquidity
Gulf Bank, National Bank of Abu Dhabi has been strong with M2 money
supply growing in excess of 20 per
and Union National Bank. cent and bank lending and deposits
growing at double digits this year.
in 2009 to 3.2 per cent in 2010E and turning insolvent. However, the disposal In Qatar, our preferred plays are
further to 4.5 per cent in 2011E. We are of Zain’s (in which Kharafi group holds the banks – Qatar National Bank,
not worried about inflation creeping in a significant stake) African assets was Commercial Bank of Qatar and Doha
through government spending as food followed by a special dividend which (due to their high growth, dividend
and beverages account for 26 per cent of allayed the market’s fears. yields and asset quality), along with
the weight and this is unlikely to shoot IQ (attractively valued and diversified
up unless we have global food inflation. UAE – CRUNCH TIME global economic play) and Q-tel.
Moreover, a portion of the corpus will In May, Dubai World announced
also be allocated towards housing its restructuring proposals to BANKS
development and should help check real creditors, postponing repayment The operating environment for
estate prices from sky-rocketing. For in two tranches – five and eight the GCC banking sector is largely
the first time since 2006 (when SAMA years. According to our calculations, unchanged from the previous year as
tightened consumer lending norms), the new proposals would amount balance sheet growth continues to be
consumer lending in Saudi Arabia has to a haircut of 40 per cent for sluggish and provisions remain high.
been growing at a relatively higher the creditors. The proposals Qatar is the only banking sector
rate than corporate lending. Banks are were followed later on by an to witness meaningful loan growth
beginning to gain confidence in the announcement that 99 per cent of this year. In the first eight months of
consumer play story while they are still the creditors have agreed to the 2010, Qatar’s loan book grew by 13

per cent while that of Saudi Arabia down to 60 basis points (bps) by 2011E.
(3.7 per cent) and UAE (2.3 per cent) The definitive moments for Gulf However, we estimate it to remain
saw very low growth and Kuwait stocks in 2010 above 100 bps for the UAE banks in
actually witnessed a decline (-0.5 per 1. The contagion effect of Europe’s 2011E. As of H1 2010, barring SABB and
cent). Qatar’s deposit base has also sovereign debt worries Arab National Bank, the other five Saudi
grown at 17 per cent this year in sharp 2. The Dubai World debt restructuring banks under our coverage reached
contrast to the one per cent to two per proposal being accepted by 99 per non-performing loans (NPL) coverage
cent growth in UAE and Kuwait and a cent of creditors levels of 100 per cent and above. Credit
decline of 1.6 per cent in Saudi Arabia. 3. Dubai brokerage houses shutting costs fears in the UAE have receded
During H1 2010, the total income down due to low trading volumes among investors following favourable
of Saudi and UAE banks fell by 4. MSCI’s exclusion of Saudi stocks in news flows on the Dubai World debt
1.6 per cent yoy and 11.5 per cent its indices restructuring proposals.
yoy, respectively, while in Qatar, it Qatar banks remain our most
grew by 11.1 per cent yoy. This is a banking sector fell to a low of 0.41 preferred in the sector due to their
reflection of sluggish loan growth per cent, which is largely due to a reasonable valuations and high
in the UAE and Saudi coupled with sharp increase in the demand deposit profitability. In the UAE, we remain
relatively lower margins. Due to the ratio from 44.4 per cent in August positive on NBAD, FGB and UNB due
dollar pegging of the GCC currencies, 2009 to 53.1 per cent in August 2010. to their high capitalisation (tier 1
it is unlikely that interest rates in Credit costs have remained high ratio more than 15 per cent), high
the region will rise before the US Fed during H1 for Saudi and UAE banks. asset quality (Q2 2010 NPL ratios
raises rates and our view is that this In our estimate, credit costs of Saudi of 1.5 per cent to 2.5 per cent) with
is unlikely to happen before the end banks are estimated to decline by 45bps provisioning over 100 per cent levels
of 2011. The cost of funds in the Saudi yoy to 84bps in 2010E and further and, finally, attractive valuations.
Executive Office: 17, Building 16, Ground Floor, Dubai Internet City | P.O. Box: 73030 | Phone/Fax: +971 4446 2640

We also remain long-term buyers and strength in the rapidly growing The chemical sector has the highest
of Saudi banks as we acknowledge mobile data segment. Moreover, its correlation with the global economy
that provisioning levels are now at major competitors – Saudi Telecom and we remain cautious on demand
all-time highs, brokerage activity is and Zain KSA are hampered by legacy recovery, especially in Europe. Given
at all-time lows and interest rates product and cost structures; and the uncertain pricing outlook, we think
are at all-time lows. balance sheet leverage respectively. it makes more sense to get exposure
Al Rajhi and Samba are our top GCC telecoms are currently cheaper to value stocks, which look attractive
picks among Saudi banks due to than their emerging market peers on relative to their global peers (SABIC
their high profitability and adequate a 2009E P/E basis and should also and IQ are trading at a discount
provisioning coverage. generate a higher dividend yield in currently), and to those that look fairly
2009E in our estimate. Our top pick valued in a negative scenario. We
TELECOMS in the sector is Q-Tel as it not only suggest that investors gain exposure
Saudi Arabia is one of the most attractive trades at the lowest 2009E P/E (7.8x) to Sipchem, IQ, and SABIC. We have a
telecom markets in the EMEA region but should also generate the highest cautious view on companies that are
because its market structure is not 2009E dividend yield (6.7 per cent), yet to report operating incomes while
oversupplied and this is likely to remain according to our estimates. trading at rich valuations (Rabigh,
the case in the near term. The country Kayan, and Yansab).
also maintains stable regulation. CHEMICALS
Mobily is our top pick in the sector We are negative on the chemicals Mohamad Hawa is the head of
due to consistent market share gains, sector globally since we expect the gap MENA equity strategy and
continued infrastructure expansion between supply and demand to widen. financials research, Credit Suisse
GULF BUSINESS TOP 100 COMPANIES IN THE GCC

2010 Ranking 2009 Ranking Company Market Cap ($ m) Country
1 1 SAUDI BASIC INDUSTRIES CORP 72.6 Saudi Arabia
2 2 AL RAJHI BANK 30.4 Saudi Arabia
3 4 ETISALAT 23.2 United Arab Emirates
4 15 EZDAN REAL ESTATE CO 23.0 Qatar
5 5 ZAIN 21.0 Kuwait
6 3 SAUDI TELECOM CO 20.5 Saudi Arabia
7 7 NATIONAL BANK OF KUWAIT 17.8 Kuwait
8 9 QATAR NATIONAL BANK SAQ 17.4 Qatar
9 11 SAUDI ELECTRICITY CO 16.7 Saudi Arabia
10 6 INDUSTRIES QATAR 16.3 Qatar
11 8 SAMBA FINANCIAL GROUP 14.6 Saudi Arabia
12 10 RIYAD BANK 11.0 Saudi Arabia
13 12 KUWAIT FINANCE HOUSE 10.7 Kuwait
14 22 ETIHAD ETISALAT CO 10.4 Saudi Arabia
15 18 SAUDI ARABIAN FERTILIZER CO 9.8 Saudi Arabia
16 14 DP WORLD LTD 9.1 United Arab Emirates
17 17 BANQUE SAUDI FRANSI 9.1 Saudi Arabia
18 13 SAUDI BRITISH BANK 8.7 Saudi Arabia
19 20 KINGDOM HOLDING CO 7.8 Saudi Arabia
20 21 NATIONAL BANK OF ABU DHABI 7.7 United Arab Emirates


21 26 SAUDI KAYAN PETROCHEMICAL CO 7.2 Saudi Arabia
22 27 QATAR TELECOM (QTEL) Q.S.C 7.0 Qatar
23 19 ARAB NATIONAL BANK 6.9 Saudi Arabia
24 23 EMAAR PROPERTIES PJSC 6.6 United Arab Emirates
25 31 ALMARAI CO LTD 6.3 Saudi Arabia
26 32 YANBU NATIONAL PETROCHEMICAL 6.2 Saudi Arabia
27 24 FIRST GULF BANK 5.8 United Arab Emirates
28 38 SAUDI ARABIAN MINING CO 5.7 Saudi Arabia
29 16 RABIGH REFINING AND PETROCHEMICALS 5.7 Saudi Arabia
30 33 COMMERCIAL BANK OF QATAR 5.3 Qatar
31 30 QATAR ISLAMIC BANK 5.0 Qatar
32 46 GULF BANK 4.6 Kuwait
33 41 SAVOLA 4.6 Saudi Arabia
34 25 EMIRATES NBD PJSC 4.5 United Arab Emirates
35 55 NATIONAL INDUSTRIALIZATION CO 4.4 Saudi Arabia
36 29 ALINMA BANK 4.3 Saudi Arabia
37 50 AHLI UNITED BANK B.S.C 4.1 Bahrain
38 37 COMMERCIAL BANK OF KUWAIT 4.1 Kuwait
39 28 DUBAI FINANCIAL MARKET 4.0 United Arab Emirates
40 66 BOUBYAN BANK K.S.C 3.9 Kuwait
41 58 BARWA REAL ESTATE CO 3.5 Qatar
42 42 du 3.4 United Arab Emirates
43 53 WATANIYA 3.3 Kuwait
44 47 ABU DHABI COMMERCIAL BANK 3.3 United Arab Emirates
45 59 MASRAF AL RAYAN 3.3 Qatar
46 43 JABAL OMAR DEVELOPMENT CO 3.1 Saudi Arabia
47 51 QATAR ELECTRICITY & WATER CO 3.1 Qatar
48 70 AL AHLI BANK OF KUWAIT 3.1 Kuwait
49 61 BANK MUSCAT SAOG 3.0 Oman
50 39 ZAIN KSA 3.0 Saudi Arabia
51 40 QATAR GAS TRANSPORT(NAKILAT) 3.0 Qatar
52 56 DOHA BANK QSC 2.9 Qatar
53 48 SAUDI HOLLANDI BANK 2.9 Saudi Arabia
54 35 DAR AL ARKAN REAL ESTATE DEVEL 2.7 Saudi Arabia
55 68 SAUDI INVESTMENT BANK 2.6 Saudi Arabia
56 44 AAMAL CO 2.6 Qatar
57 49 ABU DHABI NATIONAL ENERGY CO 2.5 United Arab Emirates
58 - QATAR NAVIGATION 2.5 Qatar
59 45 DUBAI ISLAMIC BANK 2.5 United Arab Emirates
60 62 SOUTHERN PROVINCE CEMENT CO 2.4 Saudi Arabia

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61 98 BURGAN BANK 2.4 Kuwait
62 74 SAUDI NATIONAL PETROCHEMICAL 2.4 Saudi Arabia
63 54 OMAN TELECOMMUNICATIONS CO 2.3 Oman
64 57 SAUDI INDUSTRIAL INVESTMENT GROUP 2.3 Saudi Arabia
65 50 AHLI UNITED BANK (ALMUTAHED) 2.3 Kuwait
66 74 SAUDI INT. PETROCHEMICALS 2.3 Saudi Arabia
67 60 KUWAIT FOODS (AMERICANA) 2.3 Kuwait
68 65 UNION NATIONAL BANK 2.2 United Arab Emirates
69 63 BAHRAIN TELECOM CO 2.1 Bahrain
70 72 KUWAIT PROJECTS CO HOLDINGS 2.1 Kuwait
71 78 ABU DHABI ISLAMIC BANK 2.0 United Arab Emirates
72 34 AGILITY 2.0 Kuwait
73 67 VODAFONE QATAR 1.8 Qatar
74 85 UNITED ARAB BANK 1.8 United Arab Emirates
75 81 YAMAMAH SAUDI CEMENT CO. LTD 1.8 Saudi Arabia
76 77 SAUDI CEMENT 1.8 Saudi Arabia
77 - SAHARA PETROCHEMICAL CO 1.8 Saudi Arabia
78 36 ALDAR PROPERTIES PJSC 1.8 United Arab Emirates
79 71 NATIONAL INDUSTRIES GRP HOLDING 1.8 Kuwait
80 79 QATAR INT. ISLAMIC BANK 1.8 Qatar
81 64 EMAAR ECONOMIC CITY 1.7 Saudi Arabia
82 99 QATAR FUEL CO 1.7 Qatar
83 96 QATAR INSURANCE CO 1.7 Qatar
84 91 JARIR MARKETING CO 1.7 Saudi Arabia
85 - BANK DHOFAR SAOG 1.6 Oman
86 73 COMMERCIAL BANK OF DUBAI 1.6 United Arab Emirates
87 100 ARAB BANKING CORPORATION 1.6 Bahrain
88 76 NATIONAL INVESTMENTS CO 1.5 Kuwait
89 - KUWAIT CEMENT CO 1.5 Kuwait
90 87 AL KHALIJI BANK 1.5 Qatar
91 95 GULF CABLE & ELECTRICAL IND 1.5 Kuwait
92 83 BANK ALBILAD 1.5 Saudi Arabia
93 69 DANA GAS 1.5 United Arab Emirates
94 - MABANEE CO SAKC 1.4 Kuwait
95 82 QASSIM CEMENT 1.4 Saudi Arabia
96 - NATIONAL BANK OF RAK 1.4 United Arab Emirates
97 92 NATIONAL SHIPPING CO 1.4 Saudi Arabia
98 - MAKKAH CONSTRUCTION 1.3 Saudi Arabia
99 84 BANK AL-JAZIRA 1.3 Saudi Arabia
100 93 NATIONAL BANK OF BAHRAIN 1.3 Bahrain
Source: BLOOMBERG PROFESSIONAL™

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TOP TENS TOP 10 GCC COMPANIES BY MARKET CAP

Large cap companies Company Mkt Cap ($ billion) Country Sector
The list of large-cap stocks remains relatively Saudi Basic Industries Corp 72.6 Saudi Arabia Chemicals
unchanged from last year. SABIC remains the Al Rajhi Bank 30.4 Saudi Arabia Banks
largest company in the GCC, with a market cap Etisalat 23.2 UAE Telecoms
of $72 billion. Along with SABIC, Industries ZAIN 21.0 Kuwait Telecoms
Qatar and Saudi Electricity are the only Saudi Telecom Co 20.5 Saudi Arabia Telecoms
companies in the top 10 list that otherwise National Bank of Kuwait 17.8 Kuwait Banks
remains dominated by banks and telecoms. Qatar National Bank 17.4 Qatar Banks
At a country level, Saudi Arabia continues to Saudi Electricity 16.7 Saudi Arabia Utilities
dominate the list with five companies among Industries Qatar 16.3 Qatar Chemicals
the top 10 and 15 companies in the top 25 Samba Financial Group 14.6 Saudi Arabia Banks
companies by market cap. In the top 25, UAE Source: BLOOMBERG PROFESSIONAL™
has four companies while Kuwait and Qatar
have just three companies each. TOP 10 GCC COMPANIES BY REVENUES (2009)
The aggregate market cap of the top 10 Company Revenues ($ billion) Country Sector
companies has increased by 18.2 per cent Saudi Basic Industries Corp 27.5 Saudi Arabia Chemicals
YTD to $262 billion. The composition of Saudi Telecom Co 13.5 Saudi Arabia Telecoms
the top 10 stocks has largely remained the Etisalat 8.4 UAE Telecoms
same from last year, with the only exception ZAIN 8.0 Kuwait Telecoms
being Industries Qatar, which replaced Riyad Rabigh Refining Co 7.8 Saudi Arabia Chemicals
Bank. The major change at the top of the Qatar Telecom 6.6 Qatar Telecoms
table was Emirates Telecom, which jumped Saudi Electricity 6.4 Saudi Arabia Utilities
from number four to number three, while Agility 5.9 Kuwait Warehousing
Saudi Telecom dropped from number three Savola 4.8 Saudi Arabia Consumers
last year to number five this year. Emirates NBD 4.7 UAE Banks
Source: BLOOMBERG PROFESSIONAL™
Largest companies by revenues
The list of largest companies by revenues TOP 10 GCC COMPANIES BY NET INCOME (2009)
is dominated by chemical and telecom Company Net income ($ billion) Country Sector
companies. The only bank to make it to the top Saudi Telecom Co 2.9 Saudi Arabia Telecoms
10 is Emirates NBD, which reported revenues Saudi Basic Industries Corp 2.4 Saudi Arabia Chemicals
of $4.7 billion in 2009. Sabic and Saudi Telecom Etisalat 2.4 UAE Telecoms
are the largest revenue-makers, at $27.5 billion Al Rajhi Bank 1.8 UAE Banks
and $13.5 billion in 2009 respectively. Industries Qatar 1.3 Qatar Chemicals
Samba Financial Group 1.2 Saudi Arabia Banks
Largest companies by profitability Qatar National Bank 1.2 Qatar Banks
In 2009, Saudi Telecom dethroned SABIC to National Bank of Kuwait 0.9 Kuwait Banks
become the largest profit-making listed company Emirates NBD 0.9 UAE Banks
in the GCC. However, we think this was due to First Gulf Bank 0.9 UAE Banks
a steep decline in global petrochemical product Source: BLOOMBERG PROFESSIONAL™
demand and in 2010, SABIC’s net income is
estimated to rebound (by 106 per cent) to $5.6 TOP 10 GCC COMPANIES BY YTD SHARE PRICE PERFORMANCE
(STOCKS ABOVE MARKET CAP OF $5 BILLION)
billion. On a sector level, banks dominate the top
10 list with six slots, with Al Rajhi Bank leading Company YTD returns Country Sector
the pack with a 2009 net income of $1.8 billion. Commercial Bank of Qatar 58.0 per cent Qatar Banks
National Bank of Kuwait 55.7 per cent Kuwait Banks
Best-performing large cap stocks ZAIN 54.9 per cent Kuwait Telecoms
Among the large cap stocks (market cap above Qatar National Bank 44.6 per cent Qatar Banks
$5 billion), Commercial Bank of Qatar was the Saudi Electricity 41.3 per cent Saudi Arabia Telecoms
best performer so far this year, returning 58 MAADEN 34.7 per cent Saudi Arabia Mining
per cent followed closely by National Bank of Safco 33.5 per cent Saudi Arabia Fertilizers
Kuwait and Zain at 55.7 per cent and 54.9 per Mobily 31.3 per cent Saudi Arabia Telecoms
cent respectively. The worst performers among DP World 30.0 per cent UAE Harbour transport
the large cap stocks were Petro Rabigh (-31.7 Almarai 26.4 per cent Saudi Arabia Consumers
per cent) and Arab National Bank (-7.9 per cent). Source: BLOOMBERG PROFESSIONAL™

