Ask Oliver Schutzmann why investor relations (IR) is such a big deal for firms in the GCC, and you will not get a glum lecture on what might seem a dry subject. How companies communicate with their increasingly diverse base of shareholders, he says, lies as much at the centre of the region's economic fate as issues such as corporate board reform, breaking down barriers to foreign ownership and the diversification of industries away from oil.
"You not only have regulatory obligations to fulfil in terms of disclosure, but you also have shareholders who are owners of the company and want to know why they should hold, buy or sell your stock," said Mr Schutzmann, who heads up the IR department for Shuaa Capital, an investment bank in Dubai. "With the development of the market and the growing equity culture here, it has become a necessity to cater to these investors."
According to one estimate, there are only between 30 and 40 fully fledged IR departments among the hundreds of listed companies in the GCC. That figure may increase, however, if more firms cotton on to Mr Schutzmann's argument that IR is an important ingredient in the recipe for getting foreign dollars in the door and profiting from the titanic shift in fortunes from West to East that appears to be well underway. Roughly 50 per cent of global economic growth last year came from China, India and the oil exporting countries, according to figures from the International Monetary Fund - a vast change from a decade ago, when the US, Europe and Japan dominated the scene. With investors worldwide salivating over the opportunities offered in the countries driving global growth, IR is becoming all the more important.
The primary function of IR, experts say, is to avoid movements in a company's stock price based on news and rumours that are not quickly put to rest with a response. In that sense, it is a key component of a company's overarching corporate communications strategy. Secondarily, it functions as a means for raising interest among potential investors and opening up operations to public view - to show, essentially, that it has nothing to hide. Ultimately, the hope is that increasing transparency and giving large shareholders access to executives who can justify the company's strategies will raise confidence and awareness among the broad investing community. That, in turn, should lead to a more efficiently priced stock and better coverage by analysts. It can also mean companies have cheaper access to borrowed capital.
"You hear this regularly - why is our share price so low?" Mr Schutzmann says. "Why doesn't the share price respond to earnings growth, dividend yields and other news? The reason is simple - shareholders cannot evaluate what they cannot see. Unless you give them a clear picture of what is going on in the company, investors cannot make reasoned decisions about their holdings. A lack of information is something you could be punished for as a company."
The past few years are littered with examples of companies in the GCC that have seen seemingly irrational stock price declines - and rises - accompanied by a lack of communication with shareholders.
Perhaps the most glaring recent example was Emaar's ill-fated stock-for-land swap last year, sources in the GCC's IR community say. Last March, Emaar announced it had entered into a deal with Dubai Holding, an arm of the Dubai Government, to exchange convertible shares in the company for a massive grant of land. But it took weeks before making any further announcements, leading to speculation and confusion in the markets. One frustrated broker in Dubai was quoted at the time as saying "the lack of information on Emaar's land deal with Dubai Holding" was what was sending the stock's price haywire. The deal was then scrapped later in the year.
The performance of Emaar's shares since then has been poor, in spite of the fact that it has been the UAE's most successful developer, putting its name to signature projects such as the Burj Dubai, the Dubai Marina and Arabian Ranches. From January to its low in July, its stock price tumbled roughly 36 per cent, to Dh10 (US$2.72) per share. During the same stretch, other property firms with shorter track records have done better. Shares in the Abu Dhabi developer, Aldar, for example, lost a modest four per cent for the period.
While it is impossible to link stock performance definitively to anything but the fluctuations of a skittish market, last year's confusion over the failed Dubai Holding deal led, in part, to Emaar putting a greater emphasis on communications. Last October, the company beefed up its investor relations website and created a new service that automatically sends company news to shareholders.
"Emaar is committed to lead the region in corporate work ethos including transparency, timely dissemination of information, corporate governance and other investor relations best practices," says Arif Amiri, the head of IR at Emaar. "On a continued basis, Emaar reviews the ways to improve shareholder access to information, and the communication between the company and the shareholders. Emaar adheres to immediate dissemination of important information relating to the company, to the Dubai Financial Market, media and all concerned stakeholders."
The efforts have begun to pay off. Earlier this year, researchers from HSBC wrote in a report that Emaar was one of the world's "most misunderstood" companies, and that investors had unduly punished it for corporate governance and communications practices it had already drastically bettered.
"They've definitely improved their corporate communications," says Majed Azzam, one of the HSBC analysts who wrote the report.
What happened with Emaar exemplifies the way in which corporate IR is evolving in the GCC, industry experts say. As experience shows that IR plays a crucial role - especially for companies that, like Emaar, have a global reach and actively seek out foreign investors, who are used to solid communications arms - more firms are likely to spend more money on getting the word out.
