GIC is far from being a sleeping investor. Since 2001, following a review of its business practices, the company has adopted a more aggressive approach and now looks to take an active role in projects.
It is no longer a generalist financial investor, and has dedicated teams focusing on the high-growth sectors in the Gulf – the power and water, petrochemicals and metals industries – that study all the projects in the region.
Regional head: Hashim Abdulrazzaq al-Razzuqi
Equity power capacity (GCC): 1,847MW
“We are active in the sense that we select our partners and formulate a group,” says Hashim Abdulrazzaq al-Razzuqi, CEO of GIC.
“It is never our intention to take 100 per cent of a project. We take a technical partner with us and sometimes investors, but it depends from one project to another as each project has its own requirements. Our input is mostly on the financial side, on the pricing, on the selection process of the contractors, the terms and conditions, and the loans.”
GIC has been involved in the region’s power sector since the early 1990s, advising on projects such as the restructuring of the electricity system in Saudi Arabia and the GCC interconnection scheme.
The company has won about one-third of the IWPPs and IPP tenders it has competed in, including most of the early privatisation projects.
In August, it was awarded the Addur IWPP in Bahrain in a consortium with Suez.
Over the years, GIC has carved out a niche as a financial expert in the Gulf power sector. “We are perceived as an excellent partner not only by the clients but also by developers and lenders,” says Al-Razzuqi.
“We are able to get excellent financing and even though we are a government institution, we are a dynamic organisation and our decisions are taken in a very short time. We are an investor, but we also create ideas.”
Its participation is not limited to developing new generation facilities. GIC also has a 70 per cent stake in a transmission tower manufacturing joint venture with Jyoti Structures of India, and a 25 per cent holding in the Jeddah Cable Company.
With electricity consumption in the Gulf region climbing by 8-10 per cent a year and $50bn worth of additional capacity estimated to be required by 2015, Al-Razzuqi expects GIC’s involvement with the market will continue for many years.
Ultimately, though, as a finance house, the company will have to devise a plan to exit the sector once growth begins to peak.
Al-Razzuqi suggests GIC’s assets would most likely be transferred to a new company that would then be floated on the stock market.