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FEATURES LEADERSHIP
What kind of leaders

do we need now?
A
s the recession
unfurls its grip,
Forget ‘rock star’ CEOs.
there has been As the recession subsides,
a collective
awakening across it’s time for hands-on,
Gulf boardrooms.
For a region that
honest leadership,
has only known writes ALICIA BULLER.
growth, the crisis was even more
unprecedented than in the West; so
shell-shocking, in fact, that it caused
companies to seize up through fear –
stifling innovation and investment.
This is the first mistake, according
to Aroop Zutshi, global president of
consultancy firm Frost & Sullivan.
“Growth is imperative for companies,
but they were shutting themselves
down through fear. Expectations need
to be recalibrated; they were irrational
about growth previously. But the
number one objective for all companies
should be growth, no matter what
region they are in.”
HANDS-ON
The recession prompted companies
and CEOs to lose confidence and
iStock
double guess strategy. “They’ve been
gazing inwards and thinking ‘where
did I go wrong?’ But now there are real
signs of economic activity and there adds Zutshi. “It was not just in the recession] it gets Darwinian. In tough
will be no double dip.” Gulf region – it started in the West times you need a calm defiance. In
What’s clear is that organisations with the banking crisis.” global surveys, respondents always
need a different type of boss for what Without a shield of fast, loose credit picked the same qualities they want
is, and what will continue to be, a and unsustainable revenues, it’s time to in a leader: steady and calm under
very different business landscape. choose hands-on, operational leaders, fire, defiant and vigilant, fit in body
In the UAE, in particular, there is a say the experts. Bosses who understand and mind, someone who understands
need for a fresh paradigm based on the business, its people, goals and the business and its people,” he said
lessons learned. customers. According to Adrian speaking at the 8ack ‘Negotiation and
In the boom times, the country was Furnham, professor of psychology Leadership’ workshop in Dubai.
awash with jaunty hope; anything was at University College London and “The cost is high when leaders fail,
possible, particularly if you instated a leadership columnist for the UK’s Daily which is actually around 50 per cent
‘rock star’ CEO – a smoothed-tongued, Telegraph newspaper, the qualities that of the time. There’s two types of failed
charismatic leader who could court Middle Eastern firms need in leaders leaders,” adds Furnham. “Leaders are
the media and shareholders. “We were today are similar the world over. either incompetent, because they don’t
all guilty of irrational exuberance,” “When you shake the tree [in a have enough qualities, or they get

derailed because they have too much
of one quality.”
Incompetent bosses are nothing new,
of course. But the 50 per cent failure
rate, which is the mean figure quoted
from 12 large-scale global surveys over
the last 20 years, is surprisingly high.
This figure became magnified in the
recession as one thing became clear:
CEOs had not anticipated the crisis.
The buck stops with the boss, it is his/
her responsibility to perform and meet
their targets. They didn’t.
Aroop Zutshi, global president Anil Khurana, director at business
consultancy firm Frost & Sullivan. consultancy firm PRTM.
DERAILMENT
‘Derailment ‘ in leaders was also issue when talent was in short global Anil Khurana, director at business
evident. One overrepresented supply but today it’s an employers’ consultancy firm PRTM.
quality that became a double-edged market and there is no excuse for not “There is a recognition that
sword was ‘ambition’. The boom taking the time to plan exactly what businesses are actually run by people
time environment was heady and roles are needed and filling them in a and that there needs to be a mix of
intoxicating for the overly ambitious. sustainable way. locals and international talent to ensure
A case in point is Peter Barker-Homek, While over-promotion is a major continuity. This is an issue globally, but
former CEO of Taqa (Abu Dhabi issue, another factor to consider is it was magnified in the UAE because so
National Energy Company). overload. In the UAE, a talented young much money was made in such a short
Homek – who arrived at the national will often simultaneously time. I know of companies, which I
company in 2006 from a previous role hold various roles and directorships at won’t name, where they have got rid of
as BP’s senior adviser for mergers companies and boards. the young directors and replaced them
and acquisitions – decided to reach A case in point is former Dubai with leaders with 25 years experience.”
for the stars and aimed to turn Taqa finance minister Nasser Al Shaikh, As well as choosing experienced,
into a $60 billion international energy who held a dizzyingly broad range hands-on leaders for the long-term,
company by 2012. He overleveraged, of key posts in the emirate, including there are specific leadership techniques
the company lost millions and he
was ousted. Homek has since filed a
lawsuit against Taqa from Michigan in Respondents always picked the same
the US for mistreatment and damages. qualities they want in a leader: steady,
What really happened is hard to
say, but one thing is clear, ambition defiant, vigilant and fit in body and mind.
and overleveraging hurt Taqa in the
medium-term. The Executive Council, The Supreme that can help companies to navigate
Fiscal Committee and a slew of out of the recession in the near-term.
OVER PROMOTION private firms. How much is too The ability of a CEO to shore up
A major downfall of companies pre- much? Shaikh was ousted from the momentum after inertia is a key skill.
recession was the habit of promoting government in May 2009 following “When times are uncertain, people
staff who weren’t necessarily equipped a radio interview in which he spoke immobilise themselves. Therefore,
for management. about Dubai’s debt crisis. the kind of leaders Gulf companies
“There is the assumption that the need are those who convey a clear,
good technical people make good ACTION PLAN consistent direction supported by
managers,” says Furnham. “These “Leaders must shift their ‘quick wins’ to restore confidence
staff are happy to be promoted but understanding to the nuts and bolts and momentum. Their hallmarks are
essentially they still only want to do of a company, it’s less about the clarity, decisiveness and an emphasis
what they are good at, this creates ‘personality’ approach. We need on rapid results,” says Philip Anderson,
serious problems. Many of them do not leaders that understand their business professor of entrepreneurship, INSEAD.
get given management training.” deeply, that know the company’s The quick wins are not speedy in
‘Bumping up’ staff may have seemed capabilities, know their customers the ephemeral ‘quick buck’ sense, but
an easy way around the recruitment and take a hands-on approach,” says gains that arise from core direction,

planning and knowing the business. well as manage the nuances of “You can’t make people hungry for
And while no-one would say the different cultures will be crucial. success, they either have it or they
economic crisis has been a good “The role of the CEO is changing don’t. They must be bright enough,
thing by any measure, there are a lot. Today’s CEOs tend to last four they must be good with people
opportunities to be had in readying or five years, whereas bosses of the and have drive, Leadership is very
the company for comeback; being past used to last 10 years. There is stressful as the buck stops with
the first off the start-line when the so much pressure to deliver. Today’s you,” he says.
recession clears. environment is more dynamic; leaders The Gulf’s new leaders will
“Be ready to make tough decisions need to be more innovative and agile. certainly need brains, but they’ll
and lead the pace of change,” says In mature markets, leadership is also need courage, vision and
Ahmed Youssef, partner, Booz & focused on the core business, whereas cultural awareness as they venture
Company. “Take advantage of the in developing countries it’s more out into a business world with ever-
crisis to create the burning platform about diversification. The focus is on shifting dynamics and tarnished
for the needed changes.” producing more home-grown talent confidence.
and sustainability,” says Sarwant But unlike in the West, the
NEW ERA Singh, partner at Frost & Sullivan. region’s fast-growing population,
One thing is certain: the role of But some tenets of good leadership mass infrastructure development
the CEO is going to become more are immutable, says Furnham. and oil-rich governments will
challenging, complex and dynamic According to the professor, all good continue to provide inflowing
as globalisation and technology bosses must have the following: drive, buffers. Crucially, that growth will
advances continue apace. Being ambition, dedication, ability and have to be managed very differently
able to innovate and intuit, as stress tolerance. this time around. ■

FEATURES ENERGY
The race
for power
The pressure is on to find the right strategy for the
Gulf’s first nuclear power plant in 2017. Incubating
local talent will be the UAE’s biggest challenge,
says PETER SHAW-SMITH
iStock

S
ituated 50 km
south-west of ENEC timeline
Ruwais and just Key Emirates Nuclear Energy Corporation milestones and objectives
over halfway to the April 2008 Roadmap for UAE nuclear energy programme completed
Saudi border, and
May 2008 UAE nuclear energy programme announced
only 30km south off
the azure waters of November 2008 Appointment of managing agent
the Persian Gulf, lies April 2009 Prime contractor selection process underway
a barren stretch of uninhabited desert June 2009 Technology and Prime Contractor down-select
which ordinarily would remain one
March 2010 Preparation for construction of Unit 1 underway
of the less remarkable features of the
UAE’s muscular topography. July 2010 Nuclear and “safety culture” training begins
But this tract of land is set to March 2012 First safety related concrete poured for Unit 1
transform the future of the UAE and March 2014 Operations training underway
that of the whole of the Middle East,
March 2015 Control Room Simulator completed
with establishment of the GCC’s first
nuclear power plant, to be built at the July 2016 First fuel delivery for Unit 1
Braka site by 2017. June 2017 First electricity to grid
In announcing plans to build its Source: ENEC
first nuclear reactor, the UAE has
set itself a stiff target. Building there would be insufficient supplies the GCC, Saudi Arabia is believed to
the plant on time and moving to of gas feedstock to drive existing be exploring its nuclear options, while
the operations phase are both conventional power stations during Qatar is waiting to learn the lessons
fraught with difficulty. As nuclear peak periods. of its GCC partners before taking the
power generation enjoys a global According to the US’ Energy plunge itself.
renaissance, new plants are Information Administration, the UAE’s The engineering, procurement and
being built in greater numbers total installed power capacity stood construction (EPC) contract to build
around the world entailing a at just over 15,700 megawatts in 2007. and operate the plant is to be carried
shortage of manpower and skills. Abu Dhabi Water and Electricity out on the “build, operate, transfer”
Decommissioning of the last Company estimates demand in the model, which will allow the UAE to
generation of nuclear power plants emirate alone could more than triple benefit from contractor expertise
and retirement of the experts that from almost 8,000 MW in 2009 to decades into the life of the plant’s
ran them makes this problem even 30,000 MW in 2030. As with all operation. The primary contractor
more acute. Gulf states, the UAE is burdened for the project, Korea Electric Power
UAE technical cooperation with by capacity overhangs for eight Corporation (KEPCO) was duly
the International Atomic Energy months of the year, since seasonal air selected in December in a bidding
Agency (IAEA) began in 1977 when conditioning use ramps up demand process that saw the UAE utility,
the government sought advice on the for the hottest months. Emirates Nuclear Energy Corporation
establishment of a nuclear energy In choosing to go nuclear, the (ENEC) choose it ahead of two groups,
administration, according to the US UAE has made clear that sufficient the US General Electric teamed with
Congressional Research Service. hydrocarbons remain available for Hitachi and France’s consortium of
In 2005, a new project explored the conventional power generation. Areva, GDF Suez and Total.
“technical and economic feasibility” of However, while the burning of But time is running and ENEC
a nuclear power and desalination plant liquids (crude oil or diesel) would has now less than seven years to
(the reason the proposed site is close be logistically viable, it has been deliver the first 1,400 MW unit on
to the sea). decided that this would be “both schedule. Three more units, bringing
As have all GCC energy planners, costly and environmentally harmful,” total capacity to 5,600 MW are to be
the UAE has viewed with increasing according to official statements. In completed by 2020. Although KEPCO
unease the growth in demand for
electricity, most of which comes Ordering four new reactors from a
from industrial and residential users
in the emirate of Abu Dhabi, which
company that has never built a reactor in
accounts for 85 per cent of the nation’s an international setting was a gutsy move
land mass. As early as 2008, UAE gas that carries with it a great deal of risk.
industry officials were warning that

FEATURES ENERGY
has won the prime contract, ENEC

says it will continue discussions
The global nuclear equation
with the other bidders on potential
cooperation in areas outside its scope,
such as long-term fuel supply, joint
T he mix of a country’s electricity
generating components depends
on availability of renewable and non-
the USA nine, while the UAE has four,
according to World Nuclear News (WNN).
In 2009, four plants were closed but
investments, training and education. renewable resources. It can include only two activated worldwide, WNN
Key to success of the UAE conventional nuclear, or renewables, said. “One factor in nuclear power’s
programme will be a steady including hydroelectric, geothermal, performance since 2007 has been the
supply of qualified manpower, wind, solar, tide and wave and biomass prolonged shutdown of reactors at
which requires not only top dollar and waste. Kashiwazaki Kariwa in Japan following
but government resolve. “[The] According to IAEA estimates, the Niigata-Chuetsu-Oki earthquake.”
government’s commitment is not last year 13-14 per cent of global The largest nuclear power plant in the
only financial but [a] demonstration electricity demand was met by nuclear world, it accounts for two per cent of
of political will by committing power. Plant decommissioning and global nuclear capacity and was out of
resources to ensure that the best maintenance shut-downs have led to action for many months.
skills in the world are procured a slight fall from peak global output in Nuclear energy’s application across
to help build the UAE programme 2006, of just over 2,550 terawatt hours the world is uneven. France’s generation
from scratch to operation is a very (TWh). In 2007, total global installed network has the highest nuclear input
important... advantage for the UAE,” electricity capacity stood at just under at 78 per cent, the US stands at 20 per
says the IAEA’s Bismark Tyobeka, a 4,420 gigawatts (GW), according to the cent, the UK 19 per cent and China only
South African nuclear engineer. US’ Energy Information Agency. two per cent. In 2008, Iceland was the
With a contract value of $40 Of the world’s 149 planned nuclear world’s highest per capita consumer
billion, ENEC’s nuclear power project reactors, estimated to have a total of electricity, and 100 per cent of the
sets major store by its 60 per cent capacity of just over 163 GW, China nation’s electricity is produced by
Emiratisation target. According has 33, India 20, Russia 14, Japan 12, geothermal energy and hydropower.
to John Wheeler, senior manager
of Nuclear Workforce Planning at
Entergy, a leading US nuclear energy
company, a headcount of 650 is
required to run a two-unit plant,
meaning the UAE will require at least
1,300 qualified professionals by 2020.
But that’s to say nothing of actual
plant construction.
“[Constructing] a nuclear plant is
far more complex than building a
combined cycle gas plant. Ordering
four new reactors from a company
that has never built a reactor in an Gulfpics
international setting was a gutsy
move that carries with it a great deal for electricity, mostly in the form and gas industry, and as their people
of risk,” says Wheeler. “Headcounts of air conditioning, occurs from gain experience some are likely to be
have begun to rise because many June-September, when monthly attracted away by other new nuclear
plants are proactively feeding their UAE temperatures hit 39-40 degrees programmes in the region.” The
talent ‘pipelines‘ to prepare for the centigrade; any delay in plant international community, in the shape
pending departure of ageing workers, completion will cause problems of the IAEA, and especially the US,
and to prepare for the potential of if summer 2018 becomes the earliest have given their blessing to the UAE’s
more competition for talent as new date at which additional power peaceful nuclear energy development
reactors are built in the USA and is deliverable. programme, especially thanks to a
around the world.” Given the putative programmes commitment not to enrich uranium
Selection of plant operationality of fellow GCC members, Wheeler “onshore.” Huge challenges await the
close to peak summer temperatures suggests a regional nuclear company UAE government, its young engineers
is an unwitting admission of the to harness effective working and and its international partners. But
pressure Abu Dhabi faces. A delivery human resources practices. “[The there seems little doubt that one day in
date of June 2017 leaves little margin UAE] will experience competition the not-too-distant future, Braka will
for error if delays occur. Peak demand for top talent internally from the oil be firmly established on the map. ■

