QInvest is Qatar’s leading investment bank and, with operations across the Middle East, Africa, Europe and the US, is one of the most prominent Islamic financing institutions in the world. QInvest has performed strongly over the last three years with revenue increasing consistently every year, from US$ 35 million in 2013 to US$ 114 million in 2016. QInvest has spent a significant amount of effort expanding its capabilities in Turkey. The size of its asset portfolio is over TRY 1 billion in Turkey. We asked QInvest's plans for the upcoming period and its goals for Turkey to the top executives of the company. Nasser Al Mahmoud, Head of Client Coverage and Distribution, Dr Ataf Ahmed, Head of Asset Management and Can Güçlü, Head of Investment Banking – QINVEST Turkey Office answered our questions…
Nasser Al Mahmoud, Head of Client Coverage and Distribution
1. First of all, could you please tell us about QInvest?
QInvest is Qatar’s leading investment bank and, with operations across the Middle East, Africa, Europe and the US, is one of the most prominent Islamic financing institutions in the world. We have a strong product offering across three business divisions such as Investment Banking, Principal Investments and Asset Management. We deliver world class Sharia’a compliant investment and advisory capabilities, underpinned by the highest standards of governance and transparency, to a wide range of clients.
Our headquarters are in Doha. We have a major office in Istanbul, as well as affiliates in India and the UK. Across the team, we possess extensive international experience which, when combined with a diverse range of specialist offers and award-winning expertise, uniquely positions the firm to facilitate the flow of business between Qatar, the region, including Turkey, and global markets.
QInvest has performed very strongly over the last three years with revenue increasing consistently every year, from US$ 35 million in 2013 to US$ 114 million in 2016. Based on this, we have been able to deliver net profit in each of the last four years, while assets under management increased to US$ 3.5 billion in 2017.
2. Could you please mention us your services and solutions?
The bank’s strategy is centered on steadily growing our assets under management while also holding a diversified portfolio of investments in real estate, private equity, credit, and equities, as well as providing best-in-class solutions to support Sharia’a compliant financial transactions. This balanced approach has allowed us to consistently generate long-term value for our shareholders.
On the Investment Banking front, we are involved in some of the largest Islamic finance transactions globally, with particular strength in M&A, corporate finance advisory, real estate finance and leverage & structured finance. Our Principle Investments business considers investments that provide short term profitability and long-term value creation within a manageable risk framework. Additionally, our Real Estate franchise, continues to deliver impressive results delivering tailored products which match each client’s specific needs and appetite.
On the Asset Management front, we have developed the world’s first open architecture Sharia’a compliant fund platform, QInvest Managed Account Platform (QMAP), which has enabled us to offer some of the strong investment funds to our client base including funds managed by major groups such Pioneer, Pramerica, GAM, Edgewood and JOHCM. By combining our regional expertise with international best practice we have further enhanced the offering we can deliver to clients.
3. What should be done in order to maintain and develop strong relationship between Qatar and Turkey in terms of business?
Turkey has historically been an important market for many Qatari-based businesses, and in recent years this has been led by ever-increasing demand for Islamic financial services and foreign investment. As a bank, QInvest has spent a significant amount of effort expanding our capabilities in Turkey and we have been working hard to make our award-winning products available to the local market there to take advantage of growth opportunities across the full spectrum of the financial services industry.
COMPELLING GROWTH POTENTIAL
Dr Ataf Ahmed, Head of Asset Management
4. What is your asset size that you are managing at the moment?
In total, QInvest Asset Management has assets under management of close to US$ 1 billion. The launch and growth of QMAP (QInvest Managed Account Platform) played a pivotal role in establishing QInvest as a leading asset management business in the region, which could cover multiple geographies and asset classes by hosting a series of highly-rated funds and portfolios. The concept is to continue to bring the best ideas and opportunities to clients whilst ensuring the products are fully Sharia’a compliant and do not require investors to compromise on quality.
Although we already provide clients with a strong offering of products, we continue to expand our line when we see opportunities which make sense for both ourselves as an asset management firm or for clients. For example, earlier this year, we launched the oversubscribed QInvest SQN Income Fund, a Sharia’a compliant closed-ended fund which focuses on equipment leasing and provides a unique opportunity for investors to access income generating assets in developed markets. The fund has a 7 percent per annum yield with a monthly distribution with limited exposure to risk.
5. What are your expectations for Sharia’a compliant funds?
We expect to see increasing appetite for our Sharia’a compliant funds, including from non-Muslim investors, and making our products funds meet clients’ needs and risk appetite remains a clear priority for us. Our achievements in developing the asset management industry have been recognized through multiple awards and strong ratings for our funds. In the last 4 years we have received more than 15 awards Several of our funds have a high Morningstar rating which again, highlights the quality of the product line.
