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Al Ritaj Investment - Private Equity Model

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Presentation on theme: "Al Ritaj Investment - Private Equity Model"— Presentation transcript:

0 Al Ritaj Investment Company
Al Ritaj SME Forum Al Ritaj Investment Company Investment Process Presentation 14th November 2007 Yasser Dib – Chief Investment Officer

1 Al Ritaj Investment - Private Equity Model
Asset Management Advisory Placement Direct Investments Special Purpose Vehicles Paid-up capital of KD 25m to be primarily invested by Ritaj in SME’s within the region Stringent & specific investment criteria Returns to Ritaj are dependent on post-investment management and exit Ritaj creates & manages SPV’s such as Private Equity Funds and Holding Companies Ritaj may choose to also directly invest in these investment structures SPV’s may have a defined theme, including specific sector and investment focus Returns to Ritaj are dependent on post-investment management and exit

2 Investment Strategy & Criteria
Invest in small to medium size privately held companies with growing markets, strong products / services, and recognized brand name. Investment Strategy Geography Kuwait (initially) GCC Middle East MENA Target Sector All sectors Target Company Stage Growth stage, early stage, or turnaround situations Investment Size KD 1m to KD 10m Participation Majority or Active Minority Stake Investment Period Target 3-5 years investment horizon Shariah Law Compliant with Shariah Law within 3 years

3 Deal Size vs Transaction Cost
Transaction Cost as % of Deal Size Deal Size Challenges Value Added By Ritaj Non-Optimal Commercial and Legal Structure Ritaj will work with the Target owners to optimize the commercial and legal structure in line with industry standards and regulations Corporate Governance Ritaj will introduce industry best practice Corporate Governance policies & procedures Planning Ritaj will ensure the correct planning systems and techniques are executed within the Target HR Gaps (Personality Based) Ritaj will work with the Target’s management to develop an appropriate succession plan and cover any HR deficiencies Systems Ritaj will utilize its expertise to introduce appropriate accounting, IT and management information systems Personal / Company Mixed Accounts Ritaj will ensure that the personal accounts of the Owners are at an arm’s length with the Company

4 Investment Approval Process
Preliminary Due Diligence Develop Offer Subject to DD Detailed Due Diligence Screening Closing Investment Group Prepare Investment Analysis Form Priority order Continuously Update Form Investment Committee Approve Peer Review & Challenge Approve Approve Final Approval Shariah Board Raise Shariah Compliance Issues Approve Prelim Approval Final Approval Ex Comm / Board Notify Approve Prelim Approval Final Approval CEO Sign MOU Final Signature Time Sequence (4-5 months)

5 No Involvement At This Stage Signed LOI / MOU / Exclusivity
Screening Process Roles and Responsibilities Target Owners Al Ritaj Investment Advisors Agrees To Assess Criteria Shariah Compliancy Shariah Compliant Active Participation in Management by Ritaj Reputation of business partner Develop & Restructure Co. Investment not financing No Involvement At This Stage Change Legal Status (if necessary) Investment Criteria Geography Ritaj Exit Scenarios Deal size Outcome Full Disclosure of Financial / Non Financial Information Strategic Fit % Ownership Signed LOI / MOU / Exclusivity

6 Investment Approval Process
Preliminary Due Diligence Develop Offer Subject to DD Detailed Due Diligence Screening Closing Investment Group Prepare Investment Analysis Form Priority order Continuously Update Form Investment Committee Approve Peer Review & Challenge Approve Approve Final Approval Shariah Board Raise Shariah Compliance Issues Approve Prelim Approval Final Approval Ex Comm / Board Notify Approve Prelim Approval Final Approval CEO Sign MOU Final Signature Time Sequence (4-5 months)

7 Investment Analysis Form
Company Description Shari’ah Compliant Exit Options Business mix, size, market share, growth issues Historical financial performance Product description, pricing, brand, promotion etc Size of Target and business plan conducive to IPO? Trade sale ? Sale to other potential investors such as funds etc. Current non-shariah compliant issues Willingness of partners to be shariah compliant Industry Attractiveness Post-Investment Plan Industry Size and Growth Rate Market Analysis Industry Key Success Factors Competitive landscape Industry Risk Analysis Post-investment business plan Plan to enhance management and achieve objectives Reporting requirements Ritaj Board participation TARGET COMPANY Partner / Management Valuation / Financial Analysis Strengths / Weaknesses of current Management Credibility and track record of potential Partners Alignment of interests DCF, Comparable and NAV valuation methods ROI, ROE, IRR etc calculations Sensitivity Analysis on key drivers of Target Technology Risk Factors Commercial / Financial Plan Technology requirements Technology advantages / disadvantages Technology partner credibility and background Commercial and financial risk Product and supplier / customer risk Legal risk Key management risk Current shareholding structure Financing plan of investment Post-investment capital and financial structure

