Privatization processes are one of the most critical and political processes within any economy historically dependent on the public sector. Transformation of large enterprises from public to the private needs cumulative knowledge of the vast previous human experience combined with intuitive comprehension of the local political, economical, and priorities within the concerned country.
AlShall possesses this understanding and imparts it through professional teams. This work is initiated from a conceptual and project framework, to a fully developed privatization scheme containing industry structure, regulatory framework, identification of asset transfer mechanisms, including preparation of private and public placement documents, as well as supervisions of transaction implementation.
AlShall has acted as a prime advisor in a large number of projects within industries such as oil, recreational, retail, ports operations, and others. Moreover, it has acted as a financial advisor in numerous BOT projects which, to date, formed the core of the privatization effort within Kuwait. ِAlShall was the advisory arm for many investors in their BOT submission to the municipal authorities, noting that these investor teams won their bids by a considerable success ratio (70%). It is expected that such activities will flourish in the region with attempts of economic reforms.
Project Example – Privatization.
Assignment
Privatization of local marketing operations of KNPC (fuel stations and oil blending plant).
Client Name
Privatization Committee led by Kuwait Investment Authority with Kuwait Petroleum Company.
Client’s Activities
Governmental – Public Sector.
Assignment Date & Duration
2002, 15 months.
Main Area of Focus
Review of old studies and data gathering
Prepare RFPS and qualification criteria to assign specialized third party consultants
Select sub-contractors
Develop privatization strategy that included:
– Pricing strategy (gross margin)
– National labor force
– Number of companies
– Ownership structure of these companies
– Basis of allocation of the fuel stations to these companies
– Regulatory supervision requirements upon privatization
– Valuation of companies
Services Provided
Held role of lead advisor to the committee for fuel stations and oil blending plant privatization.
Valued operations
Set-up an implementable privatization process
Presented findings to Privatization Committee and Higher Oil Council
Outcome
The fuel stations and oil blending plant were subsequently privatized in line with AlShall’s recommendations.
Project Example – Feasibility Study.
Assignment
Establishing an Islamic Bank – Cham Bank, Damascus, Syria.
Client Name
Kuwaiti Real Estate Holding (formerly known as Kuwait National Real Estate Services Company).
Client’s Activities
Private sector company with real estate activities in Kuwait and the MENA region.
Project Size
USD 175,000,000 (KD 50,000,000).
Assignment Date & Duration
2004, 5 months.
Main Area of Focus
Carrying out a financial feasibility, developing economic and market studies, and making a final submission of the BOT proposal to the Municipality of Kuwait.
Services Provided
Conducted a comprehensive feasibility study including all sub-components such as market research, industry trends, supply and demand quantification, competitors, customers, legal framework, identification and quantification of revenue streams, operating expenses, capital expenditures, capital structure, required rates of return and associated risks. AlShall built financial models for each entity to incorporate all these elements in pro-forma income statements, balance sheets and cash flows, supported by appropriate scenarios and sensitivity analysis.
Outcome
Consultancy mandate fully executed and BOT competition won by the client.