"There have been a number of pressures, both global and regional, that have come together in the last few years," says Michael Chojnacki, a banker at The Bank of New York Mellon, which has offices in Dubai and Abu Dhabi. "With the markets as they are, institutional investors are looking ever deeper for opportunities, and the Middle East has certainly benefited from this trend.
"Many of those investors have specific expectations when investing in companies. For example, they want access to critical information in a timely fashion and to have clear lines of communication into senior management. More and more companies in the Middle East are recognising this reality."
Just this month, Mr Chojnacki teamed up with a former colleague at Thompson Reuters to form the Middle East Investor Relations Society, a non-profit group that is to promote the practice in the region. They signed up the likes of Mr Amiri and officials at the telecoms company, du, the energy company, Taqa, and the interior construction firm, Depa, to sit on its board. While the exact plans of the society have yet to be formulated, lectures, seminars, awards and surveys are in the works.
"The ultimate objective of investment relations is to ensure a fair valuation of the company is reflected in its price," Mr Chojnacki says. "Investors want to see past the distorting effect of rumours and speculation around a stock, and the best way to achieve that is to put in place an internal mechanism - investor relations - that acts as a 'face' for the company and tells its story to the outside world in a clear, concise and engaging fashion."
So will IR spread like wildfire across the Middle East?
"There's a lot of change going on in this market with the arrival of the international investment community," Mr Schutzmann says. "They have a whole different set of requirements, and companies will be forced to meet them if they want that capital. Every company in the UAE is in growth mode, and if you want to grow beyond the country's borders, you're going to need capital."
@Email:afitch@thenational.ae
Citadel: Honey Bunny first episode
Directors: Raj & DK
Stars: Varun Dhawan, Samantha Ruth Prabhu, Kashvi Majmundar, Kay Kay Menon
Rating: 4/5
The burning issue
The internal combustion engine is facing a watershed moment – major manufacturer Volvo is to stop producing petroleum-powered vehicles by 2021 and countries in Europe, including the UK, have vowed to ban their sale before 2040. The National takes a look at the story of one of the most successful technologies of the last 100 years and how it has impacted life in the UAE.
Read part four: an affection for classic cars lives on
Read part three: the age of the electric vehicle begins
Read part one: how cars came to the UAE
New schools in Dubai
The%20specs
%3Cp%3E%3Cstrong%3EEngine%3A%3C%2Fstrong%3E%201.8-litre%204-cyl%20turbo%0D%3Cbr%3E%3Cstrong%3EPower%3A%20%3C%2Fstrong%3E190hp%20at%205%2C200rpm%0D%3Cbr%3E%3Cstrong%3ETorque%3A%3C%2Fstrong%3E%20320Nm%20from%201%2C800-5%2C000rpm%0D%3Cbr%3E%3Cstrong%3ETransmission%3A%20%3C%2Fstrong%3ESeven-speed%20dual-clutch%20auto%0D%3Cbr%3E%3Cstrong%3EFuel%20consumption%3A%3C%2Fstrong%3E%206.7L%2F100km%0D%3Cbr%3E%3Cstrong%3EPrice%3A%3C%2Fstrong%3E%20From%20Dh111%2C195%0D%3Cbr%3E%3Cstrong%3EOn%20sale%3A%20%3C%2Fstrong%3ENow%3C%2Fp%3E%0A
Company%20Profile
%3Cp%3E%3Cstrong%3ECompany%3A%3C%2Fstrong%3E%20Astra%20Tech%3Cbr%3E%3Cstrong%3EStarted%3A%20%3C%2Fstrong%3EMarch%202022%3Cbr%3E%3Cstrong%3EBased%3A%20%3C%2Fstrong%3EDubai%3Cbr%3E%3Cstrong%3EFounder%3A%20%3C%2Fstrong%3EAbdallah%20Abu%20Sheikh%3Cbr%3E%3Cstrong%3EIndustry%3A%3C%2Fstrong%3E%20technology%20investment%20and%20development%3Cbr%3E%3Cstrong%3EFunding%20size%3A%3C%2Fstrong%3E%20%24500m%3C%2Fp%3E%0A
COMPANY PROFILE
Name: Kumulus Water
Started: 2021
Founders: Iheb Triki and Mohamed Ali Abid
Based: Tunisia
Sector: Water technology
Number of staff: 22
Investment raised: $4 million
Sour%20Grapes
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Superliminal%20
%3Cp%3EDeveloper%3A%20Pillow%20Castle%20Games%0D%3Cbr%3EPublisher%3A%20Pillow%20Castle%20Games%0D%3Cbr%3EConsole%3A%20PlayStation%204%26amp%3B5%2C%20Xbox%20Series%20One%20%26amp%3B%20X%2FS%2C%20Nintendo%20Switch%2C%20PC%20and%20Mac%0D%3Cbr%3ERating%3A%204%2F5%3C%2Fp%3E%0A
Europe’s rearming plan
- Suspend strict budget rules to allow member countries to step up defence spending
- Create new "instrument" providing €150 billion of loans to member countries for defence investment
- Use the existing EU budget to direct more funds towards defence-related investment
- Engage the bloc's European Investment Bank to drop limits on lending to defence firms
- Create a savings and investments union to help companies access capital
Profile
Company: Justmop.com
Date started: December 2015
Founders: Kerem Kuyucu and Cagatay Ozcan
Sector: Technology and home services
Based: Jumeirah Lake Towers, Dubai
Size: 55 employees and 100,000 cleaning requests a month
Funding: The company’s investors include Collective Spark, Faith Capital Holding, Oak Capital, VentureFriends, and 500 Startups.
