Managing petro-dollars

“By creating value for our clients, we aim to emerge the partner of choice for our regional, local and institutional clients.” Mustafa Ahmed Salman, CEO, United Securities LLC, Sultanate of Oman


It is a universal truth that in the world of greed and fear it is the trust that is inculcated by creating value to customers wealth would be the only driving factor that makes an investor entrust money again with the portfolio manager. At United Securities it is a combination of sheer hard work with team effort that has paid off in bringing this dream a reality. With assets under management of over $250m, United Securities is one of the leading portfolio management companies in the Sultanate of Oman.

United Securities started its asset management division in 2003 by managing portfolios of select local high net worth individuals. What started as trickle has grown to become a full fledged stream within a short period of time. By end 2007, assets under management have grown to over $230m. The division that started with few select clients has now grown not only in terms of diversity but also offers a host of investment solutions to its geographically widespread customer base. Since inception, the asset managers at the company had always been able to outperform not only the bench mark index at local bourse, but the performance of regional bourses too.

The performance
United Securities started its asset management department with managing $15m in 2003. The assets under management increased to over $250m as at the end of February 2008. Portfolio managers have been consistently providing investors with superior returns which have never dropped below 30 percent during any given year. Outperforming the benchmark index has become a way of life at United Securities and during 2006, the portfolio returns were more than 125 percent over and above MSM30 returns.

 Year  MSM30 return  United Securities portfolio returns  AUM (Mn $)
 2004  22.2%  30.5% 15
 2005  46.3%  48.0%  15
 2006  14.5%  33.0%  42
 2007  61.9%  77.5%  230

Asset management process
Portfolio managers at United Securities point out to the well known fact that capital markets are not fully efficient and there are opportunities that arise from deviations primarily driven by heuristics. A systematic approach is adopted by them which not only ties valuations with sentiment but also uses the help of thorough research process that identifies possible opportunities that arise from the behavioral biases. An investment approach that links identifying undervalued businesses and market leaders is applied. An optimal way to exploit the market inefficiencies driven by strong research support has benefited the investors at United Securities.

The approach is incomplete without intervention of human elements and this is where the organisational culture comes into play. A team that started with four people in 1998 has grown to more than 35 people in 10 years time. Motivation, mentoring and a constant demand to build and improve skill sets and capabilities has contributed positively to the growth of United Securities.

Customer focused approach
At United Securities, investing in and nurturing of customer relationships is paramount. As investments are nurtured and taken care of, customer relationships are treated with the same diligence. A proactive and personal approach has resulted in building and sustaining higher levels of customer loyalty. Equity strategies that combine varying risk and return approaches are tailored to specific risk and return objectives are offered to the investors. This systematic customer focused approach has helped them walk away with superior gains on their investments.

Muscat Securities Market
The Muscat Securities Market (MSM) has been the only market in the Middle East to have generated consecutive positive returns for its investors since 2002. Despite the blip that investors in other GCC markets witnessed during 2006, the MSM has consistently netted positive returns and has been an out performer in 2007 where the index netted gains of 62 percent.

Though market capitalisation of the MSM has increased more than five times since 2002, the current market capitalisation at $24bn accounts for less than three percent of the total regional market capitalisation. MSM is the front runner among its GCC peers that has promoted their image of being more accessible to foreign investors. With the developed markets currently witnessing a slowdown in economic growth and decoupling of economies becoming the buzz word of the day, foreign investor interest in the region is bound to grow on account of increased inflow of petrodollars. The role of the Capital Market Authority in monitoring the MSM only adds weight to investing in Oman argument. The CMA has maintained its stringent stance regarding transparency of corporate disclosures. Oman has been foremost in adopting pro investor reforms such as introducing index based ETFs and unlike other GCC markets, pushing corporates to announce their quarterly results within a specified deadline. Thus while Omani capital market is all set to receive increased foreign inflow of investment, United Securities is far ahead, equipped with its sophisticated investment vision.

Looking forward
United Securities is utilising its long-proven experience to establish its presence as a regional player of significance. Unite Securities is a SEBI registered Foreign Institutional Investor (FII) in India. It is close to acquiring companies in Egypt and Saudi Arabia. It has advanced a long way in its journey to become a one-stop shop for all regional markets in the Middle East, the North Africa region and the Indian sub-continent.