Tag: Casting Equipments Exporter

Does the Saudi Aramco IPO in Riyadh suggest a future international listing?

Saudi Aramco’s domestic IPO may still serve as a bridge towards an international listing despite what some analysts term a “mid-decline” oil market, according to experts.

Aramco has said there are no plans for an international listing, suggesting that the long-stated aim of a second offering on a foreign bourse had been shelved. The company had previously been expected to sell 2 percent on the Saudi bourse and another 3 percent overseas.

Salah Shamma, the head of MENA investment at Franklin Templeton Emerging Markets Equity, said that his firm believes that the IPO could still serve as a “bridge” towards an international listing and hopes that it will happen at a later date.

“As an international investor, we want to see a successful local IPO of Saudi Aramco,” Shamma said. “Saudi Aramco’s $12bn bond issue earlier this year was one of the most oversubscribed in history and allowed it to borrow at a lower yield than its sovereign parent. This demand bodes well for its IPO.”

According to Shamma, the Aramco IPO “could offer investors exposure to a truly unique asset” with more than 257 billion barrels and producing more than 13.5 million barrels per day of oil equivalent.

“We believe the company is in a class of its own when it comes to profitability and cash flow generation,” Shamma said. “The recent attack on the company’s facilities does not put into question the strength of the company’s fundamentals, but it should elevate its risk premium, at least for international investors.”

Pricing and market outlook

Although the Saudi government and Crown Prince Mohammed Bin Salman had hoped for a valuation as high as $2 to $2.3 trillion – which reportedly caused the IPO to be delayed several times due to dissatisfaction with the valuation of the firm – most analysts expect the Saudis to settle on a valuation of $1.6 to $1.7 trillion.

In Shamma’s view, even with a lower valuation of $1.5 trillion, Aramco “will still be the most valuable company in the world… and with $111bn in net income in 2018, it also ranks as the most profitable company.”

Colin Croft, emerging markets fund manager at Jupiter Asset Management, told Arabian Business that the Aramco IPO must be seen within the context of long-term challenges for the oil industry, which he said was showing signs of “mid-term” decline.

“The only question is how many decades are left before climate concerns and cost competitive force the transition toward more sustainable transport systems,” he said.

“Although Aramco’s low cost base and vast reserves ought to give it far more longevity than other oil companies, I would not be keen to pay too much of a premium for it given the uncertainty regarding how much of these reserves will have to be left in the ground.”

Russian comparison
Additionally, Croft said that the company can best be compared to Russian state-owned oil companies, which also have considerable reserves and low costs, but benefit from a freely floating local currency and reputation in the market.

“These [firms] currently offer dividend yields of closer to 6.5 percent,” he explained. “If Aramco were to trade on a similar level, then its valuation would be closer to $1.2 trillion than to $2.3 trillion.”

However, Croft said that a valuation of between $1.6 and $1.8 trillion is likely still achievable, given the small proposed size of the free float and likely composition of its investor base.

“Saudi Aramco is no different from other oil companies in that its appeal would lie in its ability to supply regular dividend payouts to shareholder,” he added. “Without an attractive dividend policy, it would be impossible for the firm to achieve a valuation anywhere near the current level.”

Changes coming?
In the short-term, according to Emirates NBD commodity analyst Edward Bell, no changes are expected from Saudi Arabia in response to the IPO, with the kingdom’s commitment to the OPEC+ production cuts remaining in place.

“However, there is a risk that the oil market will need to find a new anchor dynamic once the Aramco IPO is finished,” Bell added.

When the impact of the IPO on the global stage and the Saudi government is settled in the long-run, Bell says the fundamentals of the market will once again be the most influential factor on the market and pricing.

Bell added that the market, for its part, will “fixate” over the Aramco news over the coming weeks.

“[This includes] the publication of the company’s prospectus which may shed more light on production costs and outlook, dividend strategies and how the company plans to adapt in a world on the verge of a substantial energy transition away from oil and gas.”

Source:https://www.arabianbusiness.com/ipo/432712-aramco-ipo-from-saudi-arabia-to-the-world

The Kingdom of Bahrain enacted a new bankruptcy law in December 2018, sweeping away its previous legislation and replacing it with a thoroughly modern toolkit. The law is a revolutionary improvement compared to what existed before, said lawyers polled by Debtwire.
The financial crisis of a decade ago pushed various GCC countries to reconsider their insolvency and bankruptcy regimes, as existing laws failed to adequately govern and encourage modern restructuring practices. One by one, authorities started renewing their laws, including Saudi Arabia and Dubai.

