Interview with Ahmed Al Khan on Investment at GBcorp

Ahmed Al Khan is the Head of Invesment Banking at GBCORP

Please tell us about the Investment opportunities you are offering

GBCORP’s strategy is to grasp global investment opportunities and address the growing demand for Islamic investment instruments at both a regional and international level. We have focused on creating a Shari’a-compliant portfolio of investments that have global appeal. We look at short, medium and long term investments where we are focused on creating entities that give investors a number of direct investment opportunities.
It is important to look at Multi sectored investment opportunities in order to give investors diverse portfolio offering in real estate and infrastructure, industrial areas, energy, services. The Globe is opportunistic and we see markets that are inflated and others that are deflated.
Today we are witnessing a recessionary market where what was expensive a year ago is cheap today. So if we have access to liquidity we can capitalize in different sectors. We are seeing a lot opportunities in real estate, energy and infrastructure among others where investing in them today will bring in a lot of money in the future.

How do Bahrain, Qatar, and Dubai compare as financial hubs?

In the 70s after the crisis in Beirut there was a migration of financial services to Bahrain and this helped in developing our infrastructure which was built around services more than commodities.
Bahrain has been recognized as a financial hub due to the Central Bank of Bahrain’s (CBB) excellent reputation as a regulatory body and the growing number of financial institutions setting up offices in Bahrain. Currently, The Kingdom of Bahrain has over 400 onshore and offshore conventional and Islamic financial institutions, which according to the Economic Development Board is the largest concentration in the region. The CBB applies the Basel II Standards and encourages transparency across all areas for all financial institutions operating in Bahrain.

How has regional market changed over last few years?

The regional market has shifted from a desert economy to a metropolitan economy bringing with it many opportunities and opening itself to the globe. The wave of liquidity that has been seen in the region created a huge increase in developments in the GCC markets. The whole economic indicators of the economy have changed where consumer needs and wants have shifted.

If we look at the Islamic banking and finance industry, we notice that it has crossed regional boundaries and come to be accepted on the global stage, due to the demand for an alternative to western banking products structured along ethically-aware Islamic principles. The global Islamic finance industry is now worth more than $1 trillion in terms of assets, having quadrupled in the last three years. Although this figure remains just a fraction of global assets, given a world Muslim population of around 1.5 billion people, the industry has enormous potential, and some of the largest western-based banking, fund management and insurance groups have now launched banking facilities compliant with Shari'a law.

Describe the type of investors are you seeking?

GBCORP incorporates diversity within its vast range of products, which are aimed at project finance for large governmental projects, wealth and fund management for high net worth individuals and unique investment opportunities and debt and equity products for individuals.
With time we will also need to be looking at dollar cost average instruments where we can introduce not only high net worth individuals but also upper middle class individuals who want to put aside some of their disposable income. So in time the investor base is going to change due to the change in the market sentiment.

Returns available?

What service can be expected?

We are currently doing services in fund management, corporate finance, financial modelling advisory and private equity. During the next few years there will be a greater focus on wealth and asset management because people will want to know how to manage their existing asset in a risk mitigated way.

Has GBCORP been hit by the current market turmoil?

GBCORP is a fairly new institution that has not been exposed to the debt market so we are in a clean slate. This market has taught us how to strategically weigh our debt and not to expose ourselves to any credit in the future.
We are concentrating on strengthening our risk mitigated strategies because GBCORP is rapidly growing in a time where opportunities are found in various markets. Our challenge is choose the right markets to tap into.

Is this the worst financial crisis in 60 years (George Soros)?

Indicators show that this is the worst financial crisis in 60 years where we see that one market has brought down the entire globe. This just shows us how the world has globalized today, where one economy can affect so many others; a scream in one end of the globe can be heard on the other end. The Credit crunch situation, mortgage situation, equity market downfall has gone cross boundary.

Is a recession in the developed world inevitable? How do you feel this region will be affected?

We are already in a recession where we see unemployment rates are rising, book value of companies falling, debt market crashing, people’s retirement packages dropping, consumer price index dropping. When Economic indicators in the economy drop it is a sign of a recession. The recession is beyond preventable but the important thing is to be able to bounce out of it.

Does this mark the end of an era for credit expansion based on the dollar as the international reserve currency?

Where will new capital be found – sovereign wealth funds? - The firms that bailed out Long term Capital in 98 did very well

Sovereign wealth funds today are not bailing out American companies but rather reinvesting in their economy. For Islamic banks, new capital will be found in emerging markets that want to multiply their wealth and expand. Sovereign wealth funds are being more conservative in order to conserve their wealth.

Is the global financial system on its knees? - Financial authorities can’t seem to stimulate the economy as before due to unwillingness of rest of world to accumulate additional dollar reserves.

The global financial system is on its knees because the global markets have crashed, and when you are down you are on your knees. No matter how you stimulate the economy the economy is made up of complex adaptive units and will still act randomly. We can say that financial systems are pegged against people who have different and random reactions that can’t be predicted. Each element in the economy being a complex adaptive unit will adapt to its own need.

For example, in a down torn of an economy you would want people not to sell but because each individual will ac in his own interest it will automatically drag the economy down. No matter how many dollars we inject in the economy we still have to deal with the psychology of the economy as a whole which is not dollar based.

Is now a good time to be investing; why? In what?

In my opinion, it is a very good time to be investing. The market is cheap and those who are liquid with a long term vision should take this opportunity in investments. Europe and North America have fantastic real estate opportunities where prices are very low and equity market shares, if carefully picked, are record low.