Investment portfolio restructuring and operating model review

The situation

A leading GCC investment company, acting as financier and investor, with significant investments in play during a market bubble, asked for Strategy&’s help to design a formalized investment strategy and operating model.

The company’s portfolio was fragmented with no single accountability; management layers between holding and end investments needed to be trimmed and complex cross-ownerships streamlined; and the company lacked a formal investment committee and investment processes, as well as strategic oversight and direction.

How we helped

The Strategy& team designed the investment strategy in line with capital allocation cascaded down to annual targets. A divestment program adjusted the asset allocation according to plan. The team put in place institutional investment governance and processes, with operational investment committees. They centralized investment activities, with two investment vehicles and a capital market arm. They defined the turnaround exposure and developed restructuring plans to maximize the recovery on the turnaround investments.

They established a turnaround department, recruited four new staff, and enhanced the department’s capabilities via processes and training. The Strategy& team valued debtors’ assets, developed settlements proposals, and negotiated with debtors to secure agreement on the plans. They continued to monitor the plan execution, assessing new debt settlements along the way and appointing financial and legal advisors on a deal by deal basis.

Results

Within a year, the new investment portfolio and operating model had yielded a considerable cash return, boosted the value of the company, and improved its capital adequacy ratio by 0.59 percent.