IRAN’S CAPITAL MARKETS THE FUTURE IS BRIGHT DECEMBER 2017 A SSET M ANAGEMENT AND P RIVATE E QUITY
WHAT WE DO 2
G RIFFON C APITAL OVERVIEW What do we do Griffon Capital is an Asset Management and Private Equity group focused solely on the Iranian market What sets us apart? Local / International Team Strategic Shareholders Public and Private Equity Licensed and Regulated Founded and managed by a unique Backed by a group of strategic Our Asset Management and One of Griffon’s key differentiating mix of shareholders and senior shareholders, which include Corporate Finance Advisory factors is our competency to cover management on-the-ground in European and Middle Eastern platforms are fully licensed and the whole spectrum of public and Iran. The team has extensive family offices and international regulated by the Securities and private equity markets. experience in the Iranian market investment companies with Exchange Organization (SEO) of Iran. and has worked many years for top extensive frontier market Aside from being able to provide a tier global financial institutions. experience. We develop extensive in-house broader array of products to our Our team is further strengthened These shareholders significantly research covering over 16 sectors. investors, leveraging sector by a team of world class senior increase the reach of our network Our Corporate Finance team has a information from the public market advisors who ensure that we align and our ability to seed various as well as Private Equity insight, successful track record of completing ourselves with best international investment vehicles and products provides our team with a 360 ‘ view transactions for leading international practices offered by our business units. of the opportunities. clients. 3
T HREE COMPLEMENTARY BUSINESS LINES 1 2 3 Asset Management Private Equity Cross-border M&A ‒ Offering be bespoke po portfolio lio man management ‒ Fir irst t Priv ivate Equ quity ity fund und and Club b Deal al ‒ Mergers & Acquisitions advisory servic se ices that satisfy a broad mix of platform for the Iranian market pl ‒ Executed largest recent landmark k cros oss investor requirements ‒ Focused on the consumer sector bor border M&A de deals als in n Iran an ‒ Apr pril l 20 2016 16 launch- The he GIF GIF Fun und SP- ope pen ende nded fun und investi ting in n listed ‒ Unique team on the ground ‒ Focused on creating synergies with equit quitie ies Griffon’s PE fund ‒ Unparalleled access to pr prop oprie ietary ‒ Investment philosophy and strategy pi pipe pelin line of f de deals als ‒ Integrated an existing advisory firm in based on fundamental, bottom up, 2014 – ABIC proprietary research ‒ 320+ companies met, 64 soft due ‒ Strong team on on-the-ground- 50 years diligence ‒ an experienced team with over 13 13 combined (domestic & year ye ars of f local exp xperie ience ‒ Building on strength of corporate international)investment management finance team ‒ Strong deal track record experience coupled with analysts’ proprietary research covering 15 sectors ‒ Unique position in the consumer ‒ Only team in Iran led by se senio ior ‒ Structure to allow institutional access and tech ecosystems investment ba bankers from top ‒ Transparent and regulated structure international investment banks ‒ Deep and extensive local l ne netw twork ‒ Rob obust t sa sanctio tions com omplia liance ‒ Unique understanding of the local framework k str tructured by by He Herbert ‒ Focus on valu alue enh nhancement market Smit mith Freehills lls Lon London ‒ International level governance ‒ Cayman CIMA registered Fund with ‒ Ongoing strategic dialogue with key Fully licensed and regulated ‒ Reporting and auditing players in the market Domestic Manager ‒ Operational efficiency ‒ Institutional standard risk framework ‒ Clear path to exit and corporate governance 4
WHY IRAN? 5
I RAN : T HE FASTEST GROWING , LARGEST AND CHEAPEST ‘F RONTIER M ARKET ’ The largest by Market Capitalisation The largest number of listed equity securities 140.0 438 383 120.0 342 335 100.0 299 80.0 USD bn 195 190 172 60.0 150 124 40.0 83 73 67 45 20.0 0.0 Source: MSCI, TSE Source: Stock exchanges, TSE The cheapest by P/E (hist.) ratio The highest dividend yield (hist.) 10.6% 21.2x 19.9x 15.8x 15.8x 15.5x 6.7% 13.5x 6.5% 13.2x 11.8x 11.2x 10.7x 4.9% 4.5% 8.8x 4.2% 8.4x 3.7% 3.7% 3.4% 6.6x 6.5x 2.5% 2.4% 2.2% 2.1% 1.1% Source: MSCI, TSE Source: MSCI, TSE 6
