The Kuwaiti government is set to privatise its national airline by launching a Dh1.1 billion (US$299.4 million) initial public offering as part of a plan to diversify the economy and boost the country's private sector.
In a landmark privatisation, Kuwait Airways plans to list 40 per cent of its business on the Kuwait Stock Exchange and sell a minority stake of 35 per cent to a strategic investor.
"The philosophy in the Gulf is privatisation will provide more efficiencies and bring better governance and transparency to a country," said Dr Karim El Solh, the chief executive of Gulf Capital, an alternative investment company.
Kuwait Airways' initial public offering (IPO) is a rare move in a region dominated by government-owned airlines and analysts are sceptical about both the appetite for an IPO and interest from a strategic investor.
The airline has reportedly been loss-making for two decades and competes in an already saturated Middle East market that includes Emirates Airline, Etihad Airways and Qatar Airways.
"I'm scratching my head to know who would be interested, it is not exactly a high-growth story," said Anais Faraj, the managing director of investment banking at The National Investor. "I doubt it will stack up as a profitable business."
Kuwait Airways is the country's oldest airline, founded in 1954, and national flag carrier, with a local market share of 31 per cent by passengers transported.
Kuwait Airways made a net loss of $556m on revenues of $771m last year, according to documents seen by The National.
As a carrot to entice investors, Kuwait Airways will receive a 10 per cent discount on fuel provided by the Kuwaiti government on top of the 10 per cent provided to all other carriers operating out of Kuwait International Airport, the documents said.
Mr Faraj said the only reason an international carrier would buy the 35 per cent stake and help turn the business around would be if a "sweetener" - such as fuel subsidies - were also added to the deal.
"Another airline would only buy it if you could get an agreement to sell fuel to, for example, 50 per cent of the international airline's fleet," he said.
The new airline will receive tenders for the 35 per cent stake until August 25 when the committee will begin considering bids.
Once a deal has been agreed, the committee and the new investor will begin listing the airline on the Kuwait Stock Exchange.
"It's a question of routes," said one banker in Abu Dhabi, who asked not to be identified. "Emirates, Etihad and Qatar Airways have taken care of all the lucrative routes. How much market can there be to support another airline in the Gulf?"
Kuwait Investment Authority, the country's sovereign wealth fund, will own 20 per cent of the new airline company, with 5 per cent of the new entity to be offered to employees. In total, the privatisation is expected to be worth 220m Kuwaiti dinars (Dh2.96bn).
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The Sand Castle
Director: Matty Brown
Stars: Nadine Labaki, Ziad Bakri, Zain Al Rafeea, Riman Al Rafeea
Rating: 2.5/5
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Dubai Bling season three
Cast: Loujain Adada, Zeina Khoury, Farhana Bodi, Ebraheem Al Samadi, Mona Kattan, and couples Safa & Fahad Siddiqui and DJ Bliss & Danya Mohammed
Rating: 1/5
Jeff Buckley: From Hallelujah To The Last Goodbye
By Dave Lory with Jim Irvin
COMPANY PROFILE
Name: Qyubic
Started: October 2023
Founder: Namrata Raina
Based: Dubai
Sector: E-commerce
Current number of staff: 10
Investment stage: Pre-seed
Initial investment: Undisclosed
COMPANY PROFILE
Name: HyperSpace
Started: 2020
Founders: Alexander Heller, Rama Allen and Desi Gonzalez
Based: Dubai, UAE
Sector: Entertainment
Number of staff: 210
Investment raised: $75 million from investors including Galaxy Interactive, Riyadh Season, Sega Ventures and Apis Venture Partners
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The specs
Engine: Long-range single or dual motor with 200kW or 400kW battery
Transmission: Single-speed automatic
Max touring range: 620km / 590km
Price: From Dh250,000 (estimated)
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THE LIGHT
Director: Tom Tykwer
Starring: Tala Al Deen, Nicolette Krebitz, Lars Eidinger
Rating: 3/5
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How to help
Send “thenational” to the following numbers or call the hotline on: 0502955999
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Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
The specs
Engine: 6.2-litre supercharged V8
Power: 712hp at 6,100rpm
Torque: 881Nm at 4,800rpm
Transmission: 8-speed auto
Fuel consumption: 19.6 l/100km
Price: Dh380,000
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Anghami
Started: December 2011
Co-founders: Elie Habib, Eddy Maroun
Based: Beirut and Dubai
Sector: Entertainment
Size: 85 employees
Stage: Series C
Investors: MEVP, du, Mobily, MBC, Samena Capital
MATCH INFO
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Real Madrid: Isco (33'), Ramos (38'), Vázquez (84'), Jovic (90' 2)
COMPANY PROFILE
Name: Almnssa
Started: August 2020
Founder: Areej Selmi
Based: Gaza
Sectors: Internet, e-commerce
Investments: Grants/private funding
How to play the stock market recovery in 2021?
If you are looking to build your long-term wealth in 2021 and beyond, the stock market is still the best place to do it as equities powered on despite the pandemic.
Investing in individual stocks is not for everyone and most private investors should stick to mutual funds and ETFs, but there are some thrilling opportunities for those who understand the risks.
Peter Garnry, head of equity strategy at Saxo Bank, says the 20 best-performing US and European stocks have delivered an average return year-to-date of 148 per cent, measured in local currency terms.
Online marketplace Etsy was the best performer with a return of 330.6 per cent, followed by communications software company Sinch (315.4 per cent), online supermarket HelloFresh (232.8 per cent) and fuel cells specialist NEL (191.7 per cent).
Mr Garnry says digital companies benefited from the lockdown, while green energy firms flew as efforts to combat climate change were ramped up, helped in part by the European Union’s green deal.
Electric car company Tesla would be on the list if it had been part of the S&P 500 Index, but it only joined on December 21. “Tesla has become one of the most valuable companies in the world this year as demand for electric vehicles has grown dramatically,” Mr Garnry says.
By contrast, the 20 worst-performing European stocks fell 54 per cent on average, with European banks hit by the economic fallout from the pandemic, while cruise liners and airline stocks suffered due to travel restrictions.
As demand for energy fell, the oil and gas industry had a tough year, too.
Mr Garnry says the biggest story this year was the “absolute crunch” in so-called value stocks, companies that trade at low valuations compared to their earnings and growth potential.
He says they are “heavily tilted towards financials, miners, energy, utilities and industrials, which have all been hit hard by the Covid-19 pandemic”. “The last year saw these cheap stocks become cheaper and expensive stocks have become more expensive.”
This has triggered excited talk about the “great value rotation” but Mr Garnry remains sceptical. “We need to see a breakout of interest rates combined with higher inflation before we join the crowd.”
Always remember that past performance is not a guarantee of future returns. Last year’s winners often turn out to be this year’s losers, and vice-versa.
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The Brutalist
Director: Brady Corbet
Stars: Adrien Brody, Felicity Jones, Guy Pearce, Joe Alwyn
Rating: 3.5/5
The specs
Engine: Four electric motors, one at each wheel
Power: 579hp
Torque: 859Nm
Transmission: Single-speed automatic
Price: From Dh825,900
On sale: Now
The specs
Engine: 3.0-litre six-cylinder turbo
Power: 398hp from 5,250rpm
Torque: 580Nm at 1,900-4,800rpm
Transmission: Eight-speed auto
Fuel economy, combined: 6.5L/100km
On sale: December
Price: From Dh330,000 (estimate)
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