8 Investment Approval Process
Preliminary Due Diligence Develop Offer Subject to DD Detailed Due Diligence Screening Closing Investment Group Prepare Investment Analysis Form Priority order Continuously Update Form Investment Committee Approve Peer Review & Challenge Approve Approve Final Approval Shariah Board Raise Shariah Compliance Issues Approve Prelim Approval Final Approval Ex Comm / Board Notify Approve Prelim Approval Final Approval CEO Sign MOU Final Signature Time Sequence (4-5 months)

9 Preliminary Due Diligence
Roles and Responsibilities Target Owners Al Ritaj Investment Advisors Agrees To Provide Evaluates Engaged to Provide Market Size and Potential Last 3 year audited financial statements Specific Market and Industry Reports Competitive Analysis Company’s Articles of Association Management Evaluation Value Proposition 5 year business plan and forecast Drivers of Growth / Turnaround Industry and company reports (if available) Outcome Possible Exit Options Organizational Structure Initial Valuation Major KPI’s Develop an Offer

10 Investment Approval Process
Preliminary Due Diligence Develop Offer Subject to DD Detailed Due Diligence Screening Closing Investment Group Prepare Investment Analysis Form Priority order Continuously Update Form Investment Committee Approve Peer Review & Challenge Approve Approve Final Approval Shariah Board Raise Shariah Compliance Issues Approve Prelim Approval Final Approval Ex Comm / Board Notify Approve Prelim Approval Final Approval CEO Sign MOU Final Signature Time Sequence (4-5 months)

11 Ritaj Makes Offer to Target Owners – Subject to Detailed Due Diligence
Development of Offer Roles and Responsibilities Target Owners Al Ritaj Investment Advisors Agrees To Develops Detailed Valuation Model Legal Advice Price Optimum Equity Stake Financial Advice Equity Stake Technical Advice Board Seat Representation Ritaj Board Participation Obtains Preliminary Internal Approvals Other specific commercial terms Outcome Key commercial terms Commercial / financial and legal restructuring (if necessary) Ritaj Makes Offer to Target Owners – Subject to Detailed Due Diligence

12 Investment Approval Process
Preliminary Due Diligence Develop Offer Subject to DD Detailed Due Diligence Screening Closing Investment Group Prepare Investment Analysis Form Priority order Continuously Update Form Investment Committee Approve Peer Review & Challenge Approve Approve Final Approval Shariah Board Raise Shariah Compliance Issues Approve Prelim Approval Final Approval Ex Comm / Board Notify Approve Prelim Approval Final Approval CEO Sign MOU Final Signature Time Sequence (4-5 months)

13 Detailed Due Diligence
Roles and Responsibilities Target Owners Al Ritaj Investment Advisors Agrees To Provide Evaluates Engaged to Provide Legal Due Diligence Support to External Advisors Financial Integrity of Audited Statements Financial Due Diligence Furnish all Company Information as requested by Advisors & Ritaj Any Commercial and/or Legal Issues of Target Company Technical Due Diligence Technical Issues HR Due Diligence HR Issues Outcome Any Additional Liabilities Risk Analysis & Management Capabilities Agreement of Final Price, Main Contract Terms & Closing Schedule

14 Investment Approval Process
Preliminary Due Diligence Develop Offer Subject to DD Detailed Due Diligence Screening Closing Investment Group Prepare Investment Analysis Form Priority order Continuously Update Form Investment Committee Approve Peer Review & Challenge Approve Approve Final Approval Shariah Board Raise Shariah Compliance Issues Approve Prelim Approval Final Approval Ex Comm / Board Notify Approve Prelim Approval Final Approval CEO Sign MOU Final Signature Time Sequence (4-5 months)

15 Signed Share Purchase Agreement and Execution of Buy / Sell Orders
Closing Roles and Responsibilities Target Owners Al Ritaj Investment Advisors Undertakes to Undertakes to Engaged to Provide Negotiate Final Terms and Conditions in Good Faith Legal Advice and Support Negotiate Final price and Main Commercial Terms Contract Negotiation Commercial and Financial Structure of Investment Change Legal and Commercial Status (if necessary) Broker Services Legal Structure of Investment File and obtain approval from all concerned authorities Contract Negotiations Outcome Prepare Post-Investment Plan Agree on post-investment plan Obtain Final Approval Signed Share Purchase Agreement and Execution of Buy / Sell Orders

16 Investment Approval Process
Preliminary Due Diligence Develop Offer Subject to DD Detailed Due Diligence Screening Closing Investment Group Prepare Investment Analysis Form Priority order Continuously Update Form Investment Committee Approve Peer Review & Challenge Approve Approve Final Approval Shariah Board Raise Shariah Compliance Issues Approve Prelim Approval Final Approval Ex Comm / Board Notify Approve Prelim Approval Final Approval CEO Sign MOU Final Signature Time Sequence (4-5 months)

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