Mr. Muhannad Al-Sane -Chairman & CEO participated as a speaker on behalf of AL-RIYADA FINANCE & INVESTMENT CO. in Inslamic Finance News (IFN) Kuwait Forum 2015 which was held in Kuwait 19/11/2015.
The Islamic finance industry continues to go from strength to strength in Kuwait, with its five Islamic banks experiencing 11% growth this year (compared to 8% for the five conventional banks) and capturing 38% of total assets. But the country offers much more than just Islamic banking – asset management and international investment opportunities are also expanding while the huge infrastructure and project finance pipeline is finally welcoming the prospect of Islamic finance involvement. At yesterday’s second annual IFN Kuwait Forum the elite of the GCC  industry gathered together to analyze the exciting opportunities in this unique market.
“Islamic banks are performing extremely well. We have the pipeline to be a major player in the Kuwaiti economy. The banks are ready to step in and provide the right financing and expertise to any major project in Kuwait,” said Emad Al Monayea, CEO of Kuwait Finance House Investment. “But the big question is whether anyone is listening to these messages. Does the government think that Islamic banks and assets are ready to support their projects?”
A key theme of the event was the exceptional opportunities for public-private partnerships in the Islamic space, with multiple mega infrastructure projects coming to the market. “All of these should create the right environment to attract Islamic financing into the real economy,” confirmed Emad. While the market is growing rapidly and the opportunities are promising, challenges remain in terms of legislation and regulation, with some gaps still waiting to be filled. “We need a debt management office to come back again,” suggested Issam Al Tawari, the managing director of Rasameel Structured Finance. “There is huge potential for financing government projects and government debt. But what is needed is a clear message of how that is going to be done – what kind of tenor, what kind of currencies, so that the market can respond accordingly. This could open up a huge opportunity for the banks – who are always looking for new things that can be done in Kuwait.”
While the low oil prices have raised concerns over budget deficits and potential funding gaps in both the public and private sectors, the situation also creates an opportunity for Sukuk  to play a significant role in financing these gaps – which is encouraging news for the debt capital markets in Kuwait. “There is a perceived need… for legal and regulatory change to encourage investor confidence – this is what is needed to develop the market in Kuwait,” pointed out Paul McViety, the head of Islamic finance for DLA Piper. Change could be on its way however, with the long-awaitedSukuk  law potentially on the verge of completion following the Companies Law of 2012 tasking the Kuwait Investment Authority with a specific mandate to develop rules and regulations for Islamic bonds. In the last few weeks, the Capital Markets Authority of Kuwait reportedly issued an executive memorandum including details of Sukuk  regulations; which has led to cautious optimism in the market. “Regulatory changes are only the first step. How long will it be before we see deals coming through?” asked McViety. “Balance is key – investor protection is important but we also need something that allows issuers to go to market quickly and effectively.”
The event saw a crowded room covering wide-ranging topics from treasury and liquidity management in the GCC  to investment opportunities and preferred asset classes for Kuwaiti investors: along with a focused Deal Dialogue on the recent National Industries Group (NIG) KWD105 million (US$347.45 million) syndicated financing featuring NIG’s CFO Mubasher Sheikh. With a keenly collaborative audience and an illustrious array of speakers, IFN Kuwait 2015 yet again demonstrated the ongoing commitment to Islamic finance in the country. With a strong investment industry already in place and a burgeoning debt capital market that looks to be on the verge of taking flight, the opportunities are exciting – as long as the country takes advantage of its own ambitions.
“Kuwait has mastered the art of investing and exporting overseas, but we have yet to learn how to borrow. That is what we lack,” noted Issam. The country has a good rating (‘AA/A-1’ from S&P) but “banks need to know where to go, which door to knock on and how to tap the market,” he suggested.