Investment

The Company

One of the oldest investment holding companies in Oman, Ominvest was established in 1983 by private business groups, public sector institutional investors and the general public. It has seen steady growth since being listed on the Muscat Securities Market in 1989. Reflecting solid business performance, the stock has delivered impressive gains. Since 1996 Ominvest shareholders have earned a compound annual total return of 15%, versus 6% delivered by the MSM Index. Oman Arab Bank (OAB) is Ominvest’s largest investment, with 51% ownership. The bank has contributed significantly to the group’s success through growth in profits and assets, and a steady stream of dividends, yielding an internal rate of return of around 20%. By 2014 OAB was Oman’s fourth-largest bank by operating income, and had total assets of over OR1.8bn ($4.7bn).

Following the arrival of CEO AbdulAziz Mohammed Al Balushi in January 2014, a new investment philosophy and business model was approved by the board. It entails developing a diverse portfolio of subsidiaries across sectors including banking, insurance and real estate, and a dedicated investment platform to make all financial investments, including public and private equity.

In August 2015 Ominvest completed its merger with Oman National Investment Corporation Holding (ONICH), creating one of the largest companies in Oman. The motivation was to achieve economies of scale, and to have a stronger and more diversified balance sheet, as well as a more diversified shareholding. Following the merger Ominvest’s business profile has improved significantly, as it now owns eight associates with a combined value of OR60.6m ($156.9m), up from three with a total value of OR6.2m ($16.1m) in 2014. The list of associates includes leading regional insurance, leasing, industrial and consumer companies. Ominvest also now owns 98% of National Life & General Insurance Company, which is the largest insurance firm in Oman and is growing fast in the UAE. Post-merger, Ominvest’s key shareholder base has expanded to include Al Hilal Investments, which along with its associates owns 20.1%, Oman Investment Fund (13.6%) and the Civil Service Employees Pension Fund (9.8%).

Performance

For the first nine months of 2015 Ominvest reported healthy performance, as total group revenues rose by 31% to OR89.06m ($230.6m) and net profit by 18% to OR28.1m ($72.8m) over the same period in 2014. Ominvest’s share of group net profits stood at OR17.8m ($46.1m), up 33% from OR13.4m ($34.7m). The increase in net profits was attributable to the share of profits from subsidiaries OAB and National Life & General Insurance Company, and from the eight associate companies. Income from other financial investments and a gain due to the combination with ONICH also contributed to the growth in the group’s net profit. OAB reported a net profit of OR21.09m ($54.6m) for the first nine months of 2015, while National Life & General Insurance Company reported a net profit of OR3.08m ($8m).

Despite weak economic conditions stemming from a 60% decline in oil prices over the past year, Ominvest is in a comfortable liquidity position, as its debt to equity remains low at 0.40 and cash flows are strong, driven by durable businesses. In the current downturn in Oman’s stock market, Ominvest has built sizeable stakes in the financial services sector at attractive valuations. It has a long track record of stable dividends to shareholders. For the fiscal year 2014 it paid a dividend of 30% of capital, 20% in the form of cash and 10% in bonus shares. Since January 2014 Ominvest’s stock price has posted a total return of over 30%, while the benchmark MSM30 Index is down by 12%.