Middle East Debt Capital Market Conference

1
Middle East Debt Capital Market Conference
April 2008
2
Agenda

• Overview

• Strategy

• Financial Overview Outlook

• Liability Management

• Annexures

3
KIPCO Overview
Presence across 21 countries
Key VerticalsFinancial Services Media
Premier holding company focused on MENA
Excellent management track record strong
shareholder support
Assets under management US24 billion
16 years of continued profitability
Among the most actively traded stock on KSE
SP RatingBBB CI Rating A-
Employees7000
4
KIPCO Ownership Liquidity
KIPCO Share Price Volume (2002-2008YTD)
Shareholding Pattern March 2008
Apr-08
Source KSE website
Total Outstanding Shares as on March 23, 2008
1,049.6 million

• KIPCO is among the most actively traded stocks on
  KSE
• KIPCO constitutes 1.9 of market cap of KSE
• Average daily trading volume in 2007 was 5.9
  million shares
• Since Jan 2002, KIPCO stock price has appreciated
  at a CAGR of 57

• KIPCOs major shareholder, Al Futtooh Investment
  Company (AFI) is owned by prominent members of
  the Al-Sabah family

As on April 15, 2008 since March 26, 2007 KIPCO
share price is trading ex-Dividend
5
KIPCO Key Milestones
1988
Acquisition of United Gulf Bank (UGB)
1994
Acquisition of stake in United Real Estate
Company (UREC)
1994
Acquisition of stake in Burgan Bank
1995
Formation of Gulf DTH (Showtime)
Acquisition of stake in Gulf Insurance Company
(GIC)
1996
Establishment of United Industries Company (UIC)
1996
Acquisition of Saudia Dairy and Foodstuff Company
(SADAFCO) by UIC
1996
1998
Formation of Kipco Asset Management Company
(KAMCO)
1999
Acquisition of stake in NMTC (Wataniya Telecom)
Establishment of United Networks Company (UNC)
2003
2005
Initial Public Offering of SADAFCO
2006
Established US2 billion EMTN programme
Sale of stake in Wataniya Telecom
2007
Sale of stake in United Aviation, Jet Aviation
United Fisheries of Kuwait (UFK)
2007
Credit rating upgraded by two notches to BBB by
SP - Highest rated Holding Company in the MENA
Region
2007
6
KIPCO Group Companies Asset Composition
The KIPCO Group comprises over 50 companies
across diversified sectors
Financial Services
21 Companies
US 881 Million
US 1,138 Million
Total Assets
US 18,092 Million
US 91 Million
US 283 Million
Total Revenue
US 2,053 Million
US 131 Million
US 158 Million
Total Assets
US 1.8 Million
US 46 Million
US 164 Million
Total Revenue
US 1.2 Million
On a 100 basis, Total Assets of the KIPCO Group
Companies is over US20 billion. Core Banking and
Insurance assets account for 80 (US16.4
billion) of the total assets of Group Companies.
In addition assets of the KIPCO Parent are
US3.6 billion.
Not included in the sectoral composition above
7
KIPCO Core Operating Companies
Media
Financial Services
Kuwait
11 countries
6 countries
22 countries
Geographic Presence in MENA
Shareholding
84.5
63.3
50.6
65.0
Notes 1. Stakes given are as on Dec 31, 2007
2. Overall group stake in Showtime is
78 3. Overall group stake in United
Gulf Bank is 87
8
Agenda

• Overview

• Strategy

• Financial Overview Outlook

• Liability Management

• In Summary

• Annexures

9
KIPCO Strategy Corner Stones
Regional Outlook
Investing in engines of growth
Target ROE 20
MENA
Building Businesses
Diversified revenue streams
Balanced Portfolio
Being first In the region
Thought leadership
Team approach
Strong managerial expertise
10
KIPCO Investment Philosophy
Invest in Our Success
Invest in What We Know
Invest with Financial Discipline
Invest primarily in MENA Region with selective
global diversification
Invest in green field ventures to introduce new
products services in the region
Invest through MA transactions to regionalise,
build scale attain market leadership
11
KIPCO Looking Ahead
KIPCO Strategy Looking Ahead
Focus on Financial Services
Selective Regional and Global Diversification
New Businesses
Existing Businesses
Global
Regional

