Daman Investments, a private sector UAE-based investment management firm, announced the launch of the Daman Fifth Fund which is a $54 million closed-ended fund.
According to the firm, the Daman Fifth Fund is a new mutual fund that will focus on blue-chip equities listed on the GCC financial exchanges, debt products and commodities, and targets an Internal rate of Return of 25% per year.
Daman Investments is listed in the Middle East Investors Directory with the code OR15.
Their full release follows
Daman Investments PSC, one of the leading private sector UAE-based investment management companies, today announced the launch of the Daman Fifth Fund. An Dhs200m closed-ended fund focussed on investments within the GCC markets, the initial offering period begins and ends on April 7, 2010.
Commenting on the announcement, Mr. Shehab Gargash, Group Managing Director, said, "It gives us great pleasure to announce the launch of this unique investment fund that is the latest to join the family of innovative asset management products by Daman Investments. The Daman Fifth Fund is an opportunity fund that capitalises on the upcoming GCC market recovery. Our first closed-ended fund since the launch of the Daman UAE Value Fund back in 2001, which was also a market recovery fund that netted an impressive return of 273.84% over its lifespan".
The Daman Fifth Fund - Investing in a forthcoming market recovery
Registered with and regulated by the UAE Central Bank, the Daman Fifth Fund is a brand new mutual fund that will focus on blue-chip equities listed on the GCC financial exchanges, debt products and commodities. The Daman Fifth Fund seeks to achieve capital appreciation over the medium term and targets an Internal rate of Return (IRR) of 25 per cent per annum over the life of the fund. Additionally, its objective is to distribute regular dividends, within a closed-ended fund structure.
The Daman Fifth Fund will feature an attractive subscription mode by accepting Payments In Kind. Instead of cash, investors can subscribe with existing liquid securities such as equities, bonds, and sukuks.
The fund's strategy will centre on investing primarily in blue-chip companies that are currently undervalued to their business potential, companies that have demonstrated good business and financial fundamentals and in such companies where there is transparency in business scalability and good corporate governance.
Furthermore, the fund's investment approach will entail active management through country and sector allocation and stock selection backed by fundamental and technical research. Daman's latest investment offering will focus on building long-term value, regardless of market fluctuations.
As fund manager, Daman Investments will provide the fund's seed capital. Subscription to the mutual fund will be up to 2,000,000 units with an initial unit price of Dhs100, up to Dhs200m in value. The minimum initial investment is Dhs200,000 and minimum additional investment thereafter is Dhs100,000. The fund has a 2 year life, extendable by an additional two years for a maximum of 4 years.
When asked about the forthcoming market cycles and why Daman sees a market recovery period, Mr. Gargash commented: "Markets go through up and down cycles. The GCC markets are well poised to chart an impressive recovery. We've seen it happen before and we will see it once again".
The Daman Fifth Fund will be managed by Daman Investments.
The Daman Investments Market Outlook - 2010 and beyond
The GCC markets were serial underperformers in 2009 in terms of both absolute and relative numbers, when compared to EMEA and developed markets.
Immediate growth drivers
• The regional GCC markets are currently trading at forward estimated valuation multiples of 10.2x for year end 2010 earnings estimate which are at a discount when we compare to then historic PE average range of 18x for the past 5 years.
• Taking P/B ratios we continue to find further support for the valuation case with the GCC region trading on 1.4x 2010e.
• The FYE2010 dividend yield at regional markets is estimated to be at an average of 3.9% with many individual stocks having yields in excess of double digit figures making the region an attractive play for income related investors.
Catalysts for Long term growth
• The outlook for oil prices remains positive with most investment houses predicting stronger outlook for global growth, lower interest rates and a more realistic acceptance of the limits of energy supply.
• The IMF continues to forecast a benign macro environment for the GCC economies looking for them to increase their GDP some 10 fold from 1980 levels to 2020 equating to some US$2trn in GDP by then.
• The governments of the region continue to pursue stimulatory policies through increased infrastructure spending. This is proving to be a counterbalance to some of the pullback of private sector spending.
• On the Banking sector, we expect the banking sector NPL curve to peak in H1'10 and to start coming down in H2'10 releasing more liquidity into the system as the appetite to grant loans increases with the strengthening economic recovery.
• Petrochemical sector to remain strong for the year on strong global growth rebound trend. GCC players continue to enjoy a strong cost advantage vis-à-vis their global players.
• We continue to view the Real Estate market across Saudi Arabia and Abu Dhabi market as favourable with an improving credit environment and increased deliveries leading to both primary and secondary market demand.
• On the Telecom sector, we are positive with the Industry getting aggressive on price competitiveness and on new product introductions such as VoIP, and upgraded 3G technologies. Strong cash flow and dividend yield characteristics with a lot of the recent deal flow beginning to bear fruit this year provides us the level of comfort to remain bullish on this sector.
Previous Post: Johannesburg-based investment firm on Middle East road show
Next Post: UAE Investors acquired 9% stake in a NYC merchant bank