With the push toward establishing a digital economy and the desire to attract large scale private sector investment, there was a need to decriminalise failure – providing new businesses, startups and entrepreneurs breathing space to innovate and allowing creative industries to flourish in the region, according to Buthaina Amin, director at the Bahrain Economic Development Board.

Alongside hopes of establishing a regional FinTech hub, efforts to secure an upgrade of Bahrain’s credit ratings also spurred the change, said Natalia Kumar and Siddharth Goud, lawyers at the Bahrain-based law firm Al Tamimi & Co.

The new law was praised for its modernism by all the sources polled, who commended its similarities to Chapter 11 of the US Bankruptcy Code and compliance with UNCITRAL Model Law. The law encourages debt restructuring in favour of liquidation and does not prevent debtors continuing in the ordinary course of business while going through a court-supervised restructuring process.

The new law utilises restructuring concepts such as a moratorium on enforcement proceedings, the ability to sell assets out of the bankrupt estate free from security, obtaining financing on super-priority terms and implementation of a reorganisation plan, noted Nick Green, partner at Trowers & Hamlins.

These are ‘debtor-friendly’ tools and are familiar to, and popular with, international companies and investors. They follow, to a large extent, the Chapter 11 proceedings in the US, he said.

Banks out of scope

The new law is applicable to any commercial company not licensed by the Central Bank of Bahrain (CBB), noted Kumar and Goud. CBB-licensed companies, such as banks, fall instead under the scope of the CBB and Financial Institutions Law of 2006.

“Those provisions [for CBB-licensed companies] now look out of date and it would be good to see a harmonised insolvency regime across all Bahraini entities under the new law, with additional restrictions and obligations on CBB-licensees as deemed necessary,” said Green.

The law is also applicable to ‘natural person traders’ who do business and have their head office in Bahrain, as defined under Bahrain’s Law of Commerce, noted Kumar and Goud.

There is no law in Bahrain that specifically deals with personal bankruptcy. Therefore, the provisions of the new law shall not apply to individuals, Kumar and Goud continued. The new law is also not applicable to financial derivative contracts under the Netting Regulations of Bahrain, which was a grey area before enactment, they said.

New system

The new law foresees two main proceedings for a struggling company: restructuring or liquidation. The scope of any restructuring proceeding can be extended to debtors’ assets located outside Bahrain, as well as those domestically located. Concepts such as an insolvency trustee and a moratorium – initially for a 120-day period – are included.

On first reading, the law may seem to offer generous concessions to insolvent debtors, at the expense of the creditors and other interested parties, said Green.

Article 11 generally empowers the court to sanction continued operation of the debtor’s business transactions after the debtor has petitioned the court, while Article 51 empowers the court to impose a multi-faceted moratorium which keeps the creditors at bay while the debtor’s business is continued as usual, added Green. Unlike US Chapter 11 proceedings, however, this moratorium is not automatic.

However, it is easy to argue that the new law also benefits creditors, by preserving the value of a debtor’s assets, Green continued. By including rehabilitation procedures for the institution or individual concerned, the law maximises creditor recoveries, he said.

Under the new law, an entity does not have to wait until it actually ceases to pay its debts for it to be become insolvent or to commence insolvency proceedings, said Green.

“The mere likelihood of an entity failing to do so is sufficient, and we can see how that might be particularly attractive to a debtor and is intended as part of a mature rescue culture,” he added.

However, the court has wide-ranging powers to scrutinise any application for bankruptcy protection and can impose various penalties when an application is believed to be simply an attempt to gain undue advantage over creditors, Green added.

Enforcement of foreign judgments

The law introduces a cross-border insolvency mechanism. The adoption of UNCITRAL Model Law for the enforcement of foreign judgments in Bahrain, while positive, is still untested, noted David Billington, partner at Cleary Gottlieb Steen & Hamilton LLP.

There is also the priority system which allows for a fair, transparent, and comprehensive framework when dealing with priority of claims, noted Amin. Representatives and creditors of foreign bankruptcy proceedings have a right of access to the courts and the right to seek relief, he added.