• Listed Equity Portfolio
• Private Equity/ Hedge Fund Portfolios

• Listed Equity Portfolio
• Rated Fixed Income
• Private Equity
• Seed Capital Investment

• Invest or partner in regional products, Islamic
  conventional products for the region
• JVs/meaningful stakes in global companies

• Increase ownership
• Strengthen capital base
• Deeper faster regionalisation
• Consolidation

12
Agenda

• Overview

• Strategy

• Financial Overview Outlook

• Liability Management

• In Summary

• Annexures

13
KIPCO (Consolidated) Key Financials
Net Income
Total Revenues
US million
US million
CAGR 134
CAGR 180
Consolidated Equity
Consolidated Assets
US million
US million
CAGR 77
CAGR 62
Attributable to equity holders of the Parent
14
KIPCO Core Companies 2007 Financials
Net Income KIPCO and Core Companies
991
163
389
40
US million
Net Income KIPCO and Core Companies (Excluding
Non-Recurring Gains)
41
-3
51
14
US million
Primarily on account of sale of NMTC (Wataniya
Telecom)
15
KIPCO Outlook for 2008 Overview

• MENA region fundamentals getting stronger in 2008
• KIPCO continues to regionalise
• Organic growth through expansion in commercial
  banking, investment
• banking, asset management and insurance sectors
• Consolidation opportunity in the media sector
• Expanding financial services adjacencies
• Long term savings and pension plan
• Re takaful
• Making a Difference Project
• Education K-12 Projects in India, GCC and
  broader MENA Region
• Housing Residential Housing in Algeria, Saudi
  Arabia, Egypt and Syria

A focused strategy aimed at organic growth and
continued margin expansion would result in an
improved portfolio. This coupled with greater
operational flexibility and continued discipline
in capital allocation better positions KIPCO to
take advantage of the growth opportunities in the
region.
16
Core Companies Projections
Net Income - GIC
Net Income - UGB
US million
US million
58
26
Net Income Burgan Bank
EBITDA - Showtime
US million
US million
671
64
17
KIPCO (Parent) Projections
Net Income
US million
59
On a normalised basis, KIPCO net income is
projected to increase at a growth rate of 59
over 2007-08
On a normalised basis
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Agenda

• Overview

• Strategy

• Financial Overview Outlook

• Liability Management

• In Summary

• Annexures

19
KIPCO (Parent) Financing Policies Targets

• Financial Policies
• Optimise sources of funds
• Diversification of debt instruments from domestic
  to global markets
• Extend maturity profile
• Maintain adequate committed and uncommitted Lines
  of Credit to cover short term maturing debt
• Proactive management of cost of funds to reduce
  spread vis-à-vis benchmark rates

• Financial Targets
• Well defined financial targets at the Parent
  Level
• Target Debt/Equity not to exceed 2.5x
• Target Net debt/investments 20-30

20
KIPCO (Parent) Liability Management
Highlights
1990

• Commercial bank term borrowing from Kuwaiti banks
  secured by collateral
• Established money market lines from Kuwaiti and
  regional banks

1994

• First bond issue of KD12 million (US41 million)
  in Kuwait

• Term borrowing from regional banks
• New borrowings only on unsecured basis

2000
2001

• First issuer of KIBOR based floating rate bonds

2004

• US100 million debut international syndicated
  loan completed
• No outstanding borrowings on secured basis

2005

• US175 million international syndicated loan
  completed

2006

• Assigned investment grade rating by Standard
  Poors
• Set up US2 billion EMTN programme
• Drawdown of US635 million in two tranches under
  the EMTN programme

2007

• Net debt/investment portfolio ratio lt 1
• Based on target net debt/ investment portfolio
  value, additional borrowing capacity of gt US1
  billion

