Markaz delays US mortgage fund, Saudi buy
Kuwait City, February 24, 2009
Kuwaiti investment firm Markaz has delayed plans to set up a $100 million fund to tap low prices in the US mortgage debt market.
The firm has also postponed its plan to acquire a financial services firm in Saudi Arabia until the market stabilises.
The firm, which offers investment bank and financial services such as asset management, corporate finance or advisory on mergers, said in November it wanted to set up a fund of up to $100 million to invest in distressed debt in the US mortgage industry.
"At the moment we have shelved the idea... We found little demand (from clients)," executive vice-president of international investments and investment advisory, Gopal Menon told Reuters.
"The market has to settle down... We want to see stability in the market," Menon said.
General Manager Manaf Alhajeri told Reuters in November Markaz wanted to buy a majority stake in an unlisted financial services firm in Saudi Arabia with a capital of 50 million riyals ($13.33 million).
But Markaz sees good picks in the US and Asian equity markets as valuations in some areas are reaching "rock bottom" amid the global financial crisis, said Menon.
The firm plans to launch an investment portfolio worth up to $30 million by April to buy into US and Asian stocks including shares in Japanese, Chinese or Indian banks, he said. Markaz will invest a minimum of 5 percent of the size of the portfolio.
"We are looking at a very low price," Menon said, adding that he saw opportunities in the healthcare and consumer services sectors in the United States.
Earlier this month, Markaz launched another portfolio buying into corporate bonds in dollars in the Middle East and Gulf regions with 3-year maturity and 30 percent return on investment, he said.
"We are looking at $50-$60 million of bonds to be made available in the market," he said.
Markaz, which has about 25 percent of the mutual fund market in Kuwait, has about $5 billion under management, it said in November. - Reuters
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