FEATURES OMAN
Betting on Oman
As the Sultanate reaps the rewards of prudence,
RYAN HARRISON explores the gains for inward investors.
B
y all estimates education, power and water, ports and Williams said the country’s
it looks like industrial projects. central bank has always been
prudence is paying Simon Williams, chief economist for particularly hands-on when it comes
off for Oman. HSBC Middle East, said on the whole to regulations, even though its
While other Gulf Oman a positive economic story and banking sector is small and seemingly
states let the one that savvy investors should keep more manageable than other local
boom years go to a close eye on. “Oman weathered the economies.
their heads, the 2008/9 period better than many of “The wider appeal of Oman is the
sultanate held its economy on a tight its peers in the Gulf, partly because greater political stability and its
leash, avoiding excesses in real estate it’s less integrated into the financial encouraging economic trajectory,
and banking. markets. But the government’s prudent which seems ambitious but realistic,”
The government has carefully spent economic management shouldn’t be he added.
its way out of the recession and yet is overlooked as well. The Central Bank of Oman (CBO)
on track to post a budget surplus of “There are a few MENA economies said recently it has no immediate
around $1billion this year thanks to where over the next three to five years plans to wind down the fiscal stimulus
higher-than-expected oil prices. it will be difficult to identify where measures introduced in the wake of
Its nationalization programme is growth will come from. Oman is not the global financial crisis in 2008.
arguably the most advanced in the on that list. Its underlying drivers are According to Executive President
region and strong domestic demand is domestic demand and its appeal as a Hamoud bin Sangour al Zadjali,
being matched by huge investments in services economy to the local region. continuing concerns over the pace

of the global recovery, as well as the In 2009, Oman spent about push ahead with infrastructure and
sluggish recovery of Oman’s non-oil $16billion on local infrastructure development projects, according to a
sector, do not warrant a lifting of the and other projects, and this year recent report by Reuters.
stimulus measures. the government has already signed Meanwhile, lawyers say Oman
Oman largely overshot its contracts worth $11.5 billion out of has been enticing foreign direct
expenditure plans in the past two the $18.7 billion spending budget, investment like never before thanks
years to help the economy through the according to national economy to a well-organised and predictable
global downturn. Spending has focused ministry statistics. Massive inward regulatory and legal regime.
heavily on its infrastructure, building investment has been possible as it Sean Angle, head of corporate for
three new airports. It also plans to largely side-stepped the huge debt the Middle East at Reed Smith, said:
upgrade its main airports in Muscat of some of its neighbours, while oil “It is possible to get a 100 per cent
and Salalah, its second largest city. prices have remained buoyant. foreign ownership, so for example,
This investment also goes for For instance, Oman based the 2010 US companies can get a 100 per cent
shipping ports, such as Sohar, Salalah budget on a $50 per barrel price but foreign ownership through the Free
and Duqm, which has been in part sold its oil at an average of $77.57 Trade Agreement that Oman and
to take advantage of its geographical a barrel in the first half of the year. the USA have. It has a corporate tax
location. Experts say building facilities Its budget surplus widened to $1.82 regime but it is sensible, well drafted
in the Gulf of Oman means trade can billion at the end of June alone. and favourable to foreigners.”
avoid the potential dangers of the It even plans to increase spending Angle said the only blot on Oman’s
Straights of Hormuz. by 11 per cent in its 2011 budget to plans is the legal underpinnings of

FEATURES OMAN
But Paul Sheridan, managing

partner in the Muscat office of law
firm SNR Denton & Co., strikes an
upbeat assessment. “High loans
to the private sector indicate a
dynamic economy – especially in
a world where many countries are
attacking their banks for failing to
support the private sector. I don’t see
significant dangers to the banks who
are tightly controlled by the Central
bank of Oman.
“The economic outlook is good but
mainly because Oman has been well
Paul Sheridan, managing partner, Simon Williams, chief economist, HSBC.
SNR Denton & Co.
managed – certainly conservatively,
but not without some dynamism,”
its tourism projects, a sector that’s Still, to the untrained eye, Omani he added.
been vital to efforts to diversify the tourism has a lot going for it: the Oil will for now be Oman’s ace up
economy away from hydrocarbons. country is renowned for its pristine the sleeve, and the sustained price of
Estimates are that investments to beaches, mountains, wadis and a barrel, which at the end of 2010 will
expand facilities for tourism across deserts as well as its unique calendar average in the range of $70, has proved
Oman will amount to $20 billion of festivals which draw in thousands this theory beyond doubt.
over the next few years, according of regional and international visitors The heightened prices will be
Business Monitor International. each year. enough to settle the Omani deficit and
The country wants to attract 12 Concerns have been raised that even to record a surplus.
million visitors annually by 2020, in efforts to kick-start the economy The sultanate said in March it
according to the head of the state in the post-financial crisis world, expected gross domestic product to
airline Oman Air. lending to the private sector has jump 6.1 per cent in 2010, helped by
Sultan Quaboos Bin Said, Oman’s become overly exuberant, with some a recovery in the oil prices. Crude oil
ruler, has counted foreign visitors reports suggesting an increase of 50 production provides more than 70 per
since assuming power in 1970. per cent last year. cent of Oman’s income, while crude
He said travel and tourism are an Questions have been asked as to the exports accounted for more than 67
essential part of his nation’s economic future performance of these loans, per cent of its overall exports on an
mix. considering Dubai as a case study. average month.
In September, it was reported that Oman’s crude oil production rose by
the number of UAE tourist arrivals at Stimulate and regulate seven per cent in the first eight months
Muscat Airport grew 30 per cent from of this year to 208.5 million barrels
23,000 in July 2008 to around 30,000
in 2010. K een to stimulate growth and get
credit flowing, the Central Bank
of Oman implemented a number of
compared to 195 million barrels in
the corresponding period in 2009,
Angle said: “The tourism projects according to statistics released by the
might not have gone ahead as well fiscal incentives in the wake of the National Economy Ministry.
as had been expected a number of global financial meltdown. Continuing to increase this
It reduced the reserve requirement
years ago. There might be a few production to support its
for banks from eight per cent to five
issues in that respect in that the developments will be key to hitting its
per cent. Further, the lending ratio
regime for obtaining freehold title has ceiling was restored to 87.5 per cent ambitious targets.
not yet been settled with the relevant from 85 per cent with effect from Outside oil and gas, Oman has
ministries such as the Ministry of January 2009 to avoid any regulatory worked hard to foster its other
Housing. induced credit contraction. positives, such as its thriving
“The Ministry of Tourism is trying Finally, with the intention of population, which now stands at over
hard to be more efficient in how providing adequate dollar liquidity three million, including an increasing
they deal with the negotiation of support to local banks following mobilised national work force.
the number of tourism development the global financial credit squeeze, If the past is any guide to the future,
the Omani government kept open a
projects as there have been investors considering Oman for part of
lending facility of up to $2 billion.
some concerns in the past about their pool of cash can take comfort in
inefficiencies in that area,” he added. knowing that it will be in safe hands. ■

Advertisement feature
Domestic demand seen fueling

Asia’s long-term growth
Developing economies in Asia, led by China, may have shifted out of the fast lane for the moment. But Bill
Sung, CEO of Singapore-based Absolute Asia Asset Management, believes that a slow and steady increase
in domestic consumption can fuel strong growth in the Pac-Rim region for decades.
“Consumption has substantial room for growth in the region. The domestic economic environment in Asia
is currently quite robust with low interest rates, increasing confidence levels, strong retail sales, and double-
digit GDP growth in many countries,” said Sung. In this environment, Absolute Asia continues to believe that
consumption-related stocks across Asia, and particularly in China, are currently offering the best investment
opportunity. Industries Sung is eyeing include autos, IT distributors, retailers, television manufacturers, and
dairy product companies in China.
GROWTH OF PRIVATE CONSUMPTION IN ASIA EX JAPAN In its “No. 1 Document of 2010”, jointly issued by the State Council
and the Central Committee, the Chinese government vowed to increase
41% Asia ex-Japan private consumption investment and create more jobs to fuel domestic consumption,
39% as % of US orivate consumption particularly in rural areas. Rural areas currently account for only about
35%
33% one-third of China’s total retail sales, and rural residents have a much
31% lower standard of living than urban residents, two factors which could
29% contribute to increased demand for goods and services as worker
27% incomes in these areas grow.
25%
23%
Asia continues to be key growth driver
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Looking at the final quarter of 2010 and into 2011, Absolute Asia expects
Source: CEIC Data, CLSA Asia-Pacific Markets, from “Global & Asia investment strategy” presentation dated March 2010 to see ongoing market volatility, but believes Asian markets should
do well on the back of sustained solid economic performance with
Domestic consumption is poised to overtake exports as the main double-digit GDP growth in several countries, decent earnings prospects,
growth driver in Asia, home to more than 3 billion people – more than reasonable valuations, and likely currency appreciation.
half the world’s total population. Sung points to the region’s largest “While Asian central banks are nudging up interest rates in response to
economy as an example. increasingly apparent inflationary pressures throughout Asia, we believe
“We are seeing many signs pointing to an ongoing structural shift in economic momentum is generally strong enough in most economies to
China today – away from an export-driven economy toward a domestic withstand a measured normalization of rates and we believe that Asian
consumption-driven one,” said Sung. He suggests that if the Chinese economic growth will continue to significantly outpace that of Japan,
people regain individual economic confidence and save less, it is very Europe, and the U.S.,” said Sung.
likely that the consumption share of the Chinese GDP could rise from its
record low of 35.1% in 2008 to a more normal 50% threshold, providing
a major growth driver for the Chinese economy in the next 10 years.
This communication is provided in and from the DIFC financial district by Natixis Global Associates
Middle East, a branch of Natixis Global Associates UK Limited, which is regulated by the DFSA. Related
China’s expanding social welfare programs and financial products or services are only available to persons who have sufficient financial experience
rural development and understanding to participate in financial markets within the DIFC, and qualify as Professional
Clients as defined by the DFSA. Registered office: PO Box 118257, 5th Floor, Building 8, Gate Village,
For over two decades, Sung has closely monitored and managed DIFC, Dubai, United Arab Emirates.
portfolios investing in China. He notes that fundamental modifications Natixis Global Associates Middle East is a business development unit of Natixis Global Associates,
in government policy have increasingly encouraged domestic the global distribution organization of Natixis Global Asset Management, the holding company of a
diverse line-up of specialized investment management and distribution entities worldwide, including
consumption and provided greater financial support for social welfare the investment manager referenced herein. Absolute Asia Asset Management Limited, a subsidiary of
programs. For example, in early 2009, the Chinese government released Natixis Global Asset Management, is authorized by the Monetary Authority of Singapore (Company
registration No.199801044D) and holds a Capital Markets Services License to provide investment
plans to allocate 850 billion yuan (USD125 billion) by 2011 to establish a
management services in Singapore. The company conducts all investment management services in
universal healthcare system to provide medical insurance for more than and from Singapore.
90% of the population. This communication is for information only and does not constitute an offer of financial services,
nor a recommendation or offer to purchase or sell shares in any financial instrument. Investors should
“Government spending in these areas has the potential to significantly consider the investment objectives, risks and expenses of any investment carefully before investing.
stimulate private consumption by relieving households of the need to save to The analyses and opinions referenced herein represent the subjective views of the portfolio
finance retirement or to self-insure against a medical emergency,” said Sung. manager as referenced.
GB-Natixis.indd 1 10/27/10 2:43:24 PM

FEATURES KSA
getty images
Arab angst
Switch bowling centre, pool hall.
As Saudi’s young and jobless population grows, RYAN HARRISON looks at how
the country can mould its youth into a powerful asset rather than a liability.
O
n the face of it, the increasing production and income, mask literature, despite the labour market
outlook is good an uncertain future in its non-oil sector. being saturated with social-science
for Saudi Arabia. Specifically, it is the crisis of and humanities-types. The bottom line
The kingdom chronic unemployment among its is there’s a glut of educated Saudis on
has oil wealth booming youth population. Instead the market but the government needs
unsurpassed of snatching up the mantle of to create a workforce better suited to
by its Gulf diversification into the private sector, the needs of the private sector.
counterparts, Saudi’s youth have become a societal But the short-comings have not
with reserves of 267 billion barrels burden, as more and more jobless lean come through lack of investment in
of crude in place. This compares to on the welfare state to survive. education. Earlier this year, Saudi
5.5 billion in Oman and 104 billion in Experts say the bloated public sector passed the latest five-year development
Kuwait, according to the US Energy is unproductive and cannot keep plan. It pumped about $200 billion
Information Administration. providing the young, educated natives into expanding access to schools and
It’s the region’s largest economy with administrative jobs. Plus, many universities, and for substantially
precisely because of its petro-dollar Saudi university students continue to increasing vocational training by 2014.
credentials. But Saudi’s importance in pursue degrees in fields such as social Previously, about a quarter of
the energy market, and its decades of studies, religious studies, history, and each yearly budget went towards

education and vocational training;
this year’s allocations, amounting to
$36.5 billion, represent a 12.4 per cent
increase over those of 2009.
“The government has risen to the
challenge and kept a lot for a rainy
day,” said Oliver Cornock, regional
editor for Oxford Business Group.
“But the educational system is still not
producing enough people for the private
sector, something that’s compounded by
massive imported labour.
“The government needs to use
its considerable reserves and start
creating more partnerships with
foreign institutions, especially at
the university level. There needs to
Oliver Cornock, regional editor, Oxford Ghanem Nuseibeh, founder, Cornerstone
be more emphasis on job creation in Business Group. Global Associates.
technical sectors, R&D and genetics,
which are all quite academic and He said the burden to Saudi of having do the jobs that young Saudis refuse
inline with the type of degrees this level of youth unemployment is to do or which culturally might be
graduates have.” incalculable. “Any society, not just difficult for them to do, for example
Officially, unemployment stands at Saudi’s, when faced with high youth the million or so jobs for drivers,”
11 per cent in Saudi, although some unemployment is faced with the added Mitchell.
unofficial estimates peg it as high as dangers of extremism, organised crime, Recent media reports even linked the
35 per cent among men in their early destruction of the family unit and a joblessness to a growing hostility to
20s. Matters will be compounded as socially divisive creation of a caste of expats, after a HSBC bank survey found
the 40 per cent of the population that haves and have-nots. white-collar foreigners working in Saudi
is currently under 15, along with more “The country is faced with a were among the world’s wealthiest, with
women, enter the labour force. double whammy – the direct cost of disposable incomes allowing them to
The most worrying element of this subsidising non contributing members buy luxuries such as yachts.
job crunch is the societal costs in the of society on the one hand; and on the As the number of unemployed
coming decades, said Metin Mitchell, other the loss of national income that Saudis increased to 449,000 in 2009
managing director for Middle East & goes in workers’ remittance to their from 416,000 a year earlier, an eight
North Africa at headhunter Korn Ferry. countries of origin – the workers who per cent jump, there were 1.54 million
work visas for foreigners issued to the
private sector last year, almost double
WANTED: URGENT EDUCATION REFORM the number granted in 2004, according
to a report by Banque Saudi Fransi.
P ressure is building on the Saudi

