The Qatari holding company is seeking new partnerships at home and abroad
Company snapshot: Gulf International Services
Date established Incorporated as a Qatari shareholding company in 2008
Main sector Oil and gas support services
Main business region Qatar
Chairman Abdullah bin Hamad al-Attiyah
Gulf International Services structure
Doha-based Gulf International Services (GIS) is one of the largest oil and gas service companies in Qatar. Originally part of state energy firm Qatar Petroleum (QP), it became a stand-alone Qatari shareholding company in February 2008 and its initial capital of QR5m ($1.4m)was divided into 499,999 ordinary shares.
In May 2008, GIS listed 70 per cent of its issued capital on the Doha Securities Market. Today, GIS-issued capital comprises QR1.229bn of ordinary shares, worth QR10 each.
Its major shareholders are QP, with 30 per cent, along with three government bodies: the Education and Health Fund; the Qatar Foundation; and the Pension and Retirement General Authority, which each have a 1.4 per cent stake.
The company’s chairman and managing director is Abdullah bin Hamad al-Attiyah, who is also deputy prime minister and minister of energy and industry for the state of Qatar.
| GIS financial performance | ||
|---|---|---|
| (QRm) | 2008* | 2009 |
| Revenues | 947 | 1,570 |
| Net profit | 423.4 | 565 |
| * Data covers February-December 2008. Source: Gulf International Services | ||
Gulf International Services operations
GIS operates as a holding company for three drilling support, insurance and transport firms previously owned by QP.
The company wholly owns the insurance company Al-Koot Insurance & Reinsurance Company and the transport and service venture Gulf Helicopters Company (GHC). It also owns a 69.99 per cent stake in Gulf Drilling International (GDI).
QP founded Al-Koot in 2003 to offer specialist cover for companies involved in Qatar’s oil and gas sector. In 2008, QP transferred ownership of Al-Koot to GIS. But QP continues to employ Al-Koot as its captive insurance and reinsurance company.
Al-Koot’s core business segments include the energy, construction and marine industries and it is also supporting QP’s overseas expansion through strategic investments.
In recent years, Al-Koot has developed aggressively into the medical insurance sector. Its health insurance programmes cover 98 per cent of Qatar’s healthcare outlets and 25,000 bases abroad. The Al-Koot Global Care Plan is a partnership with insurance giant AXA of France. Initially, it targeted Qatar-based oil and gas companies, but recent new clients include Qatar National Bank and Qatar Telecom.
| Targeted revenues (QRm) | ||||
|---|---|---|---|---|
| 2010e | 2011f | 2012f | 2013f | 2014f |
| 1,483 | 1,786 | 2,016 | 2,240 | 2,365 |
| e=Estimate. F=Forecast. Source: Gulf International Services | ||||
GHC has evolved into one of the largest operators of helicopters in the Middle East and marked its 40th anniversary in 2010. It was created in 1970 as a subsidiary of British Overseas Airways Corporation (BOAC), which later sold the business to Gulf Aviation Company. QP bought the business in 1998.
GHC has expanded from its focus on Qatar into international markets, including India, Oman, Saudi Arabia, Yemen, Sudan and Libya. Today, it commands a fleet of 36 helicopters. Major clients include the US’ Bechtel, Qatargas, ExxonMobil of the US and QP.
The company’s fleet of helicopters work on offshore operations, onshore transport, VIP transport, photographic flights and seismic surveys. In 2007, GHC launched an emergency airlift service, deploying helicopters for the ministry of health and for Hamad Medical Corporation, the main provider of healthcare services in Qatar.
| Targeted profits (QRm) | ||||
|---|---|---|---|---|
| 2010e | 2011f | 2012f | 2013f | 2014f |
| 394 | 445 | 496 | 609 | 662 |
| e=Estimate. F=Forecast. Source: Gulf International Services | ||||
GDI is Qatar’s oldest homegrown offshore and onshore drilling company, founded in 2004. It offers specialist land and offshore drilling services to companies involved in oil and gas exploration and production.
Qatar-registered GDI started out as a 60:40 joint venture with Japan Drilling Company. In the years that followed, QP increased its stake from 60 per cent to nearly 70 per cent. GDI’s issued share capital stands at 37,574,088 ordinary shares, valued at QR10 each.