When Umm Kulthum performed in Abu Dhabi
Known as The Lady of Arabic Song, Umm Kulthum performed in Abu Dhabi on November 28, 1971, as part of celebrations for the fifth anniversary of the accession of Sheikh Zayed bin Sultan Al Nahyan as Ruler of Abu Dhabi. A concert hall was constructed for the event on land that is now Al Nahyan Stadium, behind Al Wahda Mall. The audience were treated to many of Kulthum's most well-known songs as part of the sold-out show, including Aghadan Alqak and Enta Omri.
SERIES INFO
Afghanistan v Zimbabwe, Abu Dhabi Sunshine Series
All matches at the Zayed Cricket Stadium, Abu Dhabi
Test series
1st Test: Zimbabwe beat Afghanistan by 10 wickets
2nd Test: Wednesday, 10 March – Sunday, 14 March
Play starts at 9.30am
T20 series
1st T20I: Wednesday, 17 March
2nd T20I: Friday, 19 March
3rd T20I: Saturday, 20 March
TV
Supporters in the UAE can watch the matches on the Rabbithole channel on YouTube
Directed by: Craig Gillespie
Starring: Emma Stone, Emma Thompson, Joel Fry
4/5
MATCH INFO
Champions League quarter-final, first leg
Ajax v Juventus, Wednesday, 11pm (UAE)
Match on BeIN Sports
How to watch Ireland v Pakistan in UAE
When: The one-off Test starts on Friday, May 11
What time: Each day’s play is scheduled to start at 2pm UAE time.
TV: The match will be broadcast on OSN Sports Cricket HD. Subscribers to the channel can also stream the action live on OSN Play.
Company Profile
Founders: Tamara Hachem and Yazid Erman
Based: Dubai
Launched: September 2019
Sector: health technology
Stage: seed
Investors: Oman Technology Fund, angel investor and grants from Sharjah's Sheraa and Ma'an Abu Dhabi
MATCH INFO
Uefa Champions League, last-16 second leg
Paris Saint-Germain (1) v Borussia Dortmund (2)
Kick-off: Midnight, Thursday, March 12
Stadium: Parc des Princes
Live: On beIN Sports HD
RESULTS
Manchester United 2
Anthony Martial 30'
Scott McTominay 90 6'
Manchester City 0
Some of Darwish's last words
"They see their tomorrows slipping out of their reach. And though it seems to them that everything outside this reality is heaven, yet they do not want to go to that heaven. They stay, because they are afflicted with hope." - Mahmoud Darwish, to attendees of the Palestine Festival of Literature, 2008
His life in brief: Born in a village near Galilee, he lived in exile for most of his life and started writing poetry after high school. He was arrested several times by Israel for what were deemed to be inciteful poems. Most of his work focused on the love and yearning for his homeland, and he was regarded the Palestinian poet of resistance. Over the course of his life, he published more than 30 poetry collections and books of prose, with his work translated into more than 20 languages. Many of his poems were set to music by Arab composers, most significantly Marcel Khalife. Darwish died on August 9, 2008 after undergoing heart surgery in the United States. He was later buried in Ramallah where a shrine was erected in his honour.
