Technology stands at the forefront of Markaz’s strategy

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The Business Year (TBY) recently met with Ali H. Khalil, CEO of Kuwait Financial Centre (Markaz), who explained that Markaz is pursuing a long-term growth strategy aimed at expanding into new markets, enhancing distribution, optimizing operations, and scaling activities, all while adapting to changing market dynamics through a structured and forward-looking strategic planning approach.

Markaz highlighted a 20.3 percent YoY growth in GCC Fixed Income markets’ primary issuances during 2023. What are the implications of this on the regional financial landscape and Markaz’s role in it?

The strong fixed-income markets across the GCC in 2023, highlighted by the healthy YoY growth rate, carry significant implications for the regional financial and capital markets. The three most important implications are: diversification for both issuers in terms of funding sources and investors in terms of investment offerings in the market; greater liquidity and improved price discovery make the markets more efficient; and the financial markets’ heightened stability enables economic growth, attracts foreign investments, and optimizes capital allocation.

Investment banking is a key vertical within our business model through which we have executed transactions of over USD6.3 billion across the region since 1997. Debt capital market mandates have represented a significant portion of our investment banking business, and we look forward to continue playing an active role in the growth of the Kuwaiti and regional debt capital markets. Our team is highly experienced in advising, structuring, underwriting, and distributing sizable, sophisticated, and market-leading transactions.

Given Markaz’s increasing focus on ESG criteria and sustainable investing, how does the company incorporate these principles into its operations and investment strategies?

At Markaz, we firmly believe that integrating ESG factors into investment strategies leads to well-informed investment decisions and enhanced risk-adjusted returns. It stands to reason that a company that focuses on positively impacting the broader environment in which it conducts its business is more likely to succeed.
Conventional accounting methods do not capture many of these impacts. ESG criteria serve as a fundamental pillar within our business operations and corporate strategy. Driven by our belief that corporations are responsible for improving sustainability for the sake of future generations, we are unwavering in our efforts to decrease waste generation, conserve energy, and limit our carbon footprint.

Our portfolio managers assess companies by focusing on ESG governance criteria, encompassing accountability, fairness, transparency, assurance, leadership, and stakeholder management. With anticipated regulatory changes, Markaz Investment Banking Department plans to engage in ESG issuances, such as bonds and sukuk, and contribute to developing financing structures for projects that integrate and embed ESG-related elements.

What technological initiatives or innovations has Markaz implemented to remain at the forefront of the sector?

Technology stands at the forefront of Markaz’s strategy. As an organization, we have prioritized technological initiatives that serve our clients better, enhance efficiency within our operating model, or incrementally create value. The key objectives of any initiatives are enhancing our client experience through digital tools and collaborations, building a solid foundation for data and analytical capabilities, and maintaining a scalable technology infrastructure that supports Markaz’s growth strategy.

We firmly believe that people are the key resource for scaling up our technology ecosystem, and extracting the full potential of technology requires not only investment in IT tools infrastructure but, more importantly, passionate and capable individuals who serve as catalysts for change within the organization. For that, we have launched the technology champion initiative, assigning employees from respective departments to lead technology initiatives.

What are Markaz’s long-term goals or strategic initiatives for the coming years, especially considering the evolving economic landscape?

We have recently committed to a long-term growth strategy that reconfirms our business model, leverages our differentiating strengths, and opens new business verticals. The strategic initiatives that constitute the implementation plan fall within one of four key themes: entering into new markets (geography and business lines); distribution (capabilities and networks); operating model (people and technology); and scale activity (grow, reenergize, and divest). At Markaz, strategy review is a dynamic exercise that adopts a structured approach to ensure sustainable positioning in changing market dynamics. We are one of the first investment firms in Kuwait to establish an internal strategic planning department that works closely with external subject matters to ensure that we remain in tune with the latest trends shaping our markets.