government to continue driving
a massive overhaul of its primary
private businesses into the class
room as role models, educators and
influencers of curriculum.
Indeed, security officials admit that
young Saudis without jobs are easy prey
to militant groups. From 2003 to 2006 al-
and secondary school education. Widespread introduction of highly Qaeda tried to destabilise the kingdom
Beginning with: competitive and demanding team with a series of bloody attacks.
Better quality teachers – with sports in order to promote a culture of Ghanem Nuseibeh, founder at
career progression and salary winning, physical struggle, teamwork, Cornerstone Global Associates and
progression based on performance correlation of effort and results, playing senior analyst with Political Capital,
not on seniority. within agreed rules and a healthier said: “Foreign private company visas
A curriculum that strongly includes lifestyle with a view to reducing both should come with strings attached
and promotes enquiry-based learning, obesity and diabetes when they’re issued, such as quotas
maths, algebra, technology, science, Open up private schools to the or training for Saudi nationals. But
foreign languages and Islam as a poorest by reserving 25 per cent of problems come like in the UAE where
force for integrity-based and socially private school places for scholarship locals are on the books but may not be
conscious private enterprise. students from the poorest families in up to standard.
Private sector partnership – bringing Saudi Arabia “If this visa issue is not part of a
Source: Korn Ferry much wider government push to get
November 2010gulfbusiness 71
FEATURES KSA
young Saudis into jobs, then it’s the blue and white collar jobs across the years old. “In a place like Saudi, the
type of thing that can be abused.” board, but specifically, the financial entrepreneurial drive is needed to
The country’s private sector is system has an opportunity to build a diversify the economy and offset 20
largely powered by the foreign workers world-class Islamic banking centre in years of dependence on oil wealth.”
who make up about a third of its 28 Saudi, which would spur job creation. The kingdom’s new 2010-2014
million residents. The government has Meanwhile, Rabea Ataya, the CEO of economic development plan is
imposed minimum quotas of Saudi Bayt.com, said more needs to be done designed to cut unemployment to 5.5
employees on various companies to get young Saudis starting their per cent, but commentators agree that
and ruled that certain businesses, own companies. “The top recruiting this figure will struggle to make it out
like gold shops, travel firms and car industries at the moment are oil and of the double digits.
dealerships, be staffed by Saudis. gas, chemicals and banking. Next would There is still a general view that
Nuseibeh said problems also exist come IT. Interestingly though, 71 per companies in the private sector tend
in the Saudi welfare system, which cent of Saudis would like to set up their to see the Saudi population as being
is unevenly distributed. “There are a own business. So they have the appetite short of skills despite the huge strides
lot of Saudis who feel that they don’t to go into business themselves, but in investment in education.
receive as much welfare support as historically have never been trained in it. Government action in the last
they ought to. Yet on the other hand, it’s “In most countries the vast majority 10 years has served to avoid a
really difficult to say accurately who’s of jobs are created in small to medium potentially catastrophic situation
receiving what given that it’s often sized businesses. This entrepreneurial brewing at the beginning of the
broken down by tribe, area, province spirit needs to be fostered in Saudi.” decade. But it knows it has a lot to
and so on.” So what type of job creation Ataya said in the last 20 years in the do and that turning around the
is needed to turn the youth sector into US there would have been a decline tanker will take time. Many say it’s
an asset rather than a liability? in job availability if it wasn’t for not more money Saudi needs, just
Nuseibeh said there’s appetite for companies that were less than five money better spent. ■
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See you at the gate
MP0009-IBG LAUNCH-Gulf Business HP V1.indd 1 10/24/10 3:01:58‭ 73

November 2010gulfbusiness ‬PM
FEATURES TELECOMS SPECIAL REPORT
Calling for growth

Gulf telcos are seeking
quick-fix mergers to
expand. KAREN REMO-
LISTANA asks regional
bosses if growth is
sustainable long-term.
G
CC telecoms
operators are in a
bind. On the one
hand, their home
markets revenues
are shrinking,
meanwhile,
impatient
shareholders are demanding
double-digit growth. The factors
vary from company to company, but
subdued expansion results from
high-penetration levels for the voice
segment, heightened competition and
lower average revenue per user (ARPU)
than ever before.
After years of aggressive growth,
profitability of GCC telecom companies
dropped marginally last year.
According to data compiled by Global
Investment House, the aggregate net
income of GCC telecom companies was
$7.64 billion, 1.86 per cent down from
$7.79 billion a year earlier.
In comparison to Western
counterparts, the region is still
performing well, says Wasim Khan,
Mena telecom leader at Ernst & Young.
“If you look at global benchmarks,
growth comes from cost management
but in the Middle East, all operators
are still enjoying good growth in
terms of top line.”
But soon, the top line will begin to
dry up. Mohamad Mourad, principal Zain head office, Kuwait City.
at Booz & Company says GCC mobile
Reuters

Mohammad Omran, chairman, Etisalat. Peter Kaliaropoulos, group CEO, Batelco. Bashar Awadeh, group chief financial
officer, Zain.
penetration reached an average of 178 Saudi Arabia and India, is losing emphatically pointed out during the
per cent in Q2 2010, the highest among market share in its home market. It Telecoms World conference in Dubai.
all regions globally. reported a decline of 20 per cent in “We’ll be happy to get a single-digit
“Operators are facing increasing its net profits in the first half and top line so we have to work twice
pressure to continue with their forecast its full-year net profit to be as hard and three times as clever as
inorganic growth through lower than BHD100 million, due to before,” notes Kaliaropoulos. “We are
globalisation. But at this stage, there increased competition. now under tremendous pressure. To
are limited new licences being issued “Shareholders want to see grow three to five per cent organically
around the world, hence the drive sustainable growth. They say, ‘Show is a good year, so operators have to
towards consolidation,” Mourad says. me the bottom line, show me the make bold moves and acquire as many
Peter Kaliaropoulos, group CEO dividends’ and if operators fail to operators as they can.”
of Bahrain Telecommunications deliver, investors will park their There will be a new wave of mergers
Company (Batelco), admits that the cash somewhere else,” Kaliaropoulos and acquisitions in the telecoms
years of double-digit sector, particularly in
growth are over and any “areas related to the
growth prospects will no
Despite the drop in GDP and IT provision of advanced
longer be organic. spending, the telecoms industry services for consumers
The company, with was last and least affected by and developing vertical
expertise in information
operations in Bahrain,
Jordan, Kuwait, Yemen, the economic crash in 2008. and communication
technologies for
Total country connectivity measure results for 2009 enterprises”, Etisalat’s chairman
Per cent
Mohammad Omran says.
UAE 352 “The telecoms industry was last and
Saudi Arabia 286 least affected by the economic crash of
Qatar 254 2008,” he says. “Although global GDP
Bahrain 250 and IT spending saw a dip in 2008-09,
Libya 246 telecom company revenues continued
Kuwait 201 to grow. This is because telecom
Oman 189 services have joined the bundle
Algeria 161 of critical services and have some
Lebanon 155 resistance to recessionary pressures.”
Morocco 149 But even if the sector is cash-rich,
Jordan 148 expansion is proving to be difficult.
Tunisia 145 Batelco earlier this year earmarked
Syria 142 $2 billion for acquisition on top of
Egypt 140 its assets in Bahrain, Jordan, Kuwait,
Palestine 109 Yemen, Saudi Arabia and India, but
Iraq 100 remains empty-handed. It had earlier
Yemen 66 lost its bid for the third Saudi mobile
Sudan 51.2 license in 2008 to Zain Saudi Arabia,
which had paid $6 billion and in July,
Source: Capital IQ 50 100 150 200 250 300 350
Batelco’s acquisition of an additional

6.3 per cent stake in S Tel Limited from But even a skyrocket offer can also
India-based Siva Group was cancelled.
It also lost in acquiring a stake in
Shareholders want be justified. For example, Etisalat’s bid
of 1.7 dinars a share or $11.7 billion
Morocco’s second largest telecom to see growth and offer for a 46 per cent piece of Zain
firm, Meditel. if operators fail to Saudi is justifiable because of Zain’s
Despite a slew of unsuccessful bids, “well-established presence,” Shrouk
Kaliaropoulos is patient and optimistic deliver, investors Diab, analyst at UAE-based investment
that they will wager a fair deal within will park their cash bank Rasmala, says. The proposed
the next 12 months. “Batelco is not value translates into 2010 and 2011
valuing companies in huge multiples somewhere else. EV/EBITDA multiples of 16.7x and
just because they are strategic,” he says. 11.6x, respectively, based on Zawya’s
Gulf operators must open up
D espite heightened competition, the

cost of broadband and mobile/fixed
phone calls in the Middle East remains
is normal that in areas like the UAE, prices
are initially high but we expect it to go down
after a certain point.” High tariffs are also a
Only the four local operators – etisalat
and du, and satellite service providers
Yahsat and Thuraya – will be allowed to
one of the highest in the world. result of a lack of competition. offer such services.
According to a study conducted “Because there are only two major “Strictly speaking, my understanding
by independent consulting firm operators in the UAE and they have a large is the regulation does not allow Skype in
Teligen, average mobile tariffs in migrant populace, they want to milk their Oman and in the whole GCC, but the trend
Arab countries are almost double cows as much as possible,” says Mike is to open up,” says Dr Amer Awadh Salim
the OECD states. And although Al Rawas, Omantel CEO.
broadband prices have But if governments are
reduced by up to 50 per cent planning to offer this service
over the last two years, prices too, they should do it quickly,
are still three times greater than says Singh. “They may
the European average. run the risk of being left
Generally, prices in Arab behind,” he says. “It may be
countries have gone down, that the real market value
mostly with broadband services. of the assets would have
But since prices have gone diminished by the time they
down in other parts of the made up their minds.”
world, the gap between prices He insists that as GCC
in Arab countries and European players expand to other
countries remains. Olivier Campenon Mike Singh geographies, they should also
Speeds below 256 kilobyte per be quick to adopt international trends.
second are still common in most Singh, chairman and CEO of Telkom Caribe. “They have invested in overseas markets
Arab countries. “I am a strong believer that the market but they don’t want competition. That is
Yet speeds in this range are hardly will force them to open up. And once the hypocrisy,” he argues.
offered in Europe any more. market opens up, all the inefficiencies will “What’s good for the goose must be
“I am as frustrated as you are that be addressed.” good for the gander. You’ve got to have a
it doesn’t get cheaper. Clearly, there “Competition is essential for the level playing field. They have to revisit their
is a problem in pricing but the trend is end-user in terms of price and quality,” outmoded and outdated legislation and
positive,” says Olivier Campenon, BT Campenon concurs. “But we need to remove the perceived threat that VoIP is
Global Services president for Europe, remember that it takes a long time in going to cannibalise them.”
Middle East, Africa and France. He Europe to get what we are experiencing “I think the GCC is already quite
adds that the telecom business involves today. I am absolutely convinced it will competitive,” Al Rawas says, when asked
massive infrastructure investment, which happen in the Middle East.” if the region is being unfair.
translates to high operating cost in the Customers, meanwhile, have no “But the phase of competition really
first few years. other alternatives. Earlier this year, the depends entirely on the size of the market.
“Overtime, the equipment is being UAE legalised international voice over In the region, we’ve reached a level in
depreciated and then lower prices can internet protocol (VoIP) services for local competition that is satisfactory and that is
be offered,” Campenon explains. “So it operators, but Skype remains banned. why regulators are not opening up further.”

Mohamad Mourad, Wasim Khan, MENA telecoms leader, Karim Khoja, CEO,
principal, Booz & Company. Ernst & Young. Afghanistan’s Roshan Telecom.
EBITDA estimates, higher than the for GCC operators as they start to we expect these deals on average to
average of 9x EV/EBITDA for the most explore new sources beyond the be much larger in value starting in
recently announced telecoms merger traditional bank debt, Mourad adds. 2010 and 2011.”
and acquisitions (M&As) transactions, “Operators may consider revising However, the M&A trend
completed or pending. their dividend strategies in order to does not apply to all. Oman
Despite the high price, Etisalat release funds for investment or they Telecommunications Co (Omantel),
– which operates in 18 countries could tap into the equity or debt for one, has chosen to remain
throughout the Middle East, Africa markets,” he says. “It is clear that M&A concentrated in its domestic market.
and Asia – will not face difficulties is back after a temporary slowdown “We came into the game late so there
in financing this offer. It stands on a during the recent downturn. But now were fewer opportunities,” says Dr
net cash position of about $2 billion it is back in a new form. We expect to Amer Awadh Salim Al Rawas, Omantel
at the end of June 2010. see a smaller number deals compared CEO. “We looked at the options
If its proposed deal to acquire to the wave of M&A prior to 2008, but available at the time and there were
Zain is successful, really very limited offers.
Etisalat will be able to At this stage, there are limited We are still open-minded
gain access to strategic number of new licences being about the issue, however,
markets in the MENA we are not aggressively
region, including Iraq, issued around the world, hence pursuing any new
in addition to Kuwait, the drive towards consolidation. markets.” Omantel lost
Bahrain, Morocco
and Jordan. This could open up a
potential consolidation opportunity
Connectivity related to GDP per capita
in Sudan, where Etisalat already has
a fixed-line operation.
Diab said Etisalat’s strong cash
T he UAE is the most connected
country in the Arab world according
to the Arab Advisors Group’s annual Total
communications services at the same
time. However, the measure still yields
an accurate and informative picture on
balance and potentially strong Country Connectivity Measure (TCCM). the level of ICT services adoption in each
ability to raise debt should enable Saudi Arabia and Qatar follow second country, the group claims.
it to comfortably finance M&A and third positions respectively. The “By looking at the TCCM scores,
deals through a combination of group calculates its TCCM by adding it is noticeable that high scores are
both equity and debt – a mode of the household mainlines penetration, correlated with high-income levels,”
fundraising which Batelco plans cellular penetration, and internet users says Samer Abbas, senior research
to emulate. penetration rates in each country. analyst at the Arab Advisors Group.
Batelco is looking at raising debt The household mainlines penetration “GCC countries dominate the TCCM,
and is being advised by JPMorgan is measured by dividing the residential as income levels and GDP per capita in
Chase & Co on getting a credit rating mainlines by the number of households these countries is significantly higher
by the end of this year. “Believe it or in each country. The TCCM shows the than the rest of the Arab countries.
not for a company without debt, the extent of connectivity of individuals in a Moreover, countries with competitive
easiest thing to do is to arrange the certain country whether via fixed lines, markets have seen their scores
debt. The toughest thing to do is to cellular lines and/or the Internet. improve rapidly as competition drove
find an acquisition target at the right There is an expected overlap since down rates and enhanced awareness
value,” says Kaliaropoulos. many individuals will be using these three amongst consumers.”
Overall, funding is not a hindrance

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2010
its fixed-line monopoly to Nawras will you see in other regions?

this year but is still enjoying At one point, we were in 23
customer growth. In the first quarter geographies and gluing the soft
of this year, it took a higher share side, or the human side, is the most
of new subscriber additions. It difficult part.”
accounted for 66.6 per cent of new Operators agree that at the end of
subscriber additions while Nawras the day, what matters most is that
accounted for the rest. customers are served well. Karim
“The market estimate for growth is Khoja, CEO of Afghanistan’s Roshan
12 to 15 per cent,” says Al Rawas. “We Telecom says success is dependent
have 2.2 million mobile subscribers, on satisfying customer needs. “We
and this this will increase, despite have to identify our customers. In
the fact that we are 148 per cent Afghanistan, there is, an estimated
penetrated.” Omantel’s decision not $10 billion drug money market but
to join the M&A bandwagon means it obviously we do not consider them
cannot grow as fast as its peers but enterprise customers,” he says.
it also means it is spared from the Dr Amer Awadh Salim Al Rawas, Despite an environment where
CEO, Omantel. threats of Taliban attacks abound,
teething pains of consolidation.
According to Harvard professor investment. “Most M&As fail not where life expectancy is 44 years,
Michael Porter, between 50 per cent because of financial fundamentals, and where having no electricity is
and 60 per cent of acquisitions are but because of non-fitting culture,” the norm, Khoja says the company
failures. In 1995, Mercer Management says Bashar Awadeh, group chief continues to see 10 per cent growth.
Consulting noted that between 1984 financial officer of Zain. “In the For Khoja, there are other ways to
and 1994, 60 per cent of the firms Middle East there are different grow the business aside from M&As.
in the “Business Week 500” that had cultures so how many differences “I can launch a BlackBerry service
made a major acquisition but only 12 can use it,”
were less profitable than We came into the game late. he explains. “So what
their industry. In 2004, we did was we created
McKinsey calculated
We are still open-minded but are a service where farmers
that only 23 per cent of not aggressively pursuing any can call in and enquire
acquisitions achieved about the price of crops.
a positive return on
new markets for the moment. And it became a hit.” ■
Top 10 telecoms companies in the GCC