A foreign judgment or award would be enforced in Bahrain through the execution courts after an application is filed to recover the secured debt or enforce a judgment, said Kumar and Goud.

There are, however, certain criteria, with a reciprocal treaty between countries required, they said, adding that Bahrain is a signatory to the 1958 New York Convention under which the Bahraini Courts will be entitled to refuse to enforce a foreign arbitration award only on certain narrowly defined grounds.

The new law in Bahrain, by contrast to the newly enacted bankruptcy law of Saudi Arabia, benefits from its simplicity of choice and ultra-modern approach, noted Green. There are a number of different procedures available under the Saudi law – for example, the financial reorganisation procedure, the preventative composition procedure, the administrative liquidation procedure and the liquidation procedure – and the approach taken in each of these cases differs from each other.

Room for improvement

One possible development in the future will be the incorporation of a timeline within the law for lenders to foresee how long the procedures will take, said Kumar and Goud.

Another improvement would be to make the moratorium automatic on application, as is the case under US Chapter 11, rather than subject to a court decision, according to Green. The increased workload for the non-specialised courts in Bahrain and related infrastructure may also pose challenges, he said.

“There is no doubt that the creation of a specialised institution to support the courts and the public prosecutor’s office in, for example, monitoring the parties’ compliance with disclosure requirements and other obligations would, significantly improve the practical implementation of the law,” said Green.

Time will tell

In Bahrain, court judgments are not published apart from in the Court of Cassation, so the decisions are not publicly available like in the United Kingdom, noted Kumar and Goud.

For this reason, the market must get comfortable with procedures through experience. There has been one well-known instance, Garmco, where an application has been made under the new law, Kumar and Goud added.

Broadly speaking, unofficial out-of-court restructurings were much more widely used prior to the implementation of the new law, given the punitive nature of the previous statute, said Green.

This meant unofficial agreement with creditors, quite often lending institutions, without any real transparency for any other creditors involved. However, given the radical overhaul, taking in best practice from modern insolvency procedures, many more debtors may apply, he added.

“It will be a slow-burn process, people need to be encouraged and need to see the companies go through the process, steering the wheel,” noted Billington.

The legal toolkit is very sophisticated, but requires various other elements to work in practice, said Billington. This includes experienced bankruptcy judges and a deep DIP financing market, which will only come with time.

Bahrain is in the early stages of developing these things, but changing the legislation in a culture where bankruptcy has historically had significant stigma attached to it – and could even be a crime – to introducing rehabilitation proceedings is a big step, he said.

Source:https://bahrainedb.com/latest-news/bahrains-bankruptcy-law-one-year-on-an-untested-revolution/

Al Salam Bank-Bahrain (ASBB) has partnered with China-based MSA Capital to launch Al Salam-MSA Bahrain Fund I, a $50 million venture capital fund which will target investment opportunities that put innovative Chinese technologies and business models to work within the MENA region using Bahrain as a gateway into the region’s $1.5 trillion economy.

MEC Ventures will be the first privately funded and led venture to unify Chinese and Middle Eastern capital and technology markets, a statement said.

It added that the fund is expected to be the first investment limited partnership to be established under Bahrain’s recently introduced Investment Limited Partnerships Law.

The fund will spearhead capital and technology flow and cooperation between the two regions while capitalising on best practices pioneered in the Chinese tech-industry.

Investments by MEC Ventures will cover multiple sectors, including e-commerce, FinTech and the array of technology ecosystem enablers like big data, artificial intelligence, cloud computing as well as logistics and networking systems.

The team at MEC Ventures will aim to complement portfolio companies in their expansion strategies by enhancing their offerings, geographic reach and usage volumes, thereby enhancing value, the statement added.

Rafik Nayed, group CEO at Al Salam Bank-Bahrain said: “Bahrain is a natural fit for this pioneering partnership having served as a commercial bridge linking East and West for thousands of years. MEC Ventures will be an active participant in the regional venture capital landscape which only stands to grow by leveraging on cutting edge China-based technologies and expertise.”

Ben Harburg, managing partner at MSA Capital added: “The combination of high mobile penetration, high ARPU, and a large youth population, coupled with substantial market white space, evidenced by factors such as low e-commerce penetration levels and large unbanked populations, offer an ideal opportunity for investment.

