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Investment Presentation Q2 - 2011
Taking a fresh look on Kurdistan
Kurdistan Investment Company Kurdistan Investment CompanyIdrottsgatan 4 Nishtiman Market Phone: +46 46 1226172229 Lund Erbil Web: www.kurdistaninvestmentcompany.comSweden Kurdistan/Iraq E-mail: info@godvigcapital.com
2/30
* Investing into Iraqi-
dependant securities
* Size: 22 MUSD
* Offshore Fund (BVI)
* Bank: VP bank (A+)
* Admin: ATU/VP bank
Godvig Capital
Management
Godvig Capital Corp
Godvig Analytics Sarl
Godvig Foundation Iraq
Presentation of Godvig
* Investing into Kurdistan-
dependant securities
* Size: 1.5 MUSD
As of April 2011
3/30
• Kurdistan Investment Company Structure
Presentation / Road map
• Investment Case
4/30
• Kurdistan Investment Company Structure
1: Accessible 2: Liquid 3: Experience
4: Well-known Service Providers 5: Performance
6: Transparent 8: Unique
Executive Summary
• Investment Case
1: Lowered risk 2: High growth 3: Reform & Progress
4: Cheap valuations 5: Earnings growth 6: Flow & Access
7: Oil reserves 8: Uncorrelated
6/30
Macro Economy
IMF Stat 2010
Iraqi Kurdistan Region
• Growth: above Iraqi average: Oil production & exports, sustained security, non-oil sectors improve
• Structural Reforms Progress: The Investment law
Iraq
• High GDP growth: 11,5 % 2011
• Debt levels vanishing
• Inflation tamed
• Hugh FX Reserves
9/30
The Oil Story
• Oil reserves estimated to 45
billion barrels, sixth largest in the world
• Low production costs (about $2/barrel)
• Oil fields left mainly unexplored
• Exports started June 2009
Production Sharing Contract (PSC) Blocks in Kurdistan
12/30
Political Agenda and risks
• Kirkuk
• Federalism
• Reconstruction
• National elections
• US troop pull-out and the
future of the Peshmerga
• National Oil Law and
revenue-sharing law
• Trading – 5 days / week 10.00 -
12.00
• Listings – 35 with ongoing trading
• Market Cap – 2.8 billion USD
• Turnover – 1 - 2 MUSD per trading hour
• Electronic Trading - Since spring 2009
• System – Nasdaq/OMX – Horizon
Trade
• Foreigners – Full ownership rights14/30
ISX - Snapshot
• Erbil Stock Exchange (ESX) expected in 2011
• First Bank in Kurdistan Region – one of the largest banks in Iraq
• Established in 2005
• Branch network: 4
• New building in Erbil – Some areas to serve as Erbil Stock Exchange
• Total employees is 325
Investment Snapshot
20/30
Kurdistan International Bank
Investment Snapshot
• Profits 2009 : +15% YOY
• Market Cap: 200 bn IQD (166 m USD)
• P/E: 6.3
• P/B: 1.3
• Loan/Deposits 0.1 % 2005 2006 2007 2008 2009-202468
10121416
-0.125
0.6
6.5
13.3
15.5
Profit Over the Years
Am
ou
nt
(Bil
lio
n I
RQ
)
• Objectives: Explore, develop and produce oil and gas, primarily in North Africa and the Middle East.
• Focused on under-developed oil and gas fields that can be exploited economically and profitably.
• Major oil discovery in August 2009 at Shaikan-1. The block is estimated to contain 4,2 bn barrels.