W HY I RAN ? F IRST MOVERS ARE ALREADY HERE .. Wha hat mak akes Iran attrac active Other mul ultinationals alr already ha have • Very low valuations compared to other markets in the region and peers. • You are in good company - committed FDI in 2016 according to IMF was $12 bn. • Economy grew 13% last Iranian fiscal year. The stock market was up 29% despite • Many multinationals and their products are political tensions. In its Iran focused already present in Iran. report, McKinsey referred to Iran as the next trillion dollar opportunity. • Coke, Pepsi, Nestle, Danone, Henkel are to name a few. • Large- PPP basis the economy is larger than Australia and with a large • Henkel recently purchased a plant for € 153 demographic dividend – 80m population, million. 60% under 35. • Boeing recently signed a contact to sell • Diversified economy: largest exporter of $3bn of planes to Aseman. cement, 9th largest auto manufacturer, 4th largest in oil reserves, 2nd largest gas Strategic loc St location reserves, 9th in copper, 1st in Zinc and a vibrant Tech startup scene. • Direct beneficiary of OBOR (One Belt one Road)- Hugely strategic transit route, Silk • Surprisingly well developed: well Road economics stand 2,200 years later. developed with: 101% mobile penetration, 73% banking & ATM card • Regional population cluster ~300m people - penetration, 54 airports, two stock Warm water access for landlocked exchanges with over 400 actively traded countries companies. 7
D IVERSIFIED AND GROWING ECONOMY Lowest external debt in the region Oil accounts for only about 12% of the GDP Other 627 Oil & gas, mining, 1% 12% Construction, 718 Industry, 5% Real estate 646 12% and professional services, 15% Social & 404 private 390 370 330 services, 14% 119 110 Transportati 94 on & 176 16 165 communicati 8 67 on, 10% Hotel and Turkey KSA UAE Iran Egypt Financial Restaurant services, 3% GDP, Current Prices External Debt International Reserves Business, Agriculture, 13% Utilities, 5% 13% Source: CBI, World Bank Source: CBI Developed infrastructure High banking and mobile penetration 101% 92% 54 215,157 km 87% Commercial Roads 63% 61% 57% airports 15 10,407 km Account at a formal Account at a formal Ports Railway Mobile Mobile financial financial penetration rate penetration rate instutation(%age15+) female(%age15+) (Iran) (Global) Iran Global Source: The Mobile World 8
D EMOGRAPHIC DIVIDEND : LARGE , EDUCATED , COST COMPETITIVE POPULATION 80 million population growing at 1.24% 0ver $17k GDP per capita (PPP) 30.00 91 79 31 78 9 100 2.7% Thousands Millions 26.0 90 2.3% 2.3% 2.2% 25.00 2.2% 80 1.9% 20.4 70 1.7% 20.00 60 17.3 15.6 50 1.2% 14.3 1.1% 71% 15.00 40 Between 0.7% 30 15-64 10.00 20 0.2% 6.2 10 5.00 0 -0.3% Egypt Iran KSA Turkey UAE 0.00 above 64 15-64 0-14 Urbanization rate Russia Brazil Iran China India Turkey Source: IMF, WEO Oct. 2015, Central Intelligence Agency, World fact book, Est 2015 Source: IMF, 2015 3 rd highest no. of engineering graduates - 2015 Iran’s minimum wage - 2015 Country $USD/month 500 Thousands 450 Australia 1810 70% of all engineering and 400 science students are female USA 1257 350 Saudi Arabia 800 300 250 Korea 1124 200 Turkey 839 150 100 Brazil 386 50 Russian Federation 274 0 Iran 247 Russia US Iran Japan S. Korea Source: World Economic Forum/UNESCO. Rank our of 124 countries excludes China, India. Source: OECD 9
S OME OF THE MULTINATIONALS CONSUMER BRANDS CURRENTLY PRESENT IN I RAN 10
LOW HANGING FRUIT- GROWING FROM A LOW BASE 11
E CONOMY GROWING FAST OFF A VERY LOW BASE Diversified economy (Oil only ~12% of the GDP) Real GDP growth accelerating Other mining, 1% Oil & gas, 13% 12% Construction, Industry, 5% Real estate 12% and 6% professional 4% 4% 3% 3% services, 15% Social & private 0.3% 0.3% services, 14% -0.3% -2% Transportati on & communicati Agriculture, Hotel and -8% on, 10% Financial 13% Restaurant 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017E 2018E services, 3% Business, Utilities, 5% 13% Source: IMF, World bank Source: CBI GDP growth constant prices (2016) GDP composition growth: 2016 v H1 2017 29% 13% 18% 15% 12% 11% 10% 9% 7% 6% 5% 6% 4% 3% 4% 2% 5% 1% 4% 3% 3% 3% 2% 1% -6% -14% -2% -2% 2016 2017 H1 Source: SCI Source: IMF 12
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