Kuwait-based regional asset management and investment banking firm Global Investment House (Global), has entered into an asset management agreement with a regional group to manage a portfolio worth $90 million by its Special Situations Asset Management team.
Global is mandated to manage the diversified portfolio for wind-down while promoting value enhancement initiatives to attain the ultimate objective of maximising realisation proceeds over the course of the mandate.
“We are excited to engage our new mandate since we began offering this service in 2013. The mandate marks the team`s continued efforts to grow this specialised line of the asset management business and is a recognition to our achievements and track record that we have built over the past years,” said Abdul Hamid Mihrez, CFA, Executive Vice President, Special Situations Asset Management.
Changes in market fundamentals play a pivotal role in reshaping balance sheet structures for companies especially in prolonged conditions. Companies become inclined to revisit business models and extend efforts to revamp operations to suit market conditions, which in most cases led to down scaling.
On the other hand, debt to asset swap solutions are on the rise as financing companies continue to offer alternative settlement options to defaulting clients although such solutions only provide temporary relief considering regulatory requirements to unwind ‘acquired’ assets in the short term which emphasises the need for a specialised team to manage and wind-down such non-strategic assets that are usually left without proper attention as focus is usually driven towards bread and butter of the core business operations.
Efforts to decouple non-core assets become increasingly challenging as such assets tend to possess inherent illiquidity that not only weigh down on overall company performance but lag and fail to play catch up in up trending markets.
The Special Situations Asset Management team offers an unbiased and independent view on maximisation of realisation proceeds through bespoke solutions for asset owners with regional exposures in equity investments.
With this agreement, the total value of wind-down mandates the team has been awarded to manage since launching the service in 2013 stands around $830 million for several clients. The successful execution of the portfolios’ strategies resulted in generating cash inflows north of $370 million to represent an exit multiple in excess of 1.5x to clients’ target valuations.