Group’s success shows measure of private sector potential

The Kuwait Projects Company (better known as KIPCO) was founded in 1975. Since that time, the private sector company has grown into a leading regional holding with diversified interests in the financial services, media, real estate, industrial and education sectors. Today the Group is made up of over 60 companies with more than 12,000 employees spread across 24 countries. With consolidated assets of $32 billion, it is one of the largest privatesector companies in the region.

KIPCO is publically listed and its principal shareholders are members of the Kuwait royal family, with others including institutions, high-net-worth individuals and equity funds. With results-driven investors to answer to, KIPCO’s corporate culture is one of ensuring outcomes while maintaining transparent operations.

As Samer Subhi Khanachet, Group Chief Operating Officer (COO), explains, “We are extremely disciplined as an institution and our subsidiaries operate as one. Consequently, we have continuously strengthened the governance of our businesses. Our interest is to develop a sound strategy and hire good people to execute it. We don’t micro manage from the holding company.”

Evidence of the effectiveness of KIPCO’s corporate policies and business practices can be seen in its expansion following 2008’s global financial crisis. In contrast to many major groups, the crisis left KIPCO in a significantly stronger position as it invested in or acquired undervalued assets.

Following the consolidation of strategic asset acquisition, KIPCO has looked for opportunities within Kuwait and across the MENA region to further its reach across its businesses. One such opportunity is a major land acquisition in Kuwait.

Indeed this move into real estate is a bold one: a $2.5 billion real estate megaproject on prime land at the heart of Kuwait City. The 94 acre project is planned for the prestigious Al- Daiya neighborhood, with construction of both residential and commercial space, as well as extensive infrastructure upgrades to commence in Q2 of this year.

It is not just the scale of this megaproject that is impressive, but also the simplification in development regulations that have come in the wake of its planning phase.

“Previously there were very strict rules in the development of municipalities that would have made this very difficult, but after two years of negotiation we have been able to get an exemption not specifically for us, but for all projects like ours. So we have really opened the way for other developers,” says the Group COO.

Construction will commence this year and KIPCO is open to including foreign stake-holders in the project. “We have no problem with the financing to complete the project but if there is an investor that carries the vision, we will be happy to partner and hopefully shorten project completion from seven to five years,” explains Faisal Al-Ayyar, Vice- Chairman (Executive) of KIPCO.

Drawing on resources and expertise from across the Group, KIPCO is actively supporting the reinvigoration of entrepreneurial spirit in Kuwaiti youth. Mr. Khanachet reflects, “Throughout history, we have had a very tough culture because Kuwait was, traditionally, a tough place to live. You had to be smart and strong to survive in business during the pre-oil era. This skipped a generation, particularly mine, and now the younger generation needs to resurrect this characteristic and engage in innovation, given the uncertainty of energy prices”.

To this end KIPCO partnered with the Youth Empowerment Organization (Tmkeen) launching the KIPCO Tmkeen Award for Young Entrepreneurs last November. Entrepreneurs aged between 18 and 33 engaged in well-established media and technology businesses were invited to apply. According to Eman Al Awadhi, KIPCO’s Group Communications Director, “The ten finalists at the Tmkeen Award presented to Mark Kawano, Co- Founder and CEO at Storehouse, and he said that many projects were at Silicon Valley standards.” The grand prize was won by Ajar Online, a cloud service built for simplifying rent collection across the region.

Beyond youth entrepreneurship, the Group has encouraged educational ties with the US and the knowledge transfer that comes with it, sponsoring the National Union of Kuwaiti Students (NUKS). This includes the NUKS USA Branch which serves as a nation-wide forum for Kuwaitis currently enrolled in American universities.