Iraqi investors to put money where mouth is
Mar 08, 2010 at 15:18
By Rajiv Sekhri
DUBAI - Investors eyeing Iraq’s economy are expected to put their money where their mouth is in the coming months as the current election solidifies legitimacy in the country’s young democracy, a leading fund manager said on Sunday.
“This election will drive legitimacy for the government and international investors will feel more comfortable,” Dara Maghdid, who manages the $30 million Babylon Fund for Godvig, told Maktoob News.
Millions of Iraqis braved rocket, mortar and bomb attacks that killed dozens of people over the weekend to cast their ballots in the second parliamentary election since U.S.-led forces ousted dictator Saddam Hussein in 2003.
Maghdid said investors have taken a wait-and-see approach until the election, but expected improvements in political and social stability after the vote could pave the way for an economic boom in the oil-rich country.
Iraq’s stock market has the potential to “rise three times in three years, ten times in ten years”, Maghdid forecast.
The Babylon Fund has 40 to 50 investors, most of them European, and invests their money in the Iraq Stock Exchange, which has fallen about 10 percent in the first two months of this year.
The Iraq bourse has fallen about 20 percent since September 2009 when companies in the index were reweighted.
The Babylon Fund has returned about 28 percent to investors since it started in 2006, Maghdid said. While the return is not stellar, Maghdid expects steep returns in coming years.
Iraq has the world’s third largest oil reserves after Saudi Arabia and Iran, according to figures from UK energy firm BP. Foreign direct investment soared in 2009, rising more than 240 percent to nearly $157 billion in capital commitments by November.
NORTHERN STAR
Godvig plans to start a new company, Kurdistan Investment Co (KIC), in the country’s oil-rich northern region in the coming months. It has already garnered $1 million from a few investors and hopes to increase that to $50 million.
“We have two Kurdish investors and two Europeans. They live in Iraq. We’ve spoken to some big investors and they also want to come to this company and waiting for the company to be completed.”
KIC will invest in shares of foreign oil companies that are setting up operations in the region. Maghdid hopes to list KIC on the Stockholm bourse once it gets the minimum 100 investors needed.
While Iraq’s real gross domestic product is expected to rise 6.3 percent a year on average in 2010-2011, according to the Economist Intelligence Unit, Maghdid said growth in Kurdistan should exceed 20 percent annually.
“Our investors worry about the election,” he said. “But this tension is a healthy phenomenon that will create a more democratic environment in the region.”
Analysts expect four key groups to take the bulk of 325 seats in the country’s parliamentary election and attempt to form a coalition government.
These parties include: The Iraqi National Alliance, the country’s largest Shi’ite coalition; the nationalist group al-Iraqiyah led by Iyad Allawi; Prime Minister Nur al-Maliki’s State of Law party; and a coalition of two Kurdish parties.
Maghdid said that “while the security situation is not good ... things are headed in the right direction”.
The Economist Intelligence Unit said in a recent report that while it expects “the political situation in Iraq to remain unstable ... we do not expect a repeat of the sectarian conflict that engulfed Iraq in 2006 and early 2007”.
Maliki on Monday emerged as a front-runner after the election. However, estimates from the Baghdad region, which could swing the results of Sunday's poll, were not yet available but local officials said Maliki was leading in nine of Iraq's 18 provinces.
Mar 08, 2010 at 15:18
By Rajiv Sekhri
DUBAI - Investors eyeing Iraq’s economy are expected to put their money where their mouth is in the coming months as the current election solidifies legitimacy in the country’s young democracy, a leading fund manager said on Sunday.
“This election will drive legitimacy for the government and international investors will feel more comfortable,” Dara Maghdid, who manages the $30 million Babylon Fund for Godvig, told Maktoob News.
Millions of Iraqis braved rocket, mortar and bomb attacks that killed dozens of people over the weekend to cast their ballots in the second parliamentary election since U.S.-led forces ousted dictator Saddam Hussein in 2003.
Maghdid said investors have taken a wait-and-see approach until the election, but expected improvements in political and social stability after the vote could pave the way for an economic boom in the oil-rich country.
Iraq’s stock market has the potential to “rise three times in three years, ten times in ten years”, Maghdid forecast.
The Babylon Fund has 40 to 50 investors, most of them European, and invests their money in the Iraq Stock Exchange, which has fallen about 10 percent in the first two months of this year.
The Iraq bourse has fallen about 20 percent since September 2009 when companies in the index were reweighted.
The Babylon Fund has returned about 28 percent to investors since it started in 2006, Maghdid said. While the return is not stellar, Maghdid expects steep returns in coming years.
Iraq has the world’s third largest oil reserves after Saudi Arabia and Iran, according to figures from UK energy firm BP. Foreign direct investment soared in 2009, rising more than 240 percent to nearly $157 billion in capital commitments by November.
NORTHERN STAR
Godvig plans to start a new company, Kurdistan Investment Co (KIC), in the country’s oil-rich northern region in the coming months. It has already garnered $1 million from a few investors and hopes to increase that to $50 million.
“We have two Kurdish investors and two Europeans. They live in Iraq. We’ve spoken to some big investors and they also want to come to this company and waiting for the company to be completed.”
KIC will invest in shares of foreign oil companies that are setting up operations in the region. Maghdid hopes to list KIC on the Stockholm bourse once it gets the minimum 100 investors needed.
While Iraq’s real gross domestic product is expected to rise 6.3 percent a year on average in 2010-2011, according to the Economist Intelligence Unit, Maghdid said growth in Kurdistan should exceed 20 percent annually.
“Our investors worry about the election,” he said. “But this tension is a healthy phenomenon that will create a more democratic environment in the region.”
Analysts expect four key groups to take the bulk of 325 seats in the country’s parliamentary election and attempt to form a coalition government.
These parties include: The Iraqi National Alliance, the country’s largest Shi’ite coalition; the nationalist group al-Iraqiyah led by Iyad Allawi; Prime Minister Nur al-Maliki’s State of Law party; and a coalition of two Kurdish parties.
Maghdid said that “while the security situation is not good ... things are headed in the right direction”.
The Economist Intelligence Unit said in a recent report that while it expects “the political situation in Iraq to remain unstable ... we do not expect a repeat of the sectarian conflict that engulfed Iraq in 2006 and early 2007”.
Maliki on Monday emerged as a front-runner after the election. However, estimates from the Baghdad region, which could swing the results of Sunday's poll, were not yet available but local officials said Maliki was leading in nine of Iraq's 18 provinces.