الرئيس التنفيذي لمجموعة gfh المالية لـ CNBC عربية: قيمة الصفقة في سوق الخدمات اللوجستية الغذائية في السعودية 500 مليون ريال ونمتلك منها 70%
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00:00 and we are happy to welcome Mr. Hisham Al-Rayes, the Executive President of GFH and a member of the Board of Directors.
00:06 Mr. Hisham, welcome to us.
00:08 Let me start with you today from the FII's atmosphere and the files that are being discussed today
00:15 related to geopolitical risks, the risks of maintaining high interest rates for a longer period of time
00:21 and at the same time that the economic environment is difficult today and there are fears of a runaway.
00:28 Among these factors that I mentioned, which one worries you the most about investing in the region and the economy of the region?
00:37 Yes, we are globally, overall, affected by the rise in interest rates today, especially with the 15-year period that has passed.
00:48 The climate of interest rates has been low, so all the asset managers and banks built and preserved them in an environment
00:58 where the interest rate is designed to be low.
01:02 Governments have started issuing bonds at a low interest rate, and all companies.
01:09 Therefore, withdrawing and rebalancing the balance sheet in a very short period of time is a major risk to the global economy.
01:19 The US government may have overcome this kind of risk by allowing J.P. Morgan to buy a number of banks in the US,
01:28 but we saw it in Switzerland, but the continuity of increasing the interest rate affects the profits.
01:39 The financial balance of a number of investment banks in the US was recently less than expected, except for J.P. Morgan.
01:51 The banks that are too big to fail.
01:54 Therefore, the challenge is how to build and maintain the growth rate of your institution in this kind of situation
02:07 and rebalance it in a balanced way, especially since the expected interest rate is high.
02:17 In Bloomberg, they say that after five years, the interest rate will go back to the old rate.
02:26 I think that in the next two or three years, the interest rate will increase in the short term,
02:33 and then there will be a decrease in the interest rate for several years,
02:39 and then the decline will take longer and will not go back to the old levels.
02:45 This is positive for commercial banks, and therefore the GFH system serves in the period of growth
02:55 and in the periods we are currently living in.
02:58 30% of our balance sheet is the Gulf Bank, 30% is treasury, and 30% is investments.
03:09 So, there is a balance that has been built. Do you have a plan to support the institutions and investors in times like this?
03:18 I will return to the GFH issue, but I would like to go back to two agreements that were signed in the health care sector
03:28 and also in food logistics.
03:30 Today, I think that they were signed through the FII.
03:34 Tell us about the details of these agreements.
03:36 Why did you choose Saudi Arabia? Why do you think that it is expanding in Saudi Arabia?
03:40 What is the value of these agreements?
03:42 First, as we said in the past, we invested a lot in American markets outside the region,
03:50 and we are investors who like to diversify and reduce the risk of focusing on the region outside the region.
03:57 Why America? Because it is clear, it has clear laws, it has stability in the administration.
04:07 Today, the Gulf region, especially with the system that exists in Saudi Arabia,
04:13 which is clear, serious, and business-oriented, is also present in the UAE and in all the Gulf countries.
04:28 The stability and spending on investments make investors return,
04:38 and with the difficulties and the increase in the interest rate in America,
04:43 it makes investors focus on the Gulf region because most of the investments in the Gulf are not leveraged,
04:53 so you do not have a risk related to the low funding.
05:01 Many people believe that health and education services are good in the Gulf,
05:10 yes, they are good, but in the main cities.
05:12 In the secondary cities, we are underserved, so in Saudi Arabia, our strategy is to focus on the secondary cities.
05:23 In the south, in the north, the population is high, the need is high.
05:28 What is the value of the deal regarding the health care sector in Saudi Arabia that you announced?
05:33 It is part of a series of investments that we are doing under the Helium fund.
05:39 The market value of the hospital is about 1.3 billion Saudi Riyals.
05:49 We own about 60% of it, it is in the south,
05:55 and this is a primary investment, and there will be several centers in the south,
06:00 and we want to be the first in the south to serve the population in this region,
06:08 which also serves the ESG and social services.
06:14 What is the value of the food logistics agreement?
06:17 The food logistics agreement is about 500 million Saudi Riyals,
06:25 we own about 70% of it,
06:28 this is due to the development of tourism and many international restaurants that are opening in Saudi Arabia,
06:35 and hotels.
06:37 This company focuses on the logistics for premium food,
06:41 which serves hotels, companies, and restaurants.
06:47 This type is present in Dubai, in Bahrain, and in Saudi Arabia.
06:56 This company is the first in Riyadh,
07:00 and we want it to be the first in Jeddah and the east.
07:06 How much do you expect to get in return on investment for these two deals?
07:11 I like to go to the risk profile,
07:18 so companies must have a cash flow positive,
07:23 distribute profits, have a strong history, and a strong partner,
07:28 and know their business and continue with us.
07:31 These deals give us a dividend yield of about 18%,
07:37 and the annual return overall is 18% to 23% IRR,
07:47 according to the different conditions of the exit or the withdrawal.
07:53 These types of deals allow us to step up in the Saudi market,
07:57 which is the first in the region, and everyone hopes to be in it.
08:01 This size of deals allows you to have the size and the distinction,
08:07 and repeat many successful stories for the graduates.
08:11 I will return to the topic of the IPO for Saudi Arabia.
08:15 Do you intend to withdraw from something of your origin before the end of the year?
08:20 Yes, we have a withdrawal, God willing,
08:22 as part of the student residence in the United States.
08:27 How much is the withdrawal value?
08:30 It is about 30 to 40 million dollars.
08:36 We have a deal to withdraw from part of the educational reserve.