• P/E neg Market Cap: £1,100 million
Investment Snapshot
20/30
WorkingInterestFullydilutedworkinginterest Operator
Estimated oil in place
Area under licence
ShaikanGKPI 75% (MOL 20%; TKI
5%) 51% GKPI 4,2 billion barrels 283km2Sheikh Adi GKPI 80%; (KRG 20%) 80% GKPI > 1 billion barrels 180km2
Ber BahrGKPI 40% (Genel 40%; KRG
20%) 40% Genel 1.9 billion barrels 350km2Akri Bijeel GKPI 20% (MOL 80%) 12.8% MOL 2.2 billion barrels 889km2
Assets Sectors
Investment Structure
23/30
100%
Oil & Gas
86%
14%
Equities Cash/Bills
Economic Growth Oil Export Revenues ISX – Accessibility for foreigners Trust in bank sector rising New Laws- Oil, Investments, Reconc. National elections & Kirkuk issue Diplomatic / Geopolitical progress Budget execution rising Dinar appreciation Diversification needs for foreigners
Market Triggers in 2010
Portfolio Performance
22/30
Ap
r/1
0
Ma
y/1
0
Ju
n/1
0
Ju
l/10
Au
g/1
0
Se
p/1
0
Oc
t/1
0
No
v/1
0
De
c/1
0
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
6.7%
2.9%
8.2%
-4.5%
6.7%
-1.9%
-1.1%
-3.4%
0.0%
1. Screening• Universe: Kurdish-dependency• Market Cap weighted• Eliminate non-compliant stocks
50 30 securities
2. Research• Market Liquidity analysis• Fundamental analysis• Techs, Sentiment, Flow and Momentum
analysis to the extent possible
30 20 securities
3. Construction
• Portfolio optimization:• Diversification• Sector balancing• Correlation analysis
20 7/15 securities
4. Monitoring• Ongoing analysis• Re-adjustment policies• Risk management process
Investment Process
24/30
Investment Manager
Björn Englund
Mr. Englund, 41 years, is the founder of, and a fund manager for, Godvig Capital Management. In total, Björn has spent 15+ years in front-office positions, mainly in large Scandinavian banks. Former positions have varied from manager of pre-emerging market pools to trading strategist on institutional Scandi-desks. In the Mid-East region, he was stationed with the UN in Iraq and Kuwait in 1991, and in Lebanon in 1989.
Dara Maghdid ISX Market Analyst Lund & Erbil, Kurdistan/Iraq
Mohammed Mohammed ISX Prop Trader / Analyst Baghdad, Iraq
Harald Karlsson Oil Analyst Lund, Sweden
Rod Monger, PhD, USA Iraqi Financials, Accounting Sulimaniya, Kurdistan/Iraq
Al-Fawz Brokers Investment Analysis Baghdad, Iraq
Rabee Securities Investment Analysis Baghdad, Iraq
Rasul& TRC Legal Analysis Erbil, Kurdistan/Iraq
Iraqi Advisors
Advisory Team
Management of Godvig Capital
25/30
KIC
BanksSwedbank, CBIQ
Lawyers (Kurdistan)Sulaiman Rasull Auditors
Ernest & Young
Investment AdviserGodvig Analytics
Organisation
26/30
• Management fee – 2% / Year
• Performance fee – 20%
• Other – High-water mark
• NAV Calculation – Monthly
• Jurisdiction - KIC – Sweden
• Jurisdiction – Godvig – Luxembourg
Fact&Fees
27/30
Plain Vanilla
• Strong Investment Case
• Easy Exposure – To the “Kurdistan Investment Story”
• Liquidity – To be listed in Sweden
• Secure Structure – Well-known Service Providers
• Unique Product – Only investment company with a
Kurdistan focus
Recap– Kurdistan Investment Company offers…
29/30
1: Macro, 2: Oil story 3: Reform Agenda4: Reconstruction & Aid Flows 5: Performance 6: Market Size 7: Trend 8: Commitment
Contact
Björn Englund – CEOMobile: + 467 352 95 333E-mail: bjorn.englund@godvigcapital.com
Dara Maghdid – CFOMobile: + 46 73 90 727 90E-mail: dara.maghdid@godvigcapital.com
Kurdistan Investment Company
Office:Idrottsgatan 4222 29 LundTel: 046 - 12 26 17
www.kurdic.se www.kurdistaninvestmentcompany.comwww.godvigcapital.cominfo@godvigcapital.com
Harald Karlsson – AnalystMobile: + 467 365 22 824E-mail: harald.karlsson@godvigcapital.com
Ludvig Sandell – MarketingMobile: + 467 079 40 086E-mail: ludvig.sandell@godvigcapital.com
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