al ritaj investment company investment process presentation
TRANSCRIPT
Al Ritaj Investment Company
Investment Process Presentation
14th November 2007
Al Ritaj SME Forum
Yasser Dib – Chief Investment Officer
Al Ritaj Investment - Private Equity Model
Private EquityAsset
ManagementAdvisory Placement
Direct Investments Special Purpose Vehicles
Paid-up capital of KD 25m to be primarily invested by Ritaj in SME’s within the region
Stringent & specific investment criteria
Returns to Ritaj are dependent on post-investment management and exit
Ritaj creates & manages SPV’s such as Private Equity Funds and Holding Companies
Ritaj may choose to also directly invest in these investment structures
SPV’s may have a defined theme, including specific sector and investment focus
Returns to Ritaj are dependent on post-investment management and exit
Investment Strategy & Criteria
Investment StrategyInvest in small to medium size privately held companies with growing markets, strong products / services, and
recognized brand name .
Target Company Stage
Investment Period
Kuwait (initially) GCC Middle East MENAGeography
Participation
Target Sector All sectors
Investment Size
Shariah Law Compliant with Shariah Law within 3 years
Growth stage, early stage, or turnaround situations
KD 1m to KD 10m
Majority or Active Minority Stake
Target 3-5 years investment horizon
Deal Size vs Transaction Cost
Transaction Cost as % of Deal Size
Deal Size
Ritaj will work with the Target owners to optimize the commercial and legal structure in line with industry standards and regulations
Non-Optimal Commercial and Legal Structure
Ritaj will introduce industry best practice Corporate Governance policies & procedures
Corporate Governance
Ritaj will ensure the correct planning systems and techniques are executed within the Target
Planning
Ritaj will work with the Target’s management to develop an appropriate succession plan and cover any HR deficiencies
HR Gaps (Personality Based)
Ritaj will utilize its expertise to introduce appropriate accounting, IT and management information systems
Systems
Value Added By RitajChallenges
Ritaj will ensure that the personal accounts of the Owners are at an arm’s length with the Company
Personal / Company Mixed Accounts
Investment Approval Process
Investment Group
Investment Committee
Ex Comm / Board
Shariah Board
CEO
ScreeningPreliminary
Due DiligenceDetailed Due
Diligence Closing
Raise Shariah Compliance Issues
Sign MOU
Final Approval
Prelim Approval
Prelim Approval
Approve
NotifyFinal Approval
Final Signature
Continuously Update Form
Pri
orit
y or
der
Time Sequence (4-5 months)
Develop Offer Subject to DD
Approve
Approve
Approve
Peer Review & Challenge
Approve Final Approval
Prepare Investment
Analysis Form
Screening Process
Target OwnersTarget Owners Al Ritaj InvestmentAl Ritaj Investment AdvisorsAdvisors
OutcomeOutcome
Shariah Compliant
Reputation of business partner
Investment not financing
Geography
Deal size
Investment Criteria
Strategic Fit
% Ownership
Assess Criteria
Shariah Compliancy
Active Participation in Management by Ritaj
Develop & Restructure Co.
Change Legal Status (if necessary)
Agrees To
Ritaj Exit Scenarios
Full Disclosure of Financial / Non Financial Information
No Involvement At This Stage
Signed LOI / MOU / Exclusivity
Roles and Responsibilities
Investment Approval Process
Investment Group
Investment Committee
Ex Comm / Board
Shariah Board
CEO
ScreeningPreliminary
Due DiligenceDetailed Due
Diligence Closing
Raise Shariah Compliance Issues
Sign MOU
Final Approval
Prelim Approval
Prelim Approval
Approve
NotifyFinal Approval
Final Signature
Continuously Update Form
Pri
orit
y or
der
Time Sequence (4-5 months)
Develop Offer Subject to DD
Approve
Approve
Approve
Peer Review & Challenge
Approve Final Approval
Prepare Investment
Analysis Form
Investment Analysis Form
Post-Investment Plan
Company Description
Technology
Shari’ah Compliant
Partner / Management
Industry Attractiveness
Current non-shariah compliant issues
Willingness of partners to be shariah compliant
Industry Size and Growth Rate Market Analysis Industry Key Success Factors Competitive landscape Industry Risk Analysis
Post-investment business plan Plan to enhance management and
achieve objectives Reporting requirements Ritaj Board participation
Business mix, size, market share, growth issues
Historical financial performance Product description, pricing, brand,
promotion etc
Strengths / Weaknesses of current Management
Credibility and track record of potential Partners
Alignment of interests
Technology requirements Technology advantages /
disadvantages Technology partner credibility and
background
Exit Options Size of Target and business plan
conducive to IPO? Trade sale ? Sale to other potential investors
such as funds etc.