“We believe that the MENA region is nearing an inflection point that can be accelerated through the adoption of Chinese-inspired mobile-first business models.”

Jordan on Sunday announced the signing of six agreements for investment in the industrial sector, the official Petra news agency reported.

The Jordan Industrial Estates Company said that it signed deals to attract industrial investment in Salt and Madaba areas in the country.

At the signing ceremony, Jordan’s Minister of Industry and Trade Tariq Hammouri said that the investment volume of the six deals stands at around 10 million U.S. dollars.

To increase investment in Jordan, the cabinet last month made a decision that rent cost for new investment in free zones in Jordan will be lowered by 40 to 70 percent for the first three years of the contract.

The cabinet’s decision stipulates that each new investment must provide job opportunities for at least 10 Jordanian employees registered with the Social Security Corporation from the start.

Source:http://www.xinhuanet.com/english/2019-09/02/c_138356306.htm

South African Airways (SAA) officials will be summoned to a meeting with regulators next month to disclose details about talks with potential equity partners and give assurances that any deal won’t violate foreign-ownership laws.

Under the Air Services Licensing Act of 1990, airlines must be at least three-quarters owned by South Africans to operate a domestic service. That would prevent international operators from buying more than a 25% stake from the government, unless the rules are changed.

“We are going to be calling SAA to next month’s meeting to share with us what their plans are,” said Mike Mabasa, chairman of the Air Services Licensing Council, which regulates domestic aviation within South Africa. “If they are already in conversations with strategic equity partners we need to know what that entails.”

Finance Minister Tito Mboweni said last month the government is talking with potential investors in SAA, which is technically insolvent and reliant on bailouts and other forms of state support to survive. The carrier last week triggered a plan to cut 944 jobs to reduce costs – leading to an ongoing strike that started on Friday.

Two labor groups on Sunday said they are consulting with workers about intensifying the strike across the aviation industry after failing to reach a deal over wage increases and job cuts at the weekend. The National Union of Metalworkers of South Africa and the South African Cabin Crew Association argue that ending the outsourcing of services would help reduce costs.

“It is clear to us that the management of SAA is not prepared to do what is necessary to save the airline,” they said in a joint statement.

INVESTOR INTEREST
Ethiopian Airlines Group Chief Executive Officer Tewolde Gebre Mariam has said the continent’s biggest airline would consider taking a stake in SAA, a partner in the Star Alliance. Virgin Atlantic Airways founder Richard Branson has also indicated an interest.

“If some tough decisions need to be made, we’ll make them,” Public Enterprises Minister Pravin Gordhan said on Thursday. He’s previously said the company will need to remove unnecessary costs to attract a viable buyer.

Routes to some international destinations including London and New York had been due to resume Sunday night.

SAA’s ongoing battle with unions may prove decisive to the carrier’s survival, with an estimated R50-million of losses incurred with every day of strike action, and little in the way of leeway in terms of cash reserves. Labor groups are demanding a reversal of the plan to reduce the workforce by about a fifth on top of an 8% pay rise and other employment benefits.

“SAA pretends as if its service is indispensable, which is not the case,” because it has just a 20% market share, and other carriers can step in in the event of its demise, said Gerhard Papenfus, chief executive officer of the National Employers’ Association of South Africa. “This notion of indispensability, however, emboldens the trade unions to make unrealistic demands.”

Tlali Tlali, SAA’s spokesperson, didn’t answer calls to his mobile phone seeking comment.

Source:https://www.engineeringnews.co.za/article/saa-faces-regulator-inquiry-over-sale-plan-2019-11-18

The decision by the Passenger Rail Agency of South Africa (PRASA) to terminate contracts of 20 private security companies at the end of October has left railway infrastructure vulnerable to vandalism, says the United National Transport Union (Untu).

In a statement on Friday by Untu spokesperson Sonja Carstens, the union lays all manner of accusations at PRASA, saying “the leadership of Untu repeatedly warned the [PRASA] board that the decision [to terminate security contracts] exposed their staff and commuters and the assets of PRASA as the SA Police Service have never in the past came to the party.

“But the board disagreed and Untu told them the proof would be in the pudding.”