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
The specs: 2019 Haval H6
Price, base: Dh69,900
Engine: 2.0-litre turbocharged four-cylinder
Transmission: Seven-speed automatic
Power: 197hp @ 5,500rpm
Torque: 315Nm @ 2,000rpm
Fuel economy, combined: 7.0L / 100km
Biog
Age: 50
Known as the UAE’s strongest man
Favourite dish: “Everything and sea food”
Hobbies: Drawing, basketball and poetry
Favourite car: Any classic car
Favourite superhero: The Hulk original
MATCH INFO
Uefa Champions League semi-final, second leg
Real Madrid (2) v Bayern Munich (1)
Where: Santiago Bernabeu, Madrid
When: 10.45pm, Tuesday
Watch Live: beIN Sports HD
Roger Federer's 2018 record
Australian Open Champion
Rotterdam Champion
Indian Wells Runner-up
Miami Second round
Stuttgart Champion
Halle Runner-up
Wimbledon Quarter-finals
Cincinnati Runner-up
US Open Fourth round
Shanghai Semi-finals
Basel Champion
Paris Masters Semi-finals
Abaya trends
The utilitarian robe held dear by Arab women is undergoing a change that reveals it as an elegant and graceful garment available in a range of colours and fabrics, while retaining its traditional appeal.
Martin Sabbagh profile
Job: CEO JCDecaux Middle East
In the role: Since January 2015
Lives: In the UAE
Background: M&A, investment banking
Studied: Corporate finance
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
Primera Liga fixtures (all times UAE: 4 GMT)
Friday
Real Sociedad v Villarreal (10.15pm)
Real Betis v Celta Vigo (midnight)
Saturday
Alaves v Barcelona (8.15pm)
Levante v Deportivo La Coruna (10.15pm)
Girona v Malaga (10.15pm)
Las Palmas v Atletico Madrid (12.15am)
Sunday
Espanyol v Leganes (8.15pm)
Eibar v Athletic Bilbao (8.15pm)
Getafe v Sevilla (10.15pm)
Real Madrid v Valencia (10.15pm)
Jiu-jitsu calendar of events for 2017-2018:
August 5:
Round-1 of the President’s Cup in Al Ain.
August 11-13:
Asian Championship in Vietnam.
September 8-9:
Ajman International.
September 16-17
Asian Indoor and Martial Arts Games, Ashgabat.
September 22-24:
IJJF Balkan Junior Open, Montenegro.
September 23-24:
Grand Slam Los Angeles.
September 29:
Round-1 Mother of The Nation Cup.
October 13-14:
Al Ain U18 International.
September 20-21:
Al Ain International.
November 3:
Round-2 Mother of The National Cup.
November 4:
Round-2 President’s Cup.
November 10-12:
Grand Slam Rio de Janeiro.
November 24-26:
World Championship, Columbia.
November 30:
World Beach Championship, Columbia.
December 8-9:
Dubai International.
December 23:
Round-3 President’s Cup, Sharjah.
January 12-13:
Grand Slam Abu Dhabi.
January 26-27:
Fujairah International.
February 3:
Round-4 President’s Cup, Al Dhafra.
February 16-17:
Ras Al Khaimah International.
February 23-24:
The Challenge Championship.
March 10-11:
Grand Slam London.
March 16:
Final Round – Mother of The Nation.
March 17:
Final Round – President’s Cup.
Results
6.30pm Madjani Stakes Rated Conditions (PA) I Dh160,000 I 1,900m I Winner: Mawahib, Tadhg O’Shea (jockey), Eric Lemartinel (trainer)
7.05pm Maiden Dh150,000 I 1,400m I Winner One Season, Antonio Fresu, Satish Seemar
7.40pm: Maiden Dh150,000 I 2,000m I Winner Street Of Dreams, Pat Dobbs, Doug Watson
8.15pm Dubai Creek Listed I Dh250,000 I 1,600m I Winner Heavy Metal, Royston Ffrench, Salem bin Ghadayer
8.50pm The Entisar Listed I Dh250,000 I 2,000m I Winner Etijaah, Dane O’Neill, Doug Watson
9.25pm The Garhoud Listed I Dh250,000 I 1,200m I Winner Muarrab, Dane O’Neill, Ali Rashid Al Raihe
10pm Handicap I Dh160,000 I 1,600m I Winner Sea Skimmer, Patrick Cosgrave, Helal Al Alawi
UAE currency: the story behind the money in your pockets
Biography
Favourite Meal: Chicken Caesar salad
Hobbies: Travelling, going to the gym
Inspiration: Father, who was a captain in the UAE army
Favourite read: Rich Dad Poor Dad by Robert Kiyosaki and Sharon Lechter
Favourite film: The Founder, about the establishment of McDonald's
