It is the London base of the Abu Dhabi Investment Authority, probably the world’s most important institutional investor, and an easy walk from the homes of some of the most influential investors on earth.
For these reasons and more it is an appropriate and convenient base for Gulf International Bank (GIB) Asset Management, one of the few successful businesses of its kind to emerge from the banks of the Middle East in the past quarter century.
Bahrain-based GIB has undergone in the past two years two vital changes. In 1999, it merged with Saudi International Bank (SIB), which was majority-owned by the Saudi Arabian Monetary Agency (SAMA – central bank). In 2001, Gulf Investment Corporation (GIC) divested its stake in the bank, which is now directly owned by the six governments of the GCC, SAMA with 22.5 per cent and JP Morgan Overseas Capital Corporation with the remaining 5.3 per cent.
David Waite, head of GIB Asset Management since the end of 2000, welcomes the end of a period of internal change and looks forward to the opportunities that lie ahead with relish. ‘The merger with SIB did not touch asset management at all,’ he said in an interview in London in early October. ‘For us, it was welcome because it branded us with a pan-Arab name. Trying to sell our services under SIB was very difficult. It has been easier with GIB.’
Waite joined SIB in 1991 after a spell working as an equity investment manager with the UK’s Friends Provident. In 1997, Waite took over SIB portfolio management and at the end of 2000 was promoted to lead GIB’s asset management team, reporting to Matthew Snyder, now head of the bank’s merchant banking group.
Waite counted out the blessings of the changes. ‘GIC has an asset management business, but it has decided to close the discretionary portfolio management side,’ Waite said. ‘We have been a net beneficiary of that decision.’ The decision of United Bank of Kuwait (UBK), now part of Ahli United Bank, to contract out this area was another beneficial development.
For Waite, 2001 represented a fresh start for GIB Asset Management. It has two core products: discretionary portfolio services in equities and fixed income, which are marketed to major institutions in the Middle East, and a growing franchise of funds.
Delivering the service is a team of 15 investment managers in London who work across functional boundaries with GIB’s London financial markets team on emerging markets, equity products and derivatives. At the cutting edge of the business on the ground are head of sales and marketing Tim Jackson, previously of Baring Asset Management’s Bahrain office, and Ehab Emiri. Both are based in GIB’s head office in Manama.
‘We are focusing on the Middle East client base,’ said Waite. ‘We see ourselves as an indigenous Middle East-based asset manager.’
The scale of operations is set to grow. GIB Asset Management’s Falcon family of funds offer customers a diversified range of products, three of them in high-yield funds, one emerging market debt fund, one equity hedge fund, one currency and interest futures fund and a collateralised bond obligation fund launched in 2000. GIB also successfully co-manages a private equity fund from New York which includes both international and Middle Eastern investors.
On top of this are two retail funds: the global equity fund and the enhanced liquidity fund for cash management. Said Waite: ‘These two products represent the building blocks to enable us to appeal to the smaller institutional investor and the high net worth individual.’
The GIB strategy is to invest its own money in the funds. ‘We have a programme of seeding funds with our own capital,’ Waite said. A total of $173 million has been invested to match the $480 million coming from clients.
There have been plaudits on the way. In July, GIB’s Falcon Relative Value fund won the top-performing newcomer single manger fund prize in the Hedge Funds Review awards. In prospect are some new products. ‘We are launching a US long/short hedge fund at the end of October, which we are seeding with about $10 million,’ Waite said.
In discretionary management, GIB has $5,000 million provided by a wide range of predominately institutional clients. The minimum size of investment is $20 million, but most customers place much more with GIB. ‘That is where we see the most potential for growth,’ Waite said. ‘What we have is a business with the people, the process and the track record and a product line which is reasonably diversified. We are looking to leverage all that and we can take on more assets and more clients without significantly increasing the cost base.’
‘This has been a tough year,’ he continued. ‘We have equity markets down by 20 per cent plus. This is not a pleasant experience, but we have outperformed benchmarks across the board and new accounts are coming in.’
The future looks better. ‘I am very optimistic about the coming year,’ Waite concluded. ‘There is a lot of liquidity around. A lot of clients are looking to change their managers. We have picked up business on the back of that. We expect to see more of that next year.’
David Waite, head of GIB Asset Management, is a speaker at MEED’s Asset Management Conference in Bahrain on 29-30 January at Le Royal Meridien hotel. For further information contact: MEED Conferences, 33-39 Bowling Green Lane, London EC1R 0DA. Tel: 0207 505 8564. Fax: 0207 505 8566 E-mail: email@example.com