Financial Investments

SEDCO’s heritage in successful management of financial investments is even older than the company itself, dating back to the business origins of its founder. The late Sheikh Salem Bin Mahfouz, who established SEDCO in 1976, had already established Saudi Arabia’s first domestic bank, the National Commercial Bank (NCB), 23 years earlier.

 

SEDCO’s growth in financial investment has followed an impressive trajectory in terms of scale and performance – consistently out-performing benchmark indices in the public equity and private equity segments.

 

With the formation of SEDCO Capital in 2010, the launch pad was created for the next phase of sustainable growth – geographically and by product class. Today, SEDCO Capital is mandated to manage most of the financial assets of its parent company, SEDCO Holding.

 

Public Equity

SEDCO was one of the first to invest in Shariah-compliant global equities, having refined the guidelines in common use in collaboration with Islamic scholars and several other institutions. It also worked with Dow Jones to make available the extensive family of Islamic indices used to benchmark Shariah-compliant equity managers.

 

The Group has also invested directly or through respected professional managers such as JP Morgan, Permal Group, Julius Bar, Walter Scott, Lazard Asset Management, State Street Global Advisors, Rockefeller & Co, and the Oasis Group. These portfolios are spread across different asset classes, including global, Europe, Far East, small- and mid-caps, and emerging markets.

 

During 2011, a year during which the MSCI Europe returned -13.8 percent, maintaining a tactically underweight position to Europe helped the performance of the overall portfolio.

 

Six selected strategies were put in place for investing in different regions, including developed markets, emerging markets, and Asia Pacific. A high dividend yield investment portfolio was introduced against the prevailing climate of low interest rates and a generally lackluster economic outlook. This portfolio, comprising mainly global blue chip companies, is expected to provide annual yields of 4.0 percent.

 

The investment philosophy is founded on an ability to identify superior managers, as well as diversification through global asset allocation. SEDCO remains well placed to maintain this approach by leveraging more than 16 years’ experience in identifying and managing top tier managers of the caliber of Lazard and State Street Global Advisors (SSgA).

 

Private Equity

SEDCO Capital’s private equity program continues to diversify – globally and across industries and manager styles – investing in primary funds and direct/co-investments mainly in growth and expansion.

 


 

In 2011, SEDCO Capital explored new opportunities in agriculture and alternative energy, and also looked to create co-investment and secondary funds with leading international private equity managers. The firm also invested in solar power and healthcare services as co-managers of the SEDCO Capital Partners Group Opportunities Fund.

 

For 2011, the private equity program generated a total multiple of 1.20x and a realized multiple of 3.18x, contributed mainly by an extraordinary exit from a timber investment, and distributions from other funds in China, Korea, and the SEDCO Capital Partners Group Opportunities Fund.

 

Continuing close cooperation with a group of top-decile private equity managers in developed and emerging markets helped us identify and manage private equity investments globally. The value of these relationships has become more significant than ever and is central to our investment philosophy.

 

SEDCO Capital’s team has evaluated more than 100 private equity managers to refine the optimum investment strategy against the prevailing economic and investment conditions. The firm’s diligent approach to partner selection and flexible investment strategy leaves us in a strong position to meet the challenges of the coming year.