Valuation / Financial Analysis DCF, Comparable and NAV
valuation methods ROI, ROE, IRR etc calculations Sensitivity Analysis on key drivers
of Target
Commercial / Financial Plan Current shareholding structure Financing plan of investment Post-investment capital and
financial structure
TARGET COMPANY
Risk Factors Commercial and financial risk Product and supplier / customer
risk Legal risk Key management risk
Investment Approval Process
Investment Group
Investment Committee
Ex Comm / Board
Shariah Board
CEO
ScreeningPreliminary
Due DiligenceDetailed Due
Diligence Closing
Raise Shariah Compliance Issues
Sign MOU
Final Approval
Prelim Approval
Prelim Approval
Approve
NotifyFinal Approval
Final Signature
Continuously Update Form
Pri
orit
y or
der
Time Sequence (4-5 months)
Develop Offer Subject to DD
Approve
Approve
Approve
Peer Review & Challenge
Approve Final Approval
Prepare Investment
Analysis Form
Preliminary Due Diligence
Target OwnersTarget Owners Al Ritaj InvestmentAl Ritaj Investment AdvisorsAdvisors
OutcomeOutcome
Market Size and Potential
Evaluates
Last 3 year audited financial statements
Agrees To Provide
Develop an Offer
Company’s Articles of Association
5 year business plan and forecast
Industry and company reports (if available)
Organizational Structure
Competitive Analysis
Management Evaluation
Value Proposition
Drivers of Growth / Turnaround
Possible Exit Options
Initial Valuation
Major KPI’s
Roles and Responsibilities
Engaged to Provide
Specific Market and Industry Reports
Investment Approval Process
Investment Group
Investment Committee
Ex Comm / Board
Shariah Board
CEO
ScreeningPreliminary
Due DiligenceDetailed Due
Diligence Closing
Raise Shariah Compliance Issues
Sign MOU
Final Approval
Prelim Approval
Prelim Approval
Approve
NotifyFinal Approval
Final Signature
Continuously Update Form
Pri
orit
y or
der
Time Sequence (4-5 months)
Develop Offer Subject to DD
Approve
Approve
Approve
Peer Review & Challenge
Approve Final Approval
Prepare Investment
Analysis Form
Development of Offer
Target OwnersTarget Owners Al Ritaj InvestmentAl Ritaj Investment AdvisorsAdvisors
OutcomeOutcome
Detailed Valuation Model
Develops
Price
Agrees To
Ritaj Makes Offer to Target Owners – Subject to Detailed Due Diligence
Optimum Equity Stake
Board Seat Representation
Roles and Responsibilities
Equity Stake
Ritaj Board ParticipationObtains Preliminary Internal ApprovalsOther specific
commercial termsKey commercial terms
Commercial / financial and legal restructuring (if necessary)
Legal Advice
Financial Advice
Technical Advice
Investment Approval Process
Investment Group
Investment Committee
Ex Comm / Board
Shariah Board
CEO
ScreeningPreliminary
Due DiligenceDetailed Due
Diligence Closing
Raise Shariah Compliance Issues
Sign MOU
Final Approval
Prelim Approval
Prelim Approval
Approve
NotifyFinal Approval
Final Signature
Continuously Update Form
Pri
orit
y or
der
Time Sequence (4-5 months)
Develop Offer Subject to DD
Approve
Approve
Approve
Peer Review & Challenge
Approve Final Approval
Prepare Investment
Analysis Form
Detailed Due Diligence
Target OwnersTarget Owners Al Ritaj InvestmentAl Ritaj Investment AdvisorsAdvisors
OutcomeOutcome
Financial Integrity of Audited Statements
Evaluates
Support to External Advisors
Agrees To Provide
Agreement of Final Price, Main Contract Terms & Closing Schedule
Roles and Responsibilities
Engaged to Provide
Legal Due Diligence
Financial Due Diligence
Technical Due Diligence
HR Due Diligence
Any Commercial and/or Legal Issues of Target Company
Technical Issues
Any Additional Liabilities
Furnish all Company Information as requested by Advisors & Ritaj
Risk Analysis & Management Capabilities
HR Issues
Investment Approval Process
Investment Group
Investment Committee
Ex Comm / Board
Shariah Board
CEO
ScreeningPreliminary
Due DiligenceDetailed Due
Diligence Closing
Raise Shariah Compliance Issues
Sign MOU
Final Approval
Prelim Approval
Prelim Approval
Approve
NotifyFinal Approval
Final Signature
Continuously Update Form
Pri
orit
y or
der
Time Sequence (4-5 months)
Develop Offer Subject to DD
Approve
Approve
Approve
Peer Review & Challenge
Approve Final Approval
Prepare Investment
Analysis Form
Closing
Target OwnersTarget Owners Al Ritaj InvestmentAl Ritaj Investment AdvisorsAdvisors
OutcomeOutcome
Negotiate Final price and Main Commercial Terms
Undertakes to
Negotiate Final Terms and Conditions in Good Faith
Undertakes to
Signed Share Purchase Agreement and Execution of Buy / Sell Orders
Roles and Responsibilities
Engaged to Provide
Legal Advice and Support
Commercial and Financial Structure of Investment
Legal Structure of Investment
Contract Negotiations
Contract Negotiation
Broker Services
Prepare Post-Investment Plan
Obtain Final Approval
Change Legal and Commercial Status (if necessary)
File and obtain approval from all concerned authorities
Agree on post-investment plan
Investment Approval Process
Investment Group
Investment Committee
Ex Comm / Board
Shariah Board
CEO
ScreeningPreliminary
Due DiligenceDetailed Due
Diligence Closing
Raise Shariah Compliance Issues
Sign MOU
Final Approval
Prelim Approval
Prelim Approval
Approve
NotifyFinal Approval
Final Signature
Continuously Update Form
Pri
orit
y or
der
Time Sequence (4-5 months)
Develop Offer Subject to DD
Approve
Approve
Approve
Peer Review & Challenge
Approve Final Approval
Prepare Investment
Analysis Form
Questions and Answers