21
KIPCO (Parent) Debt Profile
Maturity Profile Dec 2005
Maturity Profile Dec 2007
Total Gross Debt US 963 million
Total Gross Debt US816 million
Debt Type Dec 2005
Debt Type Dec 2007
Total Gross Debt US 963 million
Total Gross Debt US816 million
Assuming, the exercise of extension option on
KD Bonds
22
KIPCO (Parent) Net Placer of Funds
Gross Debt (A)
Cash and Liquid Assets (B)
US million
US million
Liquidity Position (C A-B)
US million
KIPCO is now a Net Placer of Funds
23
KIPCO (Parent) Key Liquidity Ratios
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Agenda

• Overview

• Strategy

• Financial Overview Outlook

• Liability Management

• In Summary

• Annexures

25
Key Strengths Business profile

• Strong GDP growth registered by GCC economies
  (Kuwait18.7 in 2006)
• All GCC markets in positive territory on YTD
  basis (Kuwait market up 17.0)
• Strong oil prices, significant industrial
  infrastructural investments drive economic growth

Strong market conditions
Geographical diversification

• Presence in 21 countries
• As at December 31, 2007 36 of assets are from
  outside Kuwait

• Widespread presence across financial services,
  media, industrial and real estate sector
• Over 50 companies under management
• Investment strategy continues to promote
  diversification across geography, industry and
  asset class

Diversification by industry and asset class
Excellent track record

• 16 years of continued profitability
• Effected successful investments (greenfield/
  acquisitions) and profitable exits

• Average stay with KIPCO of the executive
  management is 9 years
• Exec. Vice Chairman, Group COO Group CFO have
  been with the Group for over 18 years
• Recent inclusions have rich experience in varied
  sectors

Experienced management team
26
Key Strengths Financial profile

• Target net debt/investment portfolio 25-30
• Dividends/interest expenses coverage gt2 times
• Dividends/interest coverage gt3 times

Conservative financial policies
Very low leverage

• As at December 31, 2007, net debt/investments was
  0.5 vis-à-vis the target 25-30

• Cash/debt due in 12 months of 3.1x
• Large liquid asset base (62 of investment
  portfolio in listed/ liquid assets)
• Liquidity monitored on a daily basis

Very good liquidity
Funding flexibility

• Strong share price
• Backed by strong and supportive shareholders with
  strong regional standing
• Good access to domestic and international capital
  markets
• Well developed lender base in Kuwait, region and
  the world
• Balanced debt maturity profile

27
Key Strengths High credit worthiness of
Underlying Assets

• Key Rating Considerations
• Strong Operational Performance
• Comprehensive Risk Management
• Adequate Capitalisation
• Improved Asset Quality

Moodys FSR Rating C- SP BBB/Positive

• Key Rating Considerations
• Strong Operational Performance
• Strong Competitive Position
• Good Capitalisation
• Improved Net Combined Ratio

SP BBB/Positive

• Key Rating Considerations
• Strong Profitability
• Adequate Capitalisation
• Growing Franchise
• Improved Funding Profile

Moodys Baa3
28
Why KIPCO?

• Thought leadership in the MENA Region
  holds many firsts to its credit
• First 100 private owned company in MENA to hold
  highest credit rating (BBB/Stable/A2) from SP
• Strong credit profile diversified lender base
  and balanced maturity
• High quality of underlying assets financial
  services operating companies have investment
  grade rating
• Strong track-record of execution by the operating
  companies
• Clear strategy and quality of management team