6. What is the size of your asset portfolio in Turkey?
We think that Turkey offers compelling investment opportunities and have therefore been building our brand and expertise in the market for some years. Today, the size of our asset portfolio is over TRY 1 billion. This was boosted by the acquisition of ERGO Portfoy, and launch of QInvest Portfoy, in 2016, which, when consolidated into QInvest, widened and deepened the expertise which we can bring to the Turkish market.
We had identified Turkey as market with significant growth potential for our asset management business a number of years ago and when the government amended legislation to support the growth of the pension industry, we felt that this additional catalyst marked the best time to enter the market with a concerted strategy. We singled out Ergo Portfoy as a leading manager, due to its particular strength on pension clients, which would enhance our own ability to deal with pension funds on a global level, while the expertise QInvest had with high new worth and institutional Islamic clients would complement Ergo Portfoy’s offering in Turkey. We therefore acquired Ergo Portfoy at the start of 2016, rebranding it QInvest Portfoy.
7. How’s the company’s position in the market?
The company today provides Sharia’a compliant services for pension and mutual funds, as well as a discretionary portfolio management offering, and continues to gain market share. It is also helping to attract new investments into Turkey, delivering top-quartile performance by offering a range of successful funds, such as QInvest Portfoy Lease Certificates Participation Fund (QInvest Portfoy Kira Sertifikasi Katilim Fonu) and QInvest Portfoy Sukuk Fund (QInvest Portfoy Kira Sertifikası (Döviz) Katilim Fonu). Both these funds were established under the QInvest Portfoy Participation Umbrella Fund, and offers institutional and individual Turkish investors an easy access to international, as well as local Islamic fixed income instruments. By combining QInvest Group’s extensive know-how in the international sukuk space and QInvest Portfoy’s expertise in the local market, both funds offer very competitive returns to their investors, and continuously rank at the top of their peer groups.
STRONG OPPORTUNITIES IN TURKEY
Can Güçlü, Head of Investment Banking – QINVEST Turkey Office
8. What are the sectors, areas, size of companies, markets that you are interested in?
We are generally sector agnostic and provide Sharia’a compliant mezzanine financings and structured transactions, which best match our risk-return profile. In regard to structured finance, the team remains highly-flexible and efficient, considering a diverse range of Sharia’a compliant structures which possess a healthy risk-return profile for clients on an opportunistic basis. Sectors we have particular strength in including logistics, real estate, contracting, retail, technology and infrastructure.
In addition, the business partners with a range of prestigious institutions with specific sector or market expertise to find compelling investment opportunities in the Middle East & North Africa region, Europe, the US and Asia. Through leveraging a wide network of contacts and thoroughly evaluating each investment opportunity, our diversified approach has supported our consistent performance in recent years.
We have the largest advisory and execution team in the MENA region, with strong Islamic and structuring capabilities, as evidenced by consistent league table rankings in the international Sukuk space. Clients include sovereigns, government-related entities, family offices and corporates across a broad range of industries, from real estate to financial institutions, and retail to oil and gas.
9. What are your investment criterias?
There are a few basic principles which dictate whether or not we commit to an investment. We obviously take into consideration prevalent economic, social and technological trends and the overarching theme is that we take a disciplined approach to our investments, and generally focus on sectors in which we have significant expertise. However, we aren’t tied to certain sectors and manage a range of Sharia’a compliant transactions which best match our risk-return profile. Through this adaptive and flexible approach, complemented by extensive due diligence and ground work, the team invests in financial structures that are carefully devised on a case-by-case basis, and which can ultimately deliver long-term value to QInvest.
10. What kind of investment opportunities do you see and seek in Turkey?
In Turkey, we see Islamic finance outperforming conventional finance and have therefore spent a significant amount of effort and investment developing and marketing our products to the market there. As a bank, QInvest has established a strong track record working on major Sukuk issuances as well as completing Sharia’a compliant mezzanine financing transactions. We will continue to focus on opportunities in Turkey that match our risk-return criteria across a broad range of sectors.
11. Where do you want to see your company in Turkey in 5-10 years time?
We continue to see strong opportunities for growth in Turkey. While we maintain prudent in how we deploy capital, and we retain existing risk management policies to protect current gains in preparation for any market uncertainties ahead, we have significant liquidity ready to be deployed to anchor the right investment opportunities.
Meanwhile, our burgeoning brand in Turkey’s asset management industry, through the further roll out of our QMAP platform, combined with our ability to provide best-in-class Sharia compliant financing solutions to meet the country’s growing demand for Islamic financing, means that we are well-placed for future growth.