Company name Location Capitalisation Total revenue Gross profit [LTM*]
$million $million $million
Emirates Telecommunications Corporation United Arab 23,139.4 8,476.1 4,038.2
(Etisalat) Emirates
Saudi Telecom Company (STC) Saudi Arabia 20,531.4 13,617.9 7,217.7
Mobile Telecommunications Company Kuwait 18,307.4 8,159.0 5,882.1
Etihad Etisalat Company Saudi Arabia 10,312.4 3,893.4 2,130.4
Qatar Telecom (Q-TEL) Qatar 6,994.7 7,032.4 6,635.1
Emirates Integrated Telecommunications United Arab 3,335.5 1,673.4 985.6
(Du) Emirates
National Mobile Telecommunications Kuwait 3,329.0 1,740.7 1,039.5
(NMTC)
Mobile Telecommunications Company Saudi Arabia 3,061.1 1,137.3 424.2
Oman Telecommunications Company Oman 2,360.0 1,123.3 639.7
(Omantel)
Bahrain Telecommunications Company Bahrain 2,081.7 921.0 568.6
(Batelco)
*Last 12 months; reportedly Source: Capital IQ

PROFILE RETAIL
Hold the mayo

Freshii, an ultra-healthy
deli that’s taking the
world by storm, has
landed in Dubai.
RYAN HARRISON reports.
C
anadian
entrepreneur
Jennifer Ridgway
wants you to
put down the
hamburger and
step away from
the fries. Drop
the chicken wings and exit the
restaurant quietly. The ex-private
equity fund manager and MBA
graduate is attempting to instigate
something of a healthy eating
revolution in the UAE. Her plan is to
do it one salad at a time.
With her husband, Michael Boocher,
a retail sector specialist, Ridgway is
to launch Freshii Dubai, a franchise
of the brand dubbed the Starbucks of
fresh food.
Freshii has a rock solid North
American presence as a restaurant
chain that serves on-the-go customised
salads, wraps, burritos, yogurts, soups
and rice bowls. The company’s tag line
is “Fresh food. Custom-built. Fast.”
Photo: Farooq Salik
But Ridgway and Boocher think

Dubai – where fried food and obesity
reigns – has the appetite for a detox.
It’s a hard sell, they admit.
“It was a concern for us and we
thought carefully about it,” says children.” Earlier this year, the UAE UAE the unwanted accolade of being
Ridgway. “The world we come from has government rolled out a national the country with the second-highest
experienced a health and fitness craze nutrition strategy to help fight its incidence of diabetes in the world.
in recent years. Dubai and the UAE are obesity epidemic, saying it may force One in five residents over 20 suffers
slightly different. fast food companies to inform people from the debilitating disease.
“But recently there has been a of exactly what’s in their products. The husband and wife team, who
huge government push on diabetes Unhealthy eating habits and a have lived in the UAE for two years,
and health disorders, particularly in general lack of exercise has given the found the ‘Dubai stone’ adage to

PROFILE RETAIL
be true, as they themselves were going to be Qatar and Oman as the difficult to keep that promise. “It was
swiftly sucked into a sedentary and healthy next step for us. a difficult challenge and we were
unhealthy lifestyle. “Saudi would be a very big step for worried that we’d have a hard time
“There was simply a lack of good, us as we don’t have the experience in having products available to us. But
wholesome, healthy options to kick us that market, although I have no doubt we have negotiated deals with three or
out of this rut,” says Ridgway. that the concept would work.” four suppliers in the region, Delmonte
So, last summer the couple started The couple is targeting Freshii’s being the primary one.”
talks with the Freshii people. well-trodden catchment areas: places So what kind of prices can
After striking a deal, they paid an in a city that have repetitive foot customers expect?
upfront franchise fee to Freshii and traffic. Given that as much as 80 per “We’re priced above the sandwich
contribute a percentage of their gross cent of Freshii’s customers are return restaurant Subway, but it’s a
sales from outlets in the region. customers, it makes sense. completely different proposition.
Their flagship store recently opened There’s only one problem. Dubai is You also get a lot more quantity; to
in the Dubai International Financial not exactly pedestrian-friendly. eat through a Freshii salad is a real
Centre, in what will be the first of five “Finding places where people challenge,” says Ridgway.
in the emirate.But why pick such a regularly walk in Dubai was definitely What Ridgway is attempting in
seemingly tough market like Dubai? a critical factor,” says Ridgway. Dubai is something that would be
Boocher says: “This is our home now “Although we’re better off than five balked back in her native Canada.
so we wouldn’t have thought to do it years ago when people just snapped up Taking such a risk on a volatile market
anywhere else. The place is a growth real estate just to get a foot in the door. is just not Canadian.
economy and accustomed to rapid We can be more selective now. Typically, the national psyche has
change. Therefore, bringing in a new “It’s likely to be JBR, Media City leant towards the fiscally conservative,
idea doesn’t seem that hard compared and large office complexes. To begin with little appetite for daring exploits
to more mature economies that are with, DIFC employees have a higher in foreign markets. For instance, unlike
more set in their ways.” pay scale generally compared to in the UK or US, Canadian banks
Freshii also recently launched in the average UAE resident, but more didn’t dabble in the complex financial
Vienna, its first European outlet. Since importantly they have access to a instruments and mortgage securities
the store’s opening in Toronto in 2005 more international community and that brought down the world economy.
Indeed, in the past, rarely has
There are not that many independent, the Canadian economy featured in
discussions between global leaders.
internationally exposed Canadian brands. As a national stereotype, Canadians
So it seems only the strong will survive. have lived a friendly but benign and
inert existence.
it has rapidly expanded across North are therefore exposed to different So the fact that Ridgway is taking
America and now has 60 locations open and often healthier lifestyles.” a punt on a hot-blooded market like
or under development in 18 countries. Eventually it is hoped that about 20 Dubai might be considered out of step
There are 21 Freshii locations in per cent of the Dubai business will with her inner-Canadian.
Canada and the US. Nine of these, come from large office orders. She agrees, with a chuckle, but
including several in Toronto and one Boocher is a self-proclaimed adds: “Canada is a huge country with
in Chicago, are corporate-owned. The serial entrepreneur who to-date has a small population. Most of the cities
rest, such as locations in Denver and launched three retail businesses with large populations border the US,
Washington, are franchises. in Dubai, most recently an arcade so if brands can make it there then
About one new Freshii restaurant style lounge and snack shop they have the confidence to make it
opens each week. By the end of 2010, for residents of a new housing anywhere, especially Dubai.
60 Freshii restaurants will be open development. “There are not that many
around the world from Los Angeles The cash generated from these independent, internationally exposed
to Vienna. By the end of the year, the ventures was put towards securing Canadian brands. So it seems only the
company is expected to bring in $50 the Freshii franchise last year. strong will survive. We’re confident
million in sales. Boocher says part of the Freshii Freshii is one of these.”
Boocher adds: “For us, we’re now ethos is sustainably grown The brand and concept for Freshii,
looking at five stores in Dubai, and ingredients and an environmentally it seems, is as strong as it is healthy.
if they prove successful then we will aware atmosphere. What may trouble Boocher and
open to other emirates, starting with Again, in an import-reliant economy Ridgway is the strength of the UAE’s
Abu Dhabi. Outside that, it’s likely such as Dubai’s it must have been resolve for fast food. ■

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OFFICE SPECIAL . . .. .. .. ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ...
Working Spaces
91 98
Furnishing demand Happy workplaces
The office fit-out sector is set for How to ensure your office
major growth across the GCC in the environment gets the most out
next decade. of your employees.
Supplement gulfbusiness 89
al ain municipality.pdf 10/25/10 4:35:13 PM
CM
MY
CY
CMY
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Furnishing demand
Research suggests that the GCC is leading the way in terms of new
commercial office projects. MARK ATKINSON investigates what is in
the pipeline and finds out what this means for the fit-out market.
By 2012, estimates
suggest that 46.4
T
iStock
here seems to be no million square feet of
exaggeration in the commercial space will In Dubai, reports have been rife
numerous reports of how about empty offices and plummeting
much new commercial be completed across prices, which, as most real estate
supply is coming onto the GCC. firms seem to agree on, is set to get
the market. Research conducted worse before it gets better. “The
by Ventures Middle East suggests that By 2012, estimates suggest that around amount of supply coming onto the market
GCC commercial projects between 2009 46.4 million square feet of commercial implies a vacancy rate of 55 per cent by
and 2010 are valued at $34 billion, with space will be completed across the GCC. 2012 – it is currently around 25 per cent,”
projected interior design spend at $4 The value is immense. Pipeline projects says Charles Neil of Landmark Properties.
billion. In the UAE alone, projects worth in the longer-term are reported to be $761 “Dubai and Abu Dhabi certainly will be
$22 billion are expected to generate an billion – many of which are scheduled for the cheapest cities in the GCC in terms
estimated fit-out spend of $2.7 billion. completion before 2020. of commercial office space by the end
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of 2012.” Still, a Jones Lange LaSalle huge opportunities. There has

report suggests that Dubai has the
world’s fastest growing ‘occupied’ office
Now is a good time been huge spending in a bid to
educate the country’s large youth
market per capita. If one considers to capitalise and set population, particularly with
the scale of building over the past few themselves up in key the launch of the King Abdullah
years, dwarfing that of just about every University of Science and
other city in the world, a current 25 areas such as Technology. This is an area that
per cent vacancy rate does not seem Sheikh Zayed Road, will continue to accelerate.”
quite so dramatic. During the boom Certainly one needs to look
years, it was estimated that almost 30 which they may beyond the office sector alone to
per cent of the world’s cranes were busy previously have been see the fit-out opportunities in
building Dubai. areas such as retail, healthcare and
priced out of. hospitality – as many hotels look
Opportunity abounds to renovate their existing stock.
Considering what is in the pipeline, With its considerable projected population
prospects for the architecture and design Trade Centre. “Qatar’s massive public growth, Saudi Arabia needs to build
industry have never looked better it spending in 2010 includes the new airport across all areas. The kingdom is pushing
seems. “Qatar’s real GDP has grown an and new city areas such as Lusali. This has tourism and has huge expansion plans
average of 17.4 per cent over the last five given interior designers billions of dollars for both its healthcare and commercial
years, making it one of the fastest growing of contracts that have simply replaced the office sectors.
economies in the world,” offers David delayed work in Dubai. “Companies are interested in setting up
Wilson, event director for the Office “Saudi is also presenting the in Saudi Arabia,” confirms Jason Burnside
Exhibition, held annually at Dubai World architecture and design market with from architectural firm Godwin Austen
Photo courtesy of Knoll Inc.
92 gulfbusiness Supplement
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...................... OFFICE SPECIAL
while there are 1.3 billion people within

three hours flying time. All this means that
the UAE’s long-term objective to be the
Middle East hub of commerce could soon
be realised.” In some ways, it already is.
When Dubai Logistics City, part of Al
Maktoum International Airport,
is completed, it will be the largest logistics
hub in the world. If completed on the scale
originally planned, its annual cargo capacity

of 12 million tonnes will be three times that
of Memphis in the US, currently the world’s
largest logistics hub.
“Commercial office space is set to double
in Dubai and Abu Dhabi in the next two
to four years,” Wilson continues. “New
Johnson. “We’re getting more enquiries for have done well in the recession,” says office space will fill the market with higher
fit-outs and architecture, as at the moment Burnside. “For them, now is a good time to quality offices as developers try to compete,
there simply isn’t enough supply.” capitalise on the current situation in Dubai differentiate and make themselves more
and set themselves up in key areas such attractive to new landlords. This will
Shifting sands as Sheikh Zayed Road, which they may drive office rents and make both cities
In the UAE, while several of the bigger previously have been priced out of..” far more attractive centres for business,
pipeline projects are in Abu Dhabi, many As Wilson adds, “Currently, the taking away from the likes of Kuwait,
of Dubai’s small to medium-sized projects infrastructure in Dubai and Abu Dhabi Bahrain and even Saudi Arabia.” Yet he feels,
are full steam ahead. “Some companies includes world-class airports and seaports, while the corrections in the commercial
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property market are fraught with Equally, many companies in

opportunity, a lot still hinges on Dubai are making do with what
stimulating investor confidence: Commercial office space they have, or what the last firm
“The government really needs to is set to double in left behind. As Neil explains,
strike now to introduce stimulus “Landlords are now saying to
measures that leverage this improved
Dubai and Abu Dhabi in companies moving out to leave
affordability, encourage the growth the next two to four years. partitions and other fit-outs as
of industries and fill space that they are, so they can utilise them
currently might be vacant.” for the next client. This makes it
easier for them to lease the property
again. Landlords are also becoming more
flexible, doing office fit-outs themselves
– full or partial.”
Certainly, with a maturing market and
tighter economic conditions, there has
been a change in approach, Burnside
says: “In the GCC in general, rather than
demolishing, people are looking much
more at refurbishment, which is closer to
the European model.”
Finally, while the mad rush of the
boom years may well be over for the
longer-term, it is not necessarily a bad
thing for the architectural and design
industry. As Burnside concludes, with

the fact that companies now have more
time to plan properly, there is more of
an opportunity for design to come to the
forefront and companies can get the best
value from their working space.
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The right fit-out

Gulf Business talks to the experts about office layouts and
technologies that ensure workers feel comfortable and productive.
T
he statistics don’t look good. discomfort from their computer screen as “Although there’s no data for the Middle
A survey conducted at last sources of their discontent. East region as yet, research by a number
year’s Office Exhibition of Employers should take heed simply of companies in the USA has shown that
1,000 respondents across from an economic perspective. Reports ergonomically-designed offices increase
the GCC, revealed that suggest that lost work hours through productivity by as much as 15 per cent,
almost 90 per cent are de-motivated by repetitive strain injury for bad posture, reduce back-related absenteeism by 50 per
their working environment, while only the wrong type of chair, a badly-designed cent and decrease staff turnover from 40
six per cent reported that their office workstation, or not taking enough breaks, per cent to five per cent,” asserts Rachel
environment has no impact on motivation. costs businesses a reported $2.9 billion, or Savage, design manager, CitySpace. “The
Many respondents cited back pain and 10 million days sick leave, in the UK alone. statistics give an overwhelmingly clear
message – people want, and need, a
working environment that supports
The statistics give an their health and well-being.”
overwhelmingly clear Ergonomic approach

message – people From Savage’s point of view,
ergonomics goes well beyond the
want, and need, a realms of desks, chairs and computer
working environment peripherals: “Many people still
believe that ergonomics just relates
that supports their to our keyboard and mouse set-up
health and well-being. or seating adjustments, but it is far
more comprehensive than that.
“An ergonomic office is one
where the work environment is designed
according to the needs of humans, to
promote health and safety and ultimately
optimise motivation and productivity.
In workplace design, this means taking
into account elements such as overall
space planning, desk/furniture size and
shape, storage height and proximity
and circulation space so that people can
work comfortably and efficiently. It also
encompasses our reaction to lighting
Rachel Savage, levels, access to natural light, air quality
design manager, and acoustics. All these factors play a
CitySpace. role in determining whether an office is
ergonomic or not.”
“Acoustics are very important,” agrees
Peter Donaldson, sales director at Xworks
Interiors. “The two main things are having
a carpeted floor and acoustic ceiling tiles,
......................
OFFICE SPECIAL . . .. .. .. ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ...
Does
Is it te chnology
e Flexible? suppor t
Tim nt ?
Spe it? Is it a
critical
factor?
Space
Quality of air
Increase natural light Increase
productivity collaboration
Amenities/services +
knowledge
Ergonomic sharing
h e n Storage
re n t
g d furniture
st bran s + Attract
e
valuethos Privacy
V’s
+ Retain
Access talent
EFFICIENT
WORKSPACE
SUCCESSFUL COMPANY
CitySpace
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both of which absorb sound. As a general with no input from the very people that
rule, soft surfaces absorb sound while hard count the most. “A lot comes down to
surfaces reflect sound.” management style,” Donaldson asserts.
In terms of layout, closed door is “Many companies don’t actually get their
fast giving way to open plan, hence a staff involved in what they’re doing.”
more collaborative environment. “More Great Place to Work Institute, whose
companies are bringing managers out of workplace design evaluation and
private offices to be part of the team, which consulting service operates across 45
helps with relationships, efficiency and in countries worldwide, recently opened its
breaking down barriers,” says Donaldson. doors in the Emirates. Michael Burchell,
Physical barriers are being reduced with the company’s partner and director in the
lower, or glass, partitioning – the latter of UAE cites the example of the DreamWorks
which still provides some privacy while Animation office in terms employee input.
increasing natural light. “During the planning process for a
Yet a lot of companies get it wrong new building, the company conducted
from the word go, forging ahead meetings with each department to elicit
More companies are

bringing managers out
of private offices to
be part of the team,
which helps with
relationships and
breaking down barriers.
Peter Donaldson, sales director at Xworks Interiors.