29
Thank You
30
Agenda

• Overview

• Strategy

• Financial Overview Outlook

• Liability Management

• In Summary

• Annexure 1 Management Team

31
Executive Management
Faisal Hamad Al Ayyar Executive Vice Chairman
Pinak Pani Maitra Group CFO
Mr. Al Ayyar was the Managing Director of the
KIPCO Group for the last 17 years. He is one of
the most well-known and successful entrepreneurs
in the Gulf region. His focus on shareholder
value has enabled KIPCO to become one of the
leading groups in the MENA area. He has been
strongly involved in the transformation of group
companies such as United Gulf Bank (UGB), Gulf
Insurance Company (GIC), Burgan Bank, SADAFCO and
Showtime. Mr. Al Ayyar is a former fighter pilot
of the Kuwait Air Force.
Mr. Maitra has worked for the KIPCO Group for
more than 18 years. He is a key member of the
Groups risk management and strategy development
team. He is also responsible for performance
analysis and budget evaluation of KIPCO and its
companies. He is a non executive Board Director
with a number of KIPCOs operating subsidiary
companies, including Showtime, Hunter Capital and
Pulsar Knowledge Centre, Delhi. Prior to joining
KIPCO, Mr. Maitra worked for the accountancy
firms Arthur Andersen and Arthur Young.
Ahmad Essa Al Ajeel Vice President,
Marketing/RD/PR
Samer Khanachet Chief Operating Officer
Mr. Khanachet became Chief Operating Officer of
KIPCO in 2008. For the previous 17 years, he was
President of United Gulf Management, KIPCOs
subsidiary in the United States, where he
identified strategic resources to support KIPCOs
activities in financial services, media and other
sectors across the MENA region. He holds BSc
degrees from the Massachusetts Institute of
Technology (MIT) and an MBA from Harvard
University. He sits on boards and committees at
the American University of Kuwait, MIT, Harvard
and the Forsyth Institute.
Mr. Al Ajeel has worked for the KIPCO Group since
1994. His current responsibilities include
financial institution relationship development
and coordinating Group marketing activities.
Prior to joining KIPCO, he worked for the
Industrial Bank of Japan and the Kuwait Foreign
Trading Contracting Investment Company. Mr. Al
Ajeel is a non-executive Board Director of United
Networks, Kuwait.
Declan Sawey Group Treasurer
Lakhdar Moussi Senior Vice President, Financial
Services
Mr. Sawey is a professional with over 16 years
experience in treasury and investment management.
Prior to joining KIPCO in 2007, Mr. Sawey was
Head of Asset Liability Management for HBOS
Corporate. Mr Sawey also has extensive Middle
East experience, having worked for Gulf Bank and
the Kuwait Investment Authority. He is a Fellow
of the Institute of Chartered Accountants in
England and Wales, a Chartered Financial Analyst
(CFA) Charter holder and a Member of the
Association of Corporate Treasurers (MCT).
Mr. Moussi joined KIPCO Group in December 2005 to
assist and advise on the Groups expansion plans
in the insurance, manufacturing and real estate
sectors. He brings over 36 years experience in
insurance, project finance, banking, investment,
manufacturing, consulting and contracting. He has
worked in Algeria, France, Bahrain and Canada.
Over the last 16 years, he has been extensively
involved in the regions insurance industry
through his association with ARIG, Bahrain.
32
Executive Management (Contd.)
Antony Miles Strover Advisor Corporate Finance
Robert Drolet Senior Vice President, Technology
Media
Mr. Antony Miles Strover has been associated with
the KIPCO Group since 1996. Mr. Strover has been
involved in acquisitions, structuring and
financing of various transactions of the KIPCO
managed companies. He also advises the KIPCO
management on investment structure, governance
and control policy, and provides taxation-related
advice to KIPCO companies. Mr. Strover is
registered as an authorised auditor by the
Ministry of Commerce of the State of Kuwait and
is also a Fellow of the Institute of Chartered
Accountants in England and Wales. Prior to
joining KIPCO, Mr. Strover was a Partner in Peat
Marwick Mitchell Co.
Mr. Drolet is responsible for the supervision,
development and optimisation of KIPCO's
communications and media portfolio. Prior to
joining KIPCO in 2006, he led and advised on
successful turnarounds, major merger and
acquisition transactions and strategic alliances.
Mr. Drolet has 14 years experience in the telecom
and media industry he was CEO of Continental
Europe, CEO of US Communications Solutions and
Global Chief Commercial Officer for Cable
Wireless, following senior positions in the UK
cable industry and at Bell Canada International.
He is a member of the Québec Bar and a Solicitor
(England Wales).
Mohsen Ali Hussain Group Chief Internal Auditor
Mazen Hawa Group Vice President, Finance
Operations
Mr. Hussain joined UGB in 2001. He was appointed
as KIPCO Group Chief Internal Auditor in May
2006. He has over 15 years of experience in
public accounting and internal auditing and was
previously employed by KPMG, Arab Insurance Group
(ARIG), National Bank of Bahrain and Ahli United
Bank. He is a Certified Public Accountant (CPA),
a Certified Information System Auditor (CISA), a
Certified Internal Auditor (CIA) and hold a BSc
in Accounting.
Mr. Hawa joined KIPCO in 2001. His
responsibilities include Group financial control
and serving as advisor to a number of KIPCOs
operating subsidiaries. He is Vice Chairman of
the United Pharmaceutical Company, Kuwait and a
non-executive Board Director of the Fajr Al Gulf
Insurance Company, Lebanon. He is a certified
member of the American Institute of Certified
Public Accountants and the Institute of
Management Accountants. Prior to joining KIPCO,
Mr. Hawa worked for the assurance and business
advisory group of Arthur Andersen.
Bibhau Tamang Group Vice President, Financial
Control
Robert Hipkins Group Communication Director
Mr. Tamang has been with KIPCO since 2000. He
brings with him over 16 years of experience in
strategic planning, debt capital markets, mergers
and acquisitions, initial public offerings and
greenfield projects. He has been instrumental in
establishing Pulsar Knowledge Centre and is also
on the Board. He has done his MBA from Brigham
Young University, USA. Prior to joining KIPCO,
Mr. Tamang worked at Novell Inc.
Mr. Hipkins has responsibility for KIPCOs
corporate communications. He joined KIPCO in
February 2007 and was previously a senior
consultant with Hill Knowlton, one of the
worlds leading public relations companies. Mr.
Hipkins has over 20 years experience in public
relations and marketing in the UK, the United
States, Europe and the Middle East. He is a
graduate of Edinburgh University, Scotland.
33
Agenda

