Kuwait Investment Opportunities Fund aims to raise $93m

04 February 2008
The Kuwait Investment Opportunities Fund (KIOF) is aiming to raise KD 35m ($93m), according to the fund’s director, Faisal al-Hamad.

KIOF is the first fund set up to address the demand from companies with offset obligations in Kuwait for efficient ways of liquidating them.

“We are targeting four sectors for investment,” said Al-Hamad, speaking at a MEED seminar in Kuwait. “These are education, healthcare, manufacturing and technology.”

He said he expected the fund to close its fundraising activities at the end of the first quarter of 2008.

KIOF was approved by Kuwait’s Ministry of Finance and the Central Bank of Kuwait in November 2007. It is managed by NBK Capital, the investment banking division of the National Bank of Kuwait.

Mazen Madooh, managing director of Kuwait’s National Offset Company (NOC), told the seminar he expects that obligations generated by the offset programme will increase to at least $750m a year.

New guidelines approved in November and big contracts awarded in the civil infrastructure sector were starting to have a positive effect on the offset programme, he said.

“We are in the process of launching a new plan for the offset programme that will lead to a big rise in the figures,” added Madooh.

The plan is being prepared for theNOCby Ernst & Young.

TheKuwaitoffset programme was launched in 1992 and initially only applied to defence contracts. It was extended to the non-defence sector in 2002 and redefined in 2004 to exclude contracts awarded in the oil and gas sector.

TheNOCwas founded to manage the offset programme and started operating in September 2006.

Under the latest guidelines, which were approved in November 2007, the programme requires the equivalent of 35 per cent of the foreign element of a government contract worth more than KD 3m ($8m) in the defence sector, and KD 10m ($37m) elsewhere, to be invested in projects that deliver benefits to the Kuwaiti economy. They include job-creation and technology transfer.

Since the programme was launched in 1992, offset obligations of $3.1bn have been incurred. Of that figure, 38 per cent had been completed, 11 per cent was being completed and 24 per cent was under negotiation.

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