Architecture
Interior Design
Engineering
www.lwdesigngroup.com
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iStock
opinions on everything from work modern corporate design is continuing

space configurations to desk size,” The greatest influencer technological improvement such as the
he explains. “As a result, the design growing prevalence of smartphones,
team made important modifications on corporate design virtual conferencing and virtual private
that would save the company money is new technological networks (VPNs), which has allowed
and help to create an even more employees to push the limits of the office
aesthetically beautiful and functional improvements such as further into virtual realms.”
environment. The opportunity to the growing prevalence With the growth of the virtual office,
be a part of the decision-making it is perhaps only natural that designers
process also gave employees a greater of smartphones. and companies are putting another
sense of ownership and control over practical spin on office design.
their physical environment…the
best companies create physical work The case for ergonomics
environments that respect the Studies have suggested that employers generally pay little attention to the impact of
people working in those buildings.” repetitive strain injury – neither from an employee’s perspective nor in terms of the
costs to businesses, which run into billions of dollars in lost work time. Looking at the
Virtual working UK market, only 17 per cent of businesses assess the cost impact of back injuries, a
As one might expect, technology is also mere 11 per cent consider the cost impact of RSI, while just 22 per cent provide any sort
playing an increasing role – in and out of treatment or rehabilitation in the event.
of the office. “Research shows that we’re RSI conditions include joint stress, ligament injuries and back problems from bad
only at our workstations about 35 to 40 posture, badly-designed workstations or using the wrong chair. For businesses, a few
per cent of the day,” comments Stacy ergonomic investments around the office may end up as a big saving.
Straczynski in Contract, an office design Source: The English Times
publication. “The greatest influencer on

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iStock
It is not so much about

cramming in as many
“In the current economic climate design-related questions our clients have
of the GCC, getting the best people as possible... been asking us.”
value from the investment in it is about optimising The different facets of office design
corporate real estate – whether go far beyond a desk, chair and coat of
owned or rented, is a major the space and being as paint. Going by the Office Exhibition
factor influencing office design,” flexible as you can. motivation survey, GCC businesses
says Savage. might do well to take note.
“However, it is not so much
about cramming as many people into a With 90 per cent of the GCC workforce demotivated by their office environment. Here are
space as possible…it is about optimising some things businesses can consider to reduce discontent.
the space, being as flexible as possible,
looking at creative ways to provide multi- tEnsure there is sufficient light and a variety of lighting, both natural and artificial.
functional zones and looking at the various tProvide different work areas with their own temperature controls and access to fresh air.
ways people work – whether office-based tUse furniture and décor to ensure that noise levels are not disruptive, including fitted
or mobile. Do all employees need to ‘own’ a carpets/carpet tiles and acoustic ceiling tiles.
desk or could we consider desk-sharing or tMake sure there are areas to converse privately, enough space for group meetings and for
mobile work? the workforce to rest/stretch out occasionally.
Can the break-out space double up as tEnsure sufficient passageways to easily move around the office, and easy access to
a meeting room? What is the best desk printers, photocopiers and beverage making areas.
or workstation configuration which tDesign the office to be inspiring to the workforce (colours, textures, choice of furniture/
will accommodate for fluctuations in décor, adequate safety standards).
headcount? These are just some of the Source: TradeArabia

How Do We Power
The Future?
Is it by developing the next-generation solar thermal technology

or by funding tomorrow’s leading cleantech companies? Is it by
providing market-driven incentives to reduce carbon emissions
or developing carbon capture networks? Is it by nurturing future
energy leaders or by developing a cleantech cluster? Actually,
it is all of the above and just the start of things to come. After
all, what we are creating in Abu Dhabi is a centre of excellence
dedicated to renewable energy and sustainable technologies.
To find out more email info@masdar.ae or

visit us online at www.masdar.ae
www.greenabudhabi.org
Join us in painting the town green with Green Abu Dhabi 2010,
taking place from 14th October to 6th November,
at the Emirates Heritage Club, Abu Dhabi
Masdar is a proud supporter of Green Abu Dhabi 2010
Official Publisher
F LIFESTYLE TRAVEL
Asian
allure
Hong Kong retains its dual charm,
combining state-of-the-art business
facilities with beguiling heritage,
writes Charles Pocock
T
he gateway to trade in China, Hong Kong is a
vertical city that lives and breathes business and
money. This regional hub bursts at the seams with
international business headquarters, from HSBC to
Jardine’s and Swire.
But it’s the juxtaposition of the ages that makes this
city so special: the colonial architecture and fading
habits of the late 19th century British Empire, infused
with the modern-day speed, design and ways
of doing business.
Corporate deals are brought headlong into the future in
surroundings such as Lord Foster’s HSBC building and
IM Pei’s Bank of China.
Hong Kong is separated into two areas: Hong Kong
Island and the mainland. An efficient and clean metro
system links the main parts of Hong Kong, with an
ultra-fast airport city link whisking you into Central.
Be sure to buy an ‘Octopus’ from the station for your
travels, the metro debit card that allows you to just
swipe and go. With the city’s chaotic traffic system and
no car parking in sight, you’ll find that the metro is used
by all walks of life.
Business aside, Hong Kong is a shopper’s dream, with
the latest brands presented in a novel way. The city is a
pioneer in its presentation of shops and malls, with a
totally different experience to that encountered in Dubai.
There is an innovative walkway in Central that connects
all the major hotels, transport links and shopping areas –
so, even as the Prada, Giorgio Armani, Loro Piana, Dunhill
and Louis Vuitton boutiques glide by, you’ll hardly feel
that you’re in a mall.
As you’d expect, this exotic business metropolis offers
a multitude of hotels, catering for all types of business
traveller. Some of the hotels are the best in the world –
the Mandarin Oriental, Four Seasons, W Hotel and the
East Hotel all come highly recommended.

Destination checklist
JOIN THE JET SET
The Peninsula, Hong Kong’s most historical hotel, offers exclusive
helicopter experiences, providing a unique link between the
old and the new. The departure terminal is crammed
with rare aviation memorabilia, evoking the glamour
of a bygone era. To get a birds-eye view of this great
city, take off from the Peninsula’s helipads. It’s the
only way to see Hong Kong. (+ 852 29202888, www.
peninsula.com/hong_kong).
SUITS YOU
Hong Kong is famous the world over for its tailors,
however, there are two notable outlets. The best
for suits is Loa Hai Shing in Central – The Wong’s
are superb and will not disappoint (+ 852 2523
6167). Opposite from Loa Hai Shing are Jantzens,
Hong Kong’s top shirt makers (+ 852 2810 8080).
Both are on Des Voeux Road in Central and are
opposite each other.
CANTONESE CUISINE
Man Wah at The Mandarin Oriental Hotel (+ 852 25231970, www.
mandarinoriental.com/hongkong) and the Luk Yu Tea House (+ 852
2523 1970) are two of Hong Kong’s superior culinary
experiences. Man Wah is pure high-end delight, while
what makes Luk Yu a must-see is its tradition: the
eatery has remained unchanged for nearly 80 years.
More ignomiously, Luk Yu was the scene of an
infamous assassination in 2002, where the hit-man
casually ate his meal, paid the bill, and well, you can
guess what happened next.
SENSATIONAL SPA
Four Seasons offers one of Hong Kong’s premium
spas. Replete with state-of-the-art thermal baths,
steam rooms and pools, all treatment rooms look
out over the harbour. Above all, the rooms and
amenities are spacious and cannot be matched
by anywhere else in Hong Kong. (+ 852 3196 8888,
www.fourseasons.com/hongkong).
WHERE TO STAY: MANDARIN ORIENTAL

With majestic suites overlooking the harbour and all the services needed
to run an office from your room, the Mandarin Oriental is deserving
of its regular plaudits. What’s more, this hotel
offers some of Hong Kong’s greatest restaurants.
Be sure to try the Michelin-starred offerings of
Pierre Gagnaire (two stars) the Mandarin Grill
(one star) and the excellent Man Wah. Built
in 1963, this superb hotel has recently been
overhauled, bringing it into the modern day
while retaining many of its original features.
(+ 852 25231970, www.mandarinoriental.com/
hongkong).

F LIFESTYLE CARS
Pole position
The elegant, hard-topped version of the BMW Z4 doesn’t disappoint
on Dubai’s roads, writes Alicia Buller.
I
’ll let you in on a secret. I’ve wanted The new Z4 actually has a double- inducing 5.2 seconds, while the top
this car forever. But when the BMW sided personality. You are offered speed is 250 km/h.
Z3 model first came out in England a choice between the harder, more The car feels well-made. Every
around ten years ago, it was called thrilling drive of having the top down aspect of the design has the luxury
the quintessential ‘hairdresser’s car’ – while driving with the roof closed BMW hallmark – but most of all,
– something I always put down to can make the car feel like a standard it’s fun. I test-drove the BMW Z4
thinly-veiled jealousy. luxury coupe. around the Palm Islands in Dubai
It was the first mass-market This choice adds considerable early one morning.
roadster introduced by BMW, a zippy dimension to the joy of the journey. The car lets you feel like you own
and stylish model that carved a There’s also a second contrast: the the road with its racing-style seats
special place in the English psyche model’s classic, imperial lines placed so close to the ground. Whether you
and the rest of the world. with a cutting-edge engine. have the roof down or up, it feels like
The Z4 model was initially released This is an extremely sporty model, a true racing car, and that’s the best
in 2002 and it won Automobile which comes with a choice of three thing about it.
Magazine Design of the Year Award. engine sizes from 2.5 litres to 3.2 As a regular (and lucky) reviewer
Last year, the anticipation was similar litres. I drove the BMW Z4 sDrive35i: of luxury cars, I’ve developed an
– only this time for the new hard- a straight-six petrol engine with twin additional layman’s barometer of a
topped version of the Z4. It doesn’t turbo and direct fuel injection. car’s desirability – how many people
disappoint. The new model retains all This car really does go and will stare at it when you’re at the traffic
the fun and cheekiness of the BMW transport you around Dubai in virtual lights. The hard-topped BMW Z4 tops
Z3 and the original Z4, but with a new milli-seconds if the traffic is good the league this year. Not so much a
touch of elegance. The Z4 does 0–100 km/h in a G-force- hairdresser’s car now, eh? ■

ART
Abu Dhabi Art:

The connoisseur’s event
In contrast to Art Dubai’s cutting-edge fare, the capital emirate offers
higher-priced, museum-quality works, writes Charles Pocock.
A
bu Dhabi Art is a a large collection of modern Iranian
platform for modern and art being withdrawn from their
contemporary art and aims recent sale in Dubai, this should
to bring artists and art lovers prove to be a provacative discussion.
together from all over the world.
The event runs from November 4 to Galleries
7 at Emirates Palace and Manarat Cy Twombly, The Rose (IV), 2008 Abu Dhabi Art includes 50 galleries.
Al Saadiyat. These galleries hail from 17
different countries and represent
Exhibitions a wide range of art from around
Opening the Doors is the most the world. The aim of Abu Dhabi
comprehensive exhibition of Art is to place emerging, as well as
Middle Eastern modern and established, galleries from both the
contemporary art ever held, all region and the world alongside each
from private collections. Featuring other in a platform of open dialogue
over 80 museum-quality works and communication. A full list can
of art from artists of the region be seen at www. abudhabiartfair.ae
and of Middle Eastern origin, this A number of questions have been
collection showcases works by Dia raised about how Abu Dhabi Art
Al Azzawi, Parviz Tanavoli, Shafiq differs from Art Dubai and what is
Abboud, Jawad Salim, Msssoud the difference. Abu Dhabi Art is a
Arabshahi, Ismail Al Sheikhly, heavyweight show with a focus on
Mahmoud Mokhtar, Ismail Fattah, modern and contemporary art. There
Parviz Tanavoli, White Heech, 1970
Adam Henein, Abbas Kiarostami is a heavier academic side to Abu
and others. This is held at Dhabi Art, it does not emulate the
Emirates Palace. carnival atmosphere of Art Dubai
Another exhibition worth and it is a lot more serious.
visiting is RSTW, a world premiere I was on the phone last week to
of masterpieces from the private Antonia Carver, fair director of
collection of renowned collector Art Dubai, and we discussed the
and art figure, Larry Gagosian. position of artists like Azzawi,
This event features works from Ed Ruscha, Robin, 1963 Tanavoli, Kiarostami and other
artists Rauschenberg, Ruscha, modern masters and their place
Serra, Twombly, Warhol and This will be followed by the book within Art Dubai. She told me the
Wool and runs from September launches of the monographs relating guidelines for Art Dubai are being
22 to January 24. RSTW aims to to the two masters of modern revised to include only cutting-
challenge the perception of what it Middle Eastern art. To have the two edge art. This now defines the
means to be a private collector and leading artists from the Middle East difference between the two fairs in
public figure simultaneously. This and the two leading art historians the Emirates; Abu Dhabi presents
is held at Manarat Al Saadiyat. discussing art in the region, will museum-quality work, international
be a first in the history of art in the and Middle Eastern, modern and
Debates region and a must-see. contemporary at the very highest
There are also a number of The Auction House debate will level, whereas Art Dubai presents
important debates and panel feature representatives from the cutting-edge, contemporary and
discussions through the fair. Artcurial, Bonham’s, Sotheby’s and more affordable. The two fairs, both
Art from Iraq and from Iran Christie’s. The houses will discuss equally interesting, cater for very
features Dia Al Azzawi, Parviz their influence on the art market and different markets.
Tanavoli, Nada Shabout and Shiva their relationships with galleries.
Balaghi, moderated by Philip With the Christie’s scandal exposed Charles Pocock runs the
Kennedy of New York University. by the Financial Times resulting in Meem Gallery, Dubai.

ESSENTIALS BOOKS
Born to lead?
In search of an answer to the age-old question ‘are leaders born or made?’ Gulf
Business looks at two very different books that explore the concept of leadership.
Persuasion why, for example, almost everyone

thinks hard-working male executives
James Borg, Pearson are high-flyers, whereas females
E ver wondered what it’s like to

get people to do what you want,
whenever you want? That’s what
CEOs are viewed as iron-maidens.
Is it because – somewhere in the
primitive psyche – we secretly think
Persuasion intends to help you do. women should live in domestic and
Written in an easy-to-read, workshop maternal servitude, following the
style, the book takes you through the long-established pattern of our
steps it takes to become one of those female ancestors?
people who seem to effortlessly get It’s not an easy feat to cover the
people on their side. The truth, says entire history of anthropological
Borg, is that charm is never effortless history and keep your readers awake
and requires knowledge and training. at the same time, but authors Mark
Based on years of analysing the van Vugt and Anjana Ahuja sprinkle
behaviours and mind-sets of the practical humour throughout the
most persuasive people around, book with some success. With
Persuasion guides you through and the ‘antagonist’. Another key Selected, you’ll come away satisfied
some of the most difficult work and section is ‘negotiation’, which takes that you‘ve glimpsed around 80 per
life situations and offers a master- you through how to get what you cent of human society through the
plan applicable for most scenarios. want on the telephone by using some ages and gained some understanding
Some of the keys include empathy, choice words and flattery. of how history affects the workplace
listening and reading body language. Ultimately, Persuasion is a ‘self- up to the present day.
You’d also be surprised just how help’ book that encourages us to
much persuasive power you can brush up on our interpersonal skills
claim simply remembering someone’s and become more aware of how we
name and life details. come to across to others, which is
Persuasion is full of useful never a bad thing. Are you persuaded?
practical tips, which even when
used alone could have long-lasting Selected
results. For example, did you know
using the words ‘why?’ or ‘you’ when
Mark van Vugt and Anjana
attempting to address poor behaviour
Ahuja, Profile Books
simply creates resentment and
doesn’t resolve the root problem?
Most usefully, the book offers a
If you want to know why some
people lead and why others follow,
then Selected is the book you have
detailed section on how to deal with been waiting for. Jam-packed with
‘difficult’ personality types; the psychologal theories and historical
list includes a range of characters background that stretches all the
we’ve all come across, from the way back to the BC era, this book
‘explosive’ to the ‘self-important’ attempts to scientifically explain

Hotel Collection
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Data monitor
Compiled by Karen Remo-Listana
116 TOP DEALS

Mergers & acquisitions
Public equity offerings
Public debt offerings
Private placements
118 GCC ECONOMIC INDICATORS

