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exclusive: destination oman

Soud Ba'alawy, executive chairman of Dubai Group, shares his views on the recent investment in BankMuscat
Mohana Prabhakar

Why did Dubai Financial Group (DFG) look at investing in Oman at this time?

DFG, the financial services holding company for Dubai Group, has a clear mandate of identifying and acquiring financial services firms. DFG has been actively seeking investment opportunities in the region and the international markets.

One country, which stands out both in terms of its strong economic fundamentals and growth momentum in the region, is Oman. It is implementing a series of measures to rapidly diversify its economy. As a result of such progressive steps, the country is experiencing a healthy and solid annual growth rate. Oman's GDP has accelerated to RO13.3bn in 2006 from around RO7.6bn in 2001, with 83 per cent growth occurring in the last two years, according to the annual survey Index of Economic Freedom – the index which measures the degree of economic freedom.

The performance of Oman companies in the first half of this year has so far been remarkable. The Muscat Securities Market (MSM) has registered reasonable growth during this period. All these factors point to a fast developing economy with significant investment potential. That is why we have invested in Omani companies earlier, as with ONIC Holding, the leading insurance company. We will continue to build synergies within our portfolio of regional and international investments in similar sectors. We believe the addition of BankMuscat to our portfolio brings immense value to stakeholders of both the financial institutions. In addition, it opens up further opportunities for us to expand our reach.

Why did you choose BankMuscat as your partner for this transaction?

BankMuscat is at an interesting stage in its development. It is Oman's largest commercial bank with a A2/Prime-1 foreign currency deposit ratings from Moody's. For the second successive quarter this year, the bank has turned in a record performance, with an impressive first half growth of 43.6 per cent.

As part of its international strategy, the bank has listed its Global Depository Receipts (GDRs) in London. It also has sizeable stakes in several overseas financial institutions including the Centurion Bank of Punjab, a private sector bank in India. It has recently acquired a 43 per cent stake in Mangal Keshav Group, one of the oldest and most respected securities houses there.

A stake in an institution of this stature brings additional value to DFG. We see a highly capable management team at the bank with solid professional expertise. DFG will have two nominated directors on BankMuscat's board. In addition, BankMuscat also has a growth strategy similar to ours. It has domestic as well as overseas expansion plans. We find these aspects quite appealing.

What does DFG expect from BankMuscat post-investment?

We see future synergies through this transaction. As we grow, we firmly believe that the two institutions can work together to develop the banking and finance sector in the region. The region's economic growth has been accelerating over the past several years. We are confident we will be in stronger position to tap future opportunities together as the regional eco-nomies expand.

Will DFG partner with the BankMuscat in its international expansion?

As a financial group with international ambitions, we are always thinking of avenues through which we can grow organically with our partners. We have similar objectives. BankMuscat has solid long term ambitions, and we too believe in long-term growth. DFG seeks to build long-term value through stra-tegic investments in both regional and
international markets.

As a key financial institution in Oman, BankMuscat plays a key role in the nation's economic progress. We are keen to participate in this process for the overall development of the region with this private placement.