08:42 We invested in the educational reserve for four years,
08:47 and this is the fifth year, and it is due for exit.
08:51 We will withdraw from it to one of the important institutions in Saudi Arabia,
08:57 and we will continue to receive proceeds from other institutions.
09:03 How much is your appetite for more loans?
09:07 I see in the budgets for June 30, you had loans of 1.9 billion,
09:13 some of which were loans.
09:16 Today, the interest rate is high, and we know this,
09:18 and this is increasing the borrowing cost.
09:20 How much is your appetite for more loans?
09:23 The financial data reflects the data of the GFH and the Gulf Trade Corporation,
09:30 which is a subsidiary.
09:31 So it is mixed.
09:32 Sometimes it is difficult to read the financial data,
09:36 but with the increase in the interest rate,
09:40 people are more committed to trade.
09:43 So the loans, because people do not want to invest, are withdrawn.
09:47 Because today the loans give you a percentage less than one-sixth.
09:52 How much did the loans increase this year for the Gulf Trade Corporation?
09:56 I will give you the interest rate today in Saudi Arabia,
10:00 you can get good loans, 6 to 6.5%.
10:05 And therefore, there is an increase in the loans.
10:08 How much?
10:10 I do not have a specific percentage.
10:12 I will try to reduce the loans,
10:19 because the interest rate is higher, and the institution is more expensive.
10:25 So we are working to reduce the loans we have,
10:28 and to tighten the budget,
10:31 to make a good growth in the first half, and hopefully in the second half as well.
10:37 But the investment style is different.
10:42 Previously, we were looking at logistics,
10:47 long-term stability, a certain yield,
10:51 there was a demand outside of the United States,
10:55 but it was a leverage, now we are doing non-leverage in Saudi Arabia.
10:58 So Saudi Arabia gives you the same interest rate as in the United States,
11:02 but without leverage.
11:04 And this reduces the risk of investment.
11:07 How is the company's yield?
11:10 How much free cash flow do we have?
11:12 And how much is there for CapEx, for acquisitions, new investments and expansions?
11:17 The amount of the treasury and the liquid capital is about $3 billion.
11:27 It is about?
11:29 It is about cash and government bonds.
11:34 Oh, liquidity is high.
11:36 Yes, the liquidity is very high.
11:38 We like high liquidity, which is expensive,
11:43 so recently we have been trying to reduce the liquidity,
11:47 because the cost of liquidity has increased.
11:50 But I think the strong institution has high liquidity.
11:55 People see a gap in liquidity, so they get better opportunities.
11:59 People say, this is a strong company,
12:02 so this is one of the strategies we have,
12:05 because you can continue investments in a short time.
12:10 So you get a better price, better investments,
12:13 in addition to the free cash flow.
12:21 I was asking you about the free cash flow.
12:23 Yes, you asked me about the acquisitions.
12:25 How much liquidity is there for acquisitions?
12:29 Most of the acquisitions we do as asset managers are partnerships,
12:36 like the ones we did in the US and in the region.
12:39 The acquisitions you see, like hospitals and schools,
12:42 are done through the treasury,
12:44 and the fundraising is done separately, not from the balance sheet.
12:47 Not from the company's own liquidity.
12:49 We invest 5-10%, but 90-95% is from the investors' investments.
12:57 Great.
12:58 The question I ask you every time I see you,
13:01 especially during this year, is the IPO.
13:03 The IPO for GFH for the Saudi market.
13:06 When will we see it?
13:07 I didn't want to ask you.
13:09 But we are hoping, but the process is taking time.
13:15 We are thinking of a different way, which is the IPO in a non-direct way.
13:21 We have the GFH Capital in Saudi Arabia,
13:24 which follows the laws of Saudi Arabia,
13:26 so it will be easier to get it through a large part of the assets management
13:33 in the Saudi market, and the IPO in the Saudi market.
13:36 This could be a short cut, God willing.
13:40 Is it possible to see it in the first half of next year?
13:43 A little bit aggressive.
13:45 Next year, a good target.
13:47 And the Hylian Fund, is it possible to see this fund in the local markets?
13:53 Because you had a plan for this.
13:55 Yes, it is a large fund, 1 billion,
13:57 which focuses mainly on Saudi Arabia and the Emirates.
14:00 60-70% in Saudi Arabia.
14:02 The objective of the funding is to be sizable.
14:07 You see in the Saudi market, especially in healthcare,
14:13 high rates of reimbursement.
14:18 When is it possible to see it in the Saudi market?
14:20 In the Saudi market, in 2-3 years.
14:24 With a long-term plan.
14:26 My last question is about the shares buyback.
14:28 Why are we seeing a lot of shares buyback in the GFH?
14:32 We are seeing a lot of re-shaping of the shares.
14:37 There is a lot of float on the shares.
14:40 Which makes it difficult.
14:43 Because the competitors love the GFH shares a lot.
14:46 Because it is in 3-4 markets.
14:49 They buy from Kuwait, Dubai, Kuwait, Bahrain, Abu Dhabi.
14:55 There is always arbitrage between the markets.
15:00 To strengthen the capitalization and the important shares in the company,
15:12 we take the treasury buyback.
15:14 We make deals like we announced a few months ago.
15:18 We sell a share to Dubai Investment.
15:21 To strategic investors.
15:23 These strategic investors have a lock-up period for some time.
15:28 So there is no circulation.
15:30 At the same time, they invest in the company.
15:34 The same deal will be made at the end of the year.
15:39 How much will it be?
15:42 The same value of the shares we bought.
15:44 It is a recycled program.
15:46 One deal is about 25-30 million.
15:52 The second deal is another 35 million.
15:57 [SPEAKING ARABIC]