Real GDP & CPI inflation
Market overview
World commodity markets
118 IN FOCUS
Debt: Demand from corporates strengthens
Economy: Copycat phenomenon threatens growth
119 COMPANY WATCH

DIB: A penny for your stake
Qtel: Solid results despite heated competition

TOP M&A TRANSACTIONS
Deal Value ($m) Bidder Target Deal Description
255 Dnata Alpha Flight UK Limited Dnata, the UAE-based company engaged in providing transportation, leisure and business support services, has agreed
to acquire Alpha Flight UK Limited, the UK-based provider of food catering services to the airline industry, from Autogrill
S.p.A., the listed Italy-based operator of retail food and beverage outlets, for a total consideration of GBP160 million
including net debt of $60 million. The proceeds from the sale of Alpha Flight UK will be used by Autogrill to pay off
EUR162 million of debt. Alpha Flight UK which was a part of Alpha Airports Group was acquired by Autogrill in 2007 for
GBP193.6 million. The transaction is subject to the approval of the anti-trust authorities and consent of certain financing
banks of the Autogrill Group and it is expected to close by December 31, 2010.
220 Lafarge SA; and Karbala Cement Plant Lafarge SA, the listed France-based manufacturer of building materials in the range of cement, aggregates, concrete,
MerchantBridge & Co. Ltd roofing and gypsum products, and MerchantBridge & Co. Ltd, the UK-based private equity firm, has acquired the
Karbala Cement Plant, the Iraq-based cement producer, from the Government of Iraq, for a total consideration
of $220 million. Under the terms of the agreement, Lafarge and MerchantBridge will take on full operations and
management of the plant under a 15-year lease agreement. The Karbala Cement Plant currently produces less than
300,000 tonnes of cement per year. MerchantBridge and Lafarge intend to increase annual production to two million
tonnes within 30 months.
– Zurich Insurance Compagnie Libanaise Zurich Insurance Company Ltd, the UAE-based company engaged in providing insurance services and a subsidiary of Zurich
Company Ltd D’Assurances SAL Financial Services Group, the Switzerland-based provider of insurance related financial services, has agreed to acquire 99.98
per cent stake in Compagnie Libanaise D’Assurances SAL, the Lebanon-based company engaged in providing insurance
services, for an undisclosed consideration. Compagnie Libanaise had generated gross written premiums of $49.1 million in
the year 2009. The transaction is subject to the regulatory approval and is expected to close in the fourth quarter of 2010.
– Landmark Group Fitness First (MENA Landmark Group, the UAE-based company engaged in hospitality and retail business has acquired the Middle
franchise ) East franchise business of Fitness First, from Awwal Fitness Ltd, the UAE-based health club operator and part of
the Alhokair Group, for an undisclosed consideration. The Fitness First Middle East franchise generated annual
turnover of $55 million and has 18 clubs across the UAE, Qatar, Jordan, Bahrain and Saudi Arabia. Concurrently,
Fitness First and Landmark has also signed 10-year franchise agreement.
– Sabre Holdings Flugwerkzeuge Aviation Sabre Holdings Corporation, US-based solutions provider for the aviation industry, and a subsidiary of TPG
Corporation Software GmbH Capital LP and Silver Lake Partners, the US based private equity firms, has acquired Austria-based Flugwerkzeuge
Aviation Software GmbH from Dubai Aerospace Enterprise for an undisclosed consideration. DAE Services,
the UAE-based aviation system integrator and a subsidiary of Dubai Aerospace Enterprise, has acquired
Flugwerkzeuge, for a total consideration of $25 million in 2008.
– Maritime industrial Litwin PEL Maritime industrial Services Co. Ltd. Inc., the listed UAE-based company has agreed to acquire Litwin PEL, a UAE-
Services Co. Ltd. Inc. based company that provides engineering services to the oil, gas and process industries, from EMDAD LLC for an
undisclosed consideration. Litwin PEL has a staff of just under 200 people.
Notes: Deals are based on the geography of target, bidder or vendor being in the Middle East, for the period between September 21, 2010 and October 19, 2010. Based on announced deals, including lapsed and
withdrawn bids. Where deal value is not disclosed, the deal has been entered based on turnover of target exceeding $10 million. Activities excluded from the table include property transactions and restructurings
where the ultimate shareholders’ interests are not changed. Source: Mergermarket
MIDDLE EAST QUARTERLY M&A ACTIVITY MIDDLE EAST ACTIVITY BY INDUSTRY SECTOR YTD 2010  VALUE
FROM 2005 TO OCTOBER 19, 2010
Energy/Mining/ TMT 8.2% Leisure Transport Pharma/Medical/
14,000 50 Utilities3.2% 4.2% 8.2% Biotech 3.1%
Number of deals
Value ($m)
12,000 Construction
Value 40 Consumer
10,000 5.8%
Volume 1.5%
8,000 30
6,000 Business
20 Services 1.6%
4,000
10 Real Estate
2,000 26.6%
0 0 Financial Services Industrials and Defence Agriculture
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2005 2006 2007 2008 2009 2010 25.4% Chemicals 10.6% 0.6% 0.2%
MIDDLE EAST ANNUAL M&A ACTIVITY MIDDLE EAST ACTIVITY BY INDUSTRY SECTOR YTD 2010  VOLUME
FROM 2004 TO OCTOBER 19, 2010
Leisure Transport Pharma/Medical/ Construction Real Estate
30,000 200 1.8% Biotech 5.5% 3.6% 7.3%
Value 3.6%
25,000 Volume Agriculture
150 0.9%
20,000
TMT Defence
Number of deals
15,000 100 20% 1.8%

Value ($m)
10,000
50 Industrials and
5,000 Chemicals 18.2%
Energy/
0 0 Mining/ Consumer Business Financial Services
2004 2005 2006 2007 2008 2009 2010 Utilities 7.3% 7.3% Services 6.4% 16.4%
Mergermarket tracks all M&A deals of more than $5m where the target, bidder or parent is a Middle Eastern company.

TOP PUBLIC EQUITY OFFERINGS
Value ($m, Target/Issuer Transaction Status Transaction comments
Historical rate)
– Aluminium Bahrain Announced Aluminium Bahrain (Alba) is offering 163.3 million shares comprising of the retail offer and the institutional offer.
The offering period starts on October 24, 2010 and closes on November 4, 2010.The final price for the offering
would be decided on November 8, 2010.The shares offered as a part of this offering would be listed on the Bahrain
Stock Exchange and on the London Stock exchange in the form of global depositary receipts. J.P. Morgan Securities
Ltd would act as the underwriter for the issue of global depositary receipts and Gulf International Bank would be
managing the domestic share issue. The retail tranche of the offering is underwritten by domestic underwriters.
Transaction: IPO or Follow-on Equity Offering; Geographic locations: Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, or UAE; All transactions announced date (Including Bids and Letters of Intent): [9/21/2010-
10/20/2010]; Source: Capital IQ.
TOP PUBLIC DEBT OFFERINGS

Value ($m, Target/Issuer Transaction Status Transaction comments
Historical rate)
750.0 QIB Sukuk Funding Limited Closed The Islamic bonds,with a coupon rate of 3.856 per cent, are guaranteed by Qatar Islamic Bank. The sukuk
are due 2015. The fund managers, banks, private banks and supra/agency subscribed for 33 per cent, 40
per cent, 10 per cent and 17 per cent of the offering.The company is acting as a trustee with respect to the
offering. Financial advisors are Credit Suisse (USA), Inc, HSBC Holdings plc ,QInvest, National Bank of Abu
Dhabi, and the investment banking arm of Islamic Development Bank Group.
500.0 Dubai Electricity And Water Announced The notes, rated Ba2 by Moody’s and BBB- by Fitch, are a part of series 2 and tranche 1 of the global
Authority medium term note programme. Interest (6.375 per cent) on the notes, will be payable on April 21 and
October 21 each year. Maturity date is on October 21, 2016.
400.0 Burgan Bank Closed The bonds, which carry a coupon rate of 7.875 per cent, will mature on September 29, 2020. The bonds are
rated BBB by S&P and A3 by Moody’s. Proceeds will be used for general corporate purposes and working capital.
80.0 Polarcus Limited Closed Polarcus Limited completed an issuance of an $80 million bond in the international market. Maturity date is
October 29, 2015. An application will be made for listing of the bonds on the Oslo Alternative Bond Market.
The bond issue was significantly oversubscribed. The bonds carry a coupon of 12.5 per cent per year, to be
paid semi-annually. The proceeds will enable the company to finance the acquisition and completion of the
vessel Polarcus Alima.Underwriters are ABG Sundal Collier Norge ASA and Pareto Securities ASA.
Transaction: Fixed income; Geographic locations: Bahrain, Kuwait, Oman, Qatar, Saudi Arabia or UAE; All transactions announced date (Including Bids and Letters of Intent): [9/21/2010-10/20/2010];
Source: Capital IQ.
TOP PRIVATE PLACEMENTS

Value ($m, Target/Issuer Buyers/Investors Transaction Status Transaction comments
Historical rate)
2,730.0 Qatar Telecom – Closed On October 19, 2010, Qtel closed the transaction. The company issued $1 billion 3.375 per cent notes due
October 14, 2016; $1 billion 4.75 per cent notes due February 16, 2021; and $750 million five per cent notes
due October 19, 2025 for total gross proceeds of $2,730,775,000.
2,000.0 Dubai Electricity and Announced Dewa announced that it will raise $2 billion through the issuance of notes on October 14, 2010. The
Water Authority securities will be issued pursuant to Rule 144A. The notes will be issued in two tranches. In the first tranche
the company will issue $500 million notes. The notes will carry a coupon of 6.375 per cent and will mature
on October 21, 2016. The first interest payment will commence from April 21, 2011. In the second tranche
the company will issue $1.5 million notes. The notes will carry a coupon of 7.375 per cent and will mature
on October 21, 2020. The first interest payment will commence from April 21, 2011. The transaction is
expected to close on October 21, 2010. Citigroup, Credit Agricole, National Bank of Abu Dhabi, RBS and
Standard Chartered Bank will serve as joint bookrunning managers and lead managers to the transaction.
1,000.0 Gulf Air Company Kingdom Announced Gulf Air announced that it will raise $1billion in funding from the returning investor Government of
Of Bahrain, Bahrain through the endowment arm of Kingdom of Bahrain, on October 19, 2010. It will use the
Endowment Arm proceeds for ongoing restructuring costs.
108.43 Kuwait Energy – Announced KEC announced a pre-IPO transaction of 198,323,540 shares at a price of KWD 0.155 per share for
Company gross proceeds of KWD 30,740,189 on October 10, 2010. The funding will involve the participation
of existing share holders through rights issue. The subscription period commences from October
10, 2010, to October 24, 2010. Allocation and settlement of shares will take place from October 25,
2010, to November 10, 2010. KEC will use the proceeds to pursue expansion plan, development and
exploration of key assets and for potential acquisitions in greater MENA region.
60.47 Polarcus Limited – Closed Polarcus Limited closed the transaction on October 14, 2010. The company issued 67,421,359
common shares at NOK 5.15 per share for gross proceeds of NOK 347,219,999 in the transaction. The
transaction was multiple times oversubscribed at the subscription price.
2.75 Nishat UAE LLC Nishat Mills Ltd. Announced Nishat UAE announced that it expects to receive $2.75 million in equity funding from Nishat Mills Ltd.
on September 24, 2010. Upon completion of the transaction, the investor shall hold a 100 per cent
stake in the company. The setting up of the entity is conditional upon the approval being granted by
the shareholders at the annual general meeting of the company to be held on October 30, 2010.
Transaction Types: Private placement; Geographic Locations: Bahrain, Kuwait, Oman, Qatar, Saudi Arabia or UAE; All transactions announced date: [9/21/2010-10/20/2010]; Source: Capital IQ.

GCC ECONOMIC FORECASTS DEBT
Updated as of: Real GDP Growth (%) CPI Inflation (% avg.)
8-Oct-10 2008 2009F 2010F 2011F 2008 2009F 2010F 2011F Demand from corporates
S.Arabia 4.3 0.1 3.2 3.4 9.9 5.1 5.7 4.8 strengthens in Q3
UAE 5.1 -1.4 1.0 2 12.3 1.6 1 2.8
Qatar 15.8 9.0 11.3 9.1 15 -4.9 -2.9 2.5 Continuing the upward trend seen during the
Kuwait 6.4 -2.2 2.5 3.1 10.5 4 3 4 first half of the year, the third quarter saw
Oman 12.3 3.8 4.6 4.8 12.6 3.5 4 4.8 GCC conventional debt markets gain further
Bahrain 6.1 1.8 2.4 1.6 3.5 2.8 2.5 3 momentum. A report from NCB Capital shows
Source: BoFA Merrill Lynch Global Research, Bloomberg, EcoWin, national statistics offices. that the number of offerings almost doubled
from 14 in Q2 to 26 in Q3.
GCC MARKET OVERVIEW On the supply-side, massive capital
Returns Value YTD* YTD* requirements of the regional governments and
Tadawaful (Saudi Arabia) 6392.39 4.70% 4.40% companies are expected to be the key factor
KSE (Kuwait) 6985.00 4.40% -0.3% driving bond and sukuk issuance. On the demand
BSE (Bahrain) 1444.76 1.80% -0.9%
side, global investors, especially from the
MSM 30 (Oman) 6472.76 3.50% 1.60%
developed markets supported by low interest rates,
DFM (Dubai, UAE) 1683.69 13.50% -6.6%
are seeking higher yields on emerging market.
ADX (Abu Dhabi, UAE) 2673.19 7.0% -2.6%
The pent-up demand for debt capital is also
DSM 20 (Qatar) 7694.88 6.50% 10.60%
becoming more active. Potential issuers who
Source: Bloomberg * All returns are latest available end of day September 30, 2010.
had earlier forestalled planned issues in hopes
WORLD COMMODITY PRICE DATA, 2010 of better values are beginning to come forward
Commodity unit July Aug Sep Sep/Aug (change) to tap the market.
Energy 257.4 260.1 262.22 0.8 The total amount issued more than doubled
Coal,Australia $/mt 96.0 89.8 94.9 5.7 from $4.5 billion in Q2 to $10.8 billion in Q3.
Crude oil, average $/bbl 74.6 75.8 76.1 0.4 “The market was supported by debt refinancing
Crude oil, Brent $/bbl 74.7 76.7 77.8 1.4 needs but also by the greater optimism created by
Crude oil, WTI $/bbl 76.4 76.6 75.3 -1.7 the Dubai World deal,” a spokesperson from NCB
Natural gas index 2000=100 157.3 157.8 161.0 2.0 Capital, said. “The pick-up in activity was led by
Natural gas, US $/mmbtu 4.6 4.3 3.9 -9.3
Non Energy 262.3 274.6 285.2 3.9
Agriculture 219.5 228.6 237.5 3.9 ECONOMY
Beverages 261.7 260.4 256.6 -1.5
Food 209.4 222.2 233.4 5.0
soybean meal $/mt 356.0 382.8 393.0 2.7
Copycat phenomenon threatens
soybean oil $/mt 907.0 1002.3 1033.0 3.1 GCC growth
soybeans $/mt 429.0 456.8 466.0 2.0
The GCC has failed to execute three major
Grains 192.3 210.8 234.4 11.2
projects designed to integrate its six states
Maize $/mt 163.8 175.6 205.9 17.3
due to long-standing differences and fierce
Sorghum $/mt 132.4 143.4 184.9 28.9
competition, a note from Standard Chartered
Wheat, Canada 287.5 326.0 365.0 12.0
Wheat, US, HRW $/mt 195.8 246.2 271.7 10.3 bank, said.
Wheat, US, SRW $/mt 222.3 261.6 276.3 5.6 The GCC was created in 1981 and has since
Sugar EU c/kg 42.8 43.2 43.9 1.6 then aimed to establish a customs union and
Sugar US c/kg 73.3 77.2 84.2 9.0 common market by 2003 and 2008, respectively.
Sugar world c/kg 38.5 40.7 49.6 21.9 Such concepts, however, are crippled by
Raw Materials 222.5 227.8 237.7 4.4 disputes and to date, remain not functional.
Fertilisers 259.4 276.4 300.8 8.8 The main reason behind the delay is the
Metals and Minerals 350.4 368.7 381.2 3.4 debate over how to split tariffs between the
Aluminium $/mt 1988.3 2118.1 2162.3 2.1 six countries. Other stumbling blocks also
Copper $/mt 6735.3 7284.0 7709.3 5.8 regularly arise.
Gold $/toz 1193.0 1215.8 1271.0 4.5 The Arab group has missed its 2010
Iron ore c/dmtu 205.0 205.0 205.0 0.0 Monetary Union deadline, with Oman and
Lead c/kg 183.7 207.5 218.4 5.3 UAE already out of the proposed union. The
Nickel s/mt 19517.5 21413.3 22643.4 5.7 much-talked GCC Railway is also likely to miss
Silver c/toz 1794.0 1849.3 2061.1 11.5 its 2017 deadline, as the project battles with
Steel products index 2000=100 231.8 230.4 235 2.0 political, financing and technical issues.
Tin c/kg 1819.1 2075.5 2270.1 9.4 With about 40 million people or less than
Zinc c/kg 184.4 204.5 215.1 5.2
half the population of Egypt, the region’s eight
$=US dollar; c=us cent; cum=cubic meter; dmtu-dry metric ton unit; kg= kilogram
mmbtu=million British thermal units; mt= metric ton; toz=troy oz; SGP=Singapore separate bourses – each with relatively low
n.a.=not available; n.q.=no quotation; source: World Bank, Commodity price data liquidity (except Saudi Arabia) – are too many.