• Overview

• Strategy

• Financial Overview Outlook

• Liability Management

• In Summary

• Annexure 2 Major Investments

34
United Gulf Bank

• Established as an offshore commercial bank in
  1980, acquired by KIPCO in 1988 and transformed
  into a leading investment bank
• Licensed as a universal wholesale bank
• Operations include asset management, corporate
  finance, equity, real estate, treasury and
  commercial banking
• Diversified asset base with assets under
  management of US7.3 billion
• Rated by Moodys (Baa3/Stable)
• Dual Listing on Kuwait Stock Exchange Bahrain
  Stock exchange

Net Income
Share Price Movement
US
CAGR 84
US million
2.18
Source Bloomberg, Bahrain Stock Exchange
Source Company
35
Gulf Insurance Company

• Incorporated in 1962 acquired by KIPCO in 1996
• Market leader in Kuwait in life, property and
  casualty insurance segments
• Comprehensive offerings include life, health,
  motor, property, casualty, marine and aviation
  insurance
• Network of 10 local branches and operations in
  six countries Kuwait, Bahrain, Saudi Arabia,
  Lebanon, Egypt and Syria
• Rated by Standard Poors (BBB/Positive)
• Listed on Kuwait Stock Exchange

Net Income
Share Price Movement
US
US million
CAGR 92
2.98
Source Bloomberg , Kuwait Stock Exchange
Source Company
36
Burgan Bank

• Incorporated in 1975 and privatised in 1995
• 3rd fastest growing bank in terms of
  profitability
• Fostering transparency and governance through
  international best practices
• Technology-driven, innovative provider of
  financial services
• Network of 20 branches, 42 ATMs, 6 K-Net ATMs and
  24 Kiosks
• Rated by Standard Poors (BBB/Positive) and by
  Moodys (A1/Stable)
• Listed on the Kuwait Stock Exchange

Net Income
Share Price Movement
US
US million
CAGR 38
3.99
Source Bloomberg, Kuwait Stock Exchange
Source Company
37
Gulf DTH (Showtime)

• Incorporated in 1995
• Leading DTH Pay TV operator
• Joint venture between KIPCO and Viacom Inc.
• Widest range of program offerings Over 50
  channels
• Operating licenses for 22 territories in the MENA
  region
• Highest revenue among all TV platforms Pay or
  Free to Air
• Exclusive rights of FAPC for three seasons
  starting August 2007
• Achieved positive EBITDA in 2007

Highest Revenue
22 Territories in MENA Region
Offering Over 50 Channels