‘JOBS PLACED AT RISK’
As the statement puts it, Untu has been inundated with videos of vandalism at various train stations across the country.

“Unfortunately, the result is massive damage to the infrastructure which is funded with taxpayers money and yet another devastating blow to PRASA employees who has to sit back and look at how their jobs are being placed at risk,” said Steve Harris, general secretary of Untu.

But, PRASA has hit back, saying they have already started deploying their own internal security personnel “while strategically planning with the rapid railway police and greater collaboration with other security partners”.

TIGHTENING SECURITY
“PRASA can now report that the first tranche of deployments of the rapid railway police has been deployed in the Western Cape and Gauteng including law enforcement units and other security cluster divisions in the protection of commuters, staff and assets,” said spokesperson for the agency, Nana Zenani.

On the crackdown on the inexplicably high rate of crime bedeviling railway’s across the country, PRASA’s group CEO Dr Nkosinathi Sishi said: “We are bridging the gap between deploying our own security personnel and additional technology in ensuring that we remove the dependence on just personnel deployments.

“We will now be able to profile suspects and conduct the necessary investigations as well which was a strength we did not have previously.”

Source:https://www.engineeringnews.co.za/article/transport-union-slams-prasa-over-escalating-railway-infrastructure-vandalism-2019-11-18

JSE-listed EPP has urged the Polish government to introduce real estate investment trust (Reit) legislation for the country to make it more open for investment.

COO Rafał Kwiatkowski believes the Polish property sector could be an excellent avenue for creating wealth and would be a good vehicle for people to invest their retirement savings.

EPP is the largest owner of shopping centres in Poland, but has witnessed the benefits of Reit legislation in South Africa, which was promulgated in May 2013.

The South African listed property sector has seen market capitalisation soar over the past two decades, rising from roughly R6-billion in 2000 to R300-billion currently.

Today, there are 32 Reits for investors to choose from, including diversified, retail, residential, office and industrial and speciality Reits. An increasing number of these now have property holdings in international markets.

“Polish citizens cannot invest in Reits because there is no legislation allowing for it.

“This would be simple legislation for the government to pass and would have a positive effect on the economy, especially now that Poland has been rated among the most developed countries by ratings agency S&P for a full year and, like the rest of the world, will have to deal with the economic fallout from trade wars and slowdowns in neighbouring economies,” Kwiatkowski points out.

He adds that Poland is still among the nations that are best poised to avoid negative growth or a recession.

While the Polish government has room to make adjustments in debt levels and is taking actions to stimulate consumer spending, there is some simple legislation that would have a very positive effect that it could do right now – Reit legislation.

Reits offer a means for everyday investors to invest in commercial real estate. When an investor buys shares in a Reit, they are getting small portions of real estate held in a portfolio managed by a corporation that is publicly traded.

It allows investors to own a share in investment-grade properties on the same basis as if they had bought the properties directly, with the added benefit of value created through active, professional management.

Source:https://www.engineeringnews.co.za/article/epp-advocates-for-real-estate-investment-policy-in-poland-2019-11-18

Since polymer supplier Vesconite Bearings introduced a minimum of two layers of corrugated cardboard packaging around each of its dispatched polymer bushings and rods, the company has had no returns from breakages, owing to transportation.

The company instituted this as a packaging standard after a complaint by a customer led it to investigate its packaging policies.

Vesconite Bearings then decided that – if stock items could not be packed into rigid tube-like cores – rods and bushings would be placed in corrugated board, with the ends folded and taped for protection.

Rods and bushings would be further wrapped in corrugated cardboard, so that cardboard would provide additional packaging.

For airfreight packaging, the package would be included in a box where it weighed less than 20 kg and secured to a pallet if the box or set of boxes weighed more than 20 kg, to ensure easy handling.

The company believes that this set of packaging policies ensures customer satisfaction since corrugated cardboard – with an arched paper that fits between two liners – can carry a range of weights, protect against moisture, and is a sustainable, recyclable packaging solution.

“We have entered a new era in which you never get any returns as a result of breakages during transportation,” says Vesconite Bearings stores manager Martin Nyathi.

He notes the company’s packaging prevents cracking and breaking so that customers receive their orders intact.

Source:https://www.engineeringnews.co.za/article/packaging-solution-proves-successful-2019-10-18