COMPANY WATCH
corporate conventional bond issuance, reducing the previous Dubai Islamic Bank
reliance of the market dynamic on sovereign issuers.”
Companies accounted for 71 per cent of the total value of
A penny for your stake
issues and 62 per cent of the number of offerings. Financial Dubai Islamic Bank’s (DIB) stake in There is plenty of missing data,
sector companies dominated. Notable deals include issues Tamweel rose from 20 per cent to 57 including the acquisition price, but
by Qatari Diar Finance ($3.5 billion), Waha Aerospace per cent after it bought stakes of other UAE-based investment bank Rasmala
($1.5 billion), ADCB Finance ($239 million), and Kuwait leading shareholders in the UAE’s speculates the price is likely to have
Projects Company ($500 million). In the sovereign space, the largest home finance company. been at a discount to the last traded
Government of Dubai successfully returned to the market. It was understood that selling price of Dhs0.99 or a total of Dhs1
However, in the absence of high-profile offerings, the GCC shareholders – Dubai World’s Istithmar billion. Although the transaction
sukuk market in Q3 2010 plunged below the disappointing (20 per cent), Dubai Holding’s Dubai raises DIB’s exposure to the property
opening quarter of the year with value of issues down sharply Capital Group (8.8 per cent) and Dubai market, from 40 per cent of the loan
to $362 million. Investment Group and others – were book to 50 per cent, Rasmala believes
short of liquidity, while DIB has excess the sensibly priced transaction may
VALUE OF CONVENTIONAL BONDS ISSUED IN Q3 of the same. Tamweel has been be value enhancing.
16,000 Value (LHS) No of deals (RHS) 30 struggling to maintain its Dhs9.6 billion Credit rating agency Fitch revises
14,000 of customer borrowing while DIB has Tamweel’s rating watch to positive
25
12,000 been warehousing Dhs15 billion after the deal. Tamweel’s standalone
10,000 20 excess cash. risk profile, however, remains weak.
Value ($ million)
8,000 15
6,000 Key Forecasts
10 FY08A FY09A FY10F FY11F FY12F
4,000 5 Reported Net Profit (Dhsm) 1730 1207 949.4 1254 1591
2,000 Normalised EPS (Dhs) 0.42 0.26 0.21 0.29 0.37
0
0 Dividend per share (Dhs) 0.23 0.14 0.15 0.18 0.18
1Q07
2Q07
3Q07
4Q07
1Q08
2Q08
3Q08
4Q08
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
Dividend yield (%) 9.94 6.22 6.62 7.72 8.04

Return on avg equity (%) 20.00 13.60 11.00 14.60 17.80
Source: Bloomberg, NCBC Research Source: Company data, Rasmala Forecasts
Qtel
Solid results despite heated competition

Furthermore, each bourse has different trading days Despite increased competition across management expects capex of QR8.6
and hours, different clearing systems and widely divergent the board, Qtel group’s performance billion to QAR9 billion for year-end
regulatory requirements, which makes trading difficult. remains solid across most of its 2010. The telco firm has successfully
Heightened competition also threatens to undermine operations, particularly in Kuwait, closed previously announced pricing of its
common regional goals, as seen in entertainment (the region Indonesia, Iraq, Algeria and Oman. senior unsecured notes under its existing
now has two Formula One Grand Prix), tourism and financial Qtel’s consolidated revenues in the $5 billion global medium-term note
services where every state bids to become the regional hub. first half increased by 13.7 per cent to programme. The most recent $1.5 billion
“The copycat phenomenon within the region brings the risk reach QAR13.1 billion for from QAR11.5 and $1.25 billion issuances were priced
of cannibalisation at best, or failure for some at worst,” a billion during the same period last year. and allocated as follows: $1 billion; 3.375
spokesperson from Standard Chartered said. Its customer-base also increased 30 per per cent six-year notes due October 14,
He said the GCC should prioritise closer coordination if the cent from 51.4 million to 66.6 million. 2016; $1 billion; 4.75 per cent 10-year
region wants to maximise the economic potential of the bloc, Net profit attributable to Qtel notes due February 16, 2021 and $750
which has combined market size of $1 trillion and average per shareholders stood at QAR1.8 billion million; five per cent 15-year notes due
capita GDP of $45,000. “Despite the region’s positive economic up 8.9 per cent. Consolidated EBITDA October 19, 2025. The proceeds will be
MARKET CAPITALISATION OF GCC
outlook and shared remained strong with a 14.6 per cent used for general corporate purposes,
BOURSES $ MILLION goals, the GCC is increase to reach QAR6.3 billion. Qtel’s including refinancing existing indebtedness.
400 not moving forward
collectively,” the Key stats
300 FY08A FY09A FY10F FY11F FY12F
spokesperson said.
Revenue (QARm) 20,319 24,025 26,687 28,808 31,013
200 “By limiting their EBITDA (QARm) 10,164 12,124 13,583 14,674 15,994
co-ordination efforts, Reported net profit (QARm) 2,306 2,780 2,860 2,958 3,559
100 the GCC countries may Normalised net profit (QARm) 2,306 2,780 2,860 2,958 3,559
Normalised EPS (QAR) 15.70 19.00 19.50 20.20 24.30
be foregoing economic Dividend per share (QAR) 10.00 7.00 8.60 7.45 8.96
0
opportunities, as well
Abu Dhabi
Bahrain
Dubai
Kuwait
Oman
Qatar
Saudi Arabia
Dividend yield (%) 6.02 4.21 5.18 4.48 5.40

as chances to increase Normalised PE (x) 10.60 8.76 8.52 8.24 6.84
EV/EBITDA (x) 4.38 4.00 3.43 2.82 2.10
their global political EV/invested capital (x) 0.95 0.91 0.85 0.78 0.68
Source: IMF, Standard Chartered Research clout,” he said. Accounting standard: IFRS; Source: Company data, Rasmala forecasts

EXHIBITIONS & CONFERENCES
ADIPEC
ADNEC, November 1 – 4
Abu Dhabi International Petroleum Exhibition and
Conference (ADIPEC) is one of the world’s largest
oil and gas conferences, bringing together regional
and international professionals, including exhibitors
from 59 countries. The theme for 2010 is ‘Meeting the
Increasing Oil and Gas Demand through Innovation.’
Now in its 14th year, the Society of Petroleum
Engineers (SPE) has again been appointed to organise
and coordinate the 2010 Conference. This is the
energy event of the year and an opportunity for like-
minded professionals to contribute to a platform for
iStock
exchanging knowledge and best practices.
UNITED ARAB EMIRATES

Abu Dhabi
November 01-04 ADIPEC 2010 ADNEC, Abu Dhabi www.adipec.com
02-04 Abu Dhabi Art Fair 2010 Emirates Palace, Abu Dhabi www.abudhabiartfair.ae
08-09 The Abu Dhabi Conference Fairmont Bab Al Bahr, Abu Dhabi www.meedawards.com
21-22 Advanced Negotiation for Project Management Sheraton Hotel, Abu Dhabi www.marcusevans.com
22-24 Hydrocarbons EPC Projects 2010 Crown Plaza, Yas Island Abu Dhabi www.meedawards.com
29-30 Middle East Wastewater Treatment & Reuse 2010 Beach Rotana, Abu Dhabi www.meedawards.com
09-11 Future Media Congress ADNEC, Abu Dhabi www.turretme.com
22-24 SIAL Middle East 2010 ADNEC, Abu Dhabi www.turretme.com
22-27 Fourth International Date Palm Festival ADNEC, Abu Dhabi www.turretme.com
22-24 IPA Middle East ADNEC, Abu Dhabi www.turretme.com
28-30 MEMEX 2010 – Middle East Manufacturing Exhibition ADNEC, Abu Dhabi www.memexme.com
28-30 Roadex-Railex Exhibition & Conference 2010 ADNEC, Abu Dhabi www.roadex-railex.com
Dubai
November 02-04 Helishow Dubai 2010 Airport Expo, Dubai www.dubaihelicoptershow.com
08-11 Index Exhibition Dubai Int’l Convention and Exhibition Centre www.indexexhibition.com
08-11 Smart Electricity World MENA 2010 Movenpick Hotel, Jumeirah, Dubai www.terrapinn.com
21-24 Private Equity World MENA 2010 Shangri-La Hotel Dubai www.terrapinn.com
22-25 The Customer Show The Address, Dubai Marina www.terrapinn.com
22-25 The Big Five Exhibition 2010 Dubai Int’l Convention and Exhibition Centre www.thebig5exhibition.com
25-27 The Indian Property Show Airport Expo East Hall, Dubai www.indianpropertyshow.com
29-01 Dec Carbon Capture Storage World MENA 2010 Movenpick Hotel, Jumeirah Beach www.terrapinn.com
Sharjah
November 22-25 Chinese Commodities Fair Sharjah Expo-Centre Sharjah www.expo-centre.ae
BAHRAIN
November 09-11 Career Expo 2010 Bahrain Int’l Exhibition and Convention Centre www.career-expo.net
11-13 Bahrain International Property Exhibition Bahrain Int’l Exhibition and Convention Centre www.bipex.org
29-01 Dec Healthcare Infrastructure World MENA 2010 Gulf Hotel, Manama www.terrapinn.com
KUWAIT
November 29-30 Kuwait Projects 2010 Courtyard Marriott, Kuwait City www.meedawards.com
24-26 Careers Fair Kuwait Int’l Fairgrounds www.kif.net
QATAR
November 09-11 Diyafa 2010 Doha Exhibition Centre www.ifpexpo.com

IN YOUR SHOES
Beauty and the boss

ALICIA BULLER touches down in London to check out Vertu’s luxury smartphone
and brush shoulders with the firm’s CEO, Perry Oosting.
W
hen I first I saw the 18 carat gold Vertu celebrity. Never mind the fact that Oscar winner and
Constellation Quest and its price tag – $27,300 Vertu phone owner Kevin Spacey just stepped on my toe.
– the dollar signs danced across my eyes. I I’ll have a word with him later.
desperately tried to hide my palpitations as I Two and half years in the making, the Quest smartphone,
counted up to the equivalent number of cars and pairs of like all Vertu phones, comes with a one-touch concierge
shoes in my head. Can people really afford phones like this, service and 24-hour technical assistance. Vertu Concierge
when there’s such a long, long list of material indulgences can ‘proactively anticipate an individual’s potential needs’
that could go in its place? But that’s me. And I’m poor. Vertu with a personalised ‘lifestyle manager’ on the end of the
phones aren’t made for people phone to book that must-go-to
like me. That’s kind of the point. restaurant or flowers for the wife.
Standing at the entrance of “The challenge is to make
the launch party for luxury a beautiful instrument from
firm’s long-awaited smart something very complex; it’s got
model, I come to the realisation to be functional, but it’s got to
that this really isn’t – it just be beautiful,” says Perry Oosting,
can’t be – only a phone. The suave boss of the luxury phone
chaffeured black Merc drops maker, in between hobnobbing
me outside the majestically- with singer Seal and Tom Parker-
fronted Lancaster House in Bowles, stepson of the future UK
Mayfair. As TV’s most famous King, Prince Charles.
nosy neighbour Lloyd Grossman “It’s been a long wait. Our
would ask, who would live in customers love our phones,
(amazing) house like this? As it the brand, the hand-crafted
happens, the Duke of York did, premium materials and the
400 years ago. design. And now they have the
Tonight it’s home to a QWERTY keyboard that comes
glittering array of London’s with it,” says Oosting, flicking
thinnest, richest and most back his hair.
beautiful. The sweeping The CEO says that Vertu now
staircases are manned by has 700 point-of-sales in 70
handsome, charming young countries. Around 10 per cent
models handing out the finest of his phones are sold in the
champagne in the finest glasses. Middle East and Oosting is
The music is moody and carefully crafted; everything planning to expand this. Dubai is a hot market, with the
about the evening has been nimbly orchestrated to strike majority of the Vertus being snapped up by young males,
the right tone in understated taste. some as young as 14 years old.
A walk into a pitch-black room envelops you “The Middle East is starting to bounce back
in suspense until… there it is – the telecoms from an economic point of view. Saudi Arabia
beauty. A shining, coveted slab of gold, with is a strong market. I have been in the luxury
sapphire cool-to-the-touch keys. For what market for __25 years and this was the first time
is ultimately an object, the new smartphone that I really saw a global recession affect the
becomes strangely personified as it shows off industry,” he says.
its wares on high-tech screens, flexing lithe “At the beginning of 2009 there was nothing you
curves from every angle and offering coquettish could do. What is good to see now is that the luxury
glimpses into the love that has been poured into market is bouncing back strongly. We are very
its engineering. positive and back into double digit growth,” he says.
Each Vertu phone is handmade by a single And now I understand why. Vertu isn’t a
technician in a small factory in Hampshire phone, it’s a statement. ‘I love beauty and I can
in the UK. Tonight, Constellation Quest is the afford it’. Can you?

HERE’S HOW TO
CHEER UP A
DEPRESSED
ECONOMY.
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What are some of the luxury brands and products mentioned?

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What types of vehicles does Lexus introduce?

What types of vehicles does Lexus introduce?

CEO EXCLUSIVES: ETISALAT BATELCO & OMANTEL

Vol. 15 Issue 7 November 2010

How to lead your firm, Harnessing Saudi’s

Omega boutiques (BurJuman, Deira City Centre, Dubai Mall,

Glashütte Original. Founder of the German Watch Museum Glashütte.

News, numbers and people from

November 2010 gulfbusiness 9

Group Senior Editor

84 106 Cris Domdom cris@motivate.ae

General Manager – Abu Dhabi

10 gulfbusiness November 2010

Sheikh Esko Aho, former Munir Majid,

GCC AND THE WORLD

12 gulfbusiness November 2010

Emirates Airline celebrates India tops Dubai

25 years of growth trade list

Emirates Airline profits and launch new In October 2008, Emirates

Dewa bonds receive vote of confidence Eastern country.

November 2010 gulfbusiness 13

Saudi GDP to grow 3.7 per cent SAMA’s foreign

on government continue for the remainder

Saudi Arabia’s cent in 2009, when growth that continues to absorb

14 gulfbusiness November 2010

Qatar branches out with

London’s Chelsea Barracks Rents in smaller

16 gulfbusiness November 2010

Kuwait Energy end of 2010 but delayed Kuwait Energy’s capital

Kuwait national oil company gets new chief February,” Mohammad

18 gulfbusiness November 2010

Is it the right time to invest in real estate?

Is the UAE the best place to put your money?

Alba to raise $541 million

20 gulfbusiness November 2010

FRENCH OPINION HAS

22 gulfbusiness November 2010

THE DUBAI BOND AND

24 gulfbusiness November 2010

CEOS SAY GOODBYE FOR

26 gulfbusiness November 2010

QE2 AND HOW IT AFFECTS

28 gulfbusiness November 2010

KEY STEPS TO MAKING

30 gulfbusiness November 2010

Learn more at Infiniti-me.com

LETTER OF THE MONTH

EXCLUSIVE REPORT: TOP DEALS AND MARKET DATA Majali’s flight

GB Regional OCTOBER 2010 copy.indd 1 10/18/10 11:32:57 AM

have much deeper pockets. But will high-frequency, low-yield flights

32 gulfbusiness November 2010

THE ACA. QUALIFIED TO SUCCEED.

The letters ACA.

The internationally-recognised ACA qualification represents the

Discover how we inspire confidence in business at

in their minds, investors remain

34 gulfbusiness November 2010