GDI employs close to 1,000 staff and owns nine modern drilling rigs. Four of its rigs are built for onshore drilling and five are offshore jack-up rigs. The firm aims to expand its drilling activity and launch new services to complement its existing portfolio of offerings to the energy sector.
Gulf International Services ambitions
The economic downturn has seen a slowdown in regional drilling activity. GIS has responded to this by seeking new joint venture opportunities outside Qatar. In a press conference this summer, GIS pledged to find new partnerships that would allow it to start drilling in international markets.
Further growth is expected to come from expansion into new business areas, in particular from expanded insurance cover, with plans to increase Al-Koot’s medical cover for serviced clients.
GHC, meanwhile, plans to invest in two new helicopters to serve the local market, making it possible to deploy some of the company’s existing craft outside Qatar. For its part, GIS’s drilling division has been negotiating with prospective clients to redeploy one offshore and one onshore rig, whose contracts were due to expire by the end of the year.
GIS is targeting revenue growth of 8.5 per cent a year over the next five years.
GIS enters 2011 with confidence intact
Despite this year’s economic uncertainty, Gulf International Services (GIS) has pushed ahead with its commitment to modernise and expand the Gulf Helicopters Company’s (GHC) fleet, replacing one of its older Bell 412 helicopters with three new AW139 helicopters. These acquisitions contributed to a 9.5 per cent increase in GHC revenues to QR327.2m in the first nine months of 2010.
GHC will add two more helicopters to its fleet, which will be deployed in the local market, allowing the company to place more of its fleet in international markets. This will boost the group’s plans to explore new opportunities outside Qatar.
Other prospects for growth come from Al-Koot Insurance & Reinsurance Company’s activities. GIS has seen a 3.1 per cent increase in premiums to QR350.4m in the first nine months of the year. The group attributes this increase largely to strong demand in Qatar for medical cover.
Al-Koot is well placed to tap into growing Qatari and regional demand for private medical cover and to seek new business from non-energy companies. Qatar’s insurance industry generated total premiums of QR4.3bn in 2010, and the industry expects Qatar to more than double its total premiums to more than QR9bn by 2015.
The Middle East is poised for an insurance boom, with the highest growth rates in the oil-rich Gulf states. According to insurance rating and information agency AM Best, the insurance markets of Qatar, the UAE and Saudi Arabia were poised for an increase in combined total gross written premiums of 15-20 per cent in 2010.
Al-Koot is planning to tap into national and regional insurance growth, at a time when Qatar Financial Centre (QFC) is also positioning Doha as a regional hub to rival Manama and Dubai. Medical cover is the fastest-growing segment of the industry in Qatar, and
Al-Koot wants to increase its 70 per cent share of the local medical insurance market.
This year, the GIS drilling business turned in a weaker performance than its two sister firms. In the first nine months, Gulf Drilling International (GDI) saw a 16.3 per cent drop in revenues to QR432.3m. Weaker demand for drilling equipment saw a quarter of the region’s drilling rigs laid up this year.
As a result, GIS’s Al-Rayyan offshore rig remained off-contract after being taken out for maintenance. Two other GDI rigs were signed into new contracts at lower rates and the company expects clients to negotiate lower rates for seven other rigs as existing contracts expire. GDI aims to finalise several new GCC contracts in 2011.
Despite weaker demand for drilling, GIS has maintained a diverse-enough business base to come through a tough year in relatively good shape. In a year that saw Qatar increase its liquefied natural gas export capacity to 77 million tonnes a year, the country has proven more resilient to the global downturn than most.
Where other companies are tightening their belts, GIS has set itself a four-year target to increase its revenues to nearly QR2.4bn and its profits to QR662m by 2014.
As Qatari investors spread their wings into new overseas markets, the country’s leading services conglomerate is poised to follow suit. One option is to pursue strategic acquisitions; another is to expand the group’s existing specialist services into emerging markets, including Turkey, Algeria and Iran.
The company’s decision to expand internationally and to venture into activities that complement its existing business portfolio will almost certainly stand it in good stead. But while recession is throwing up countless new opportunities, the challenge facing GIS is to identify the right acquisitions and new market opportunities to suit its mix of businesses.
Gulf International Services Profile
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