Amwal Capital Partners presentation for Sohn's Investment Conference in London, 14 November 2019

1. November 2019

2.  This material has been prepared by Amwal Capital Partners (DIFC) Limited (“ACP”) located at Level 19, Index Tower Dubai International
Financial Centre, Dubai, united Arab Emirates. ACP is regulated by the Dubai Financial Services Authority (“DFSA”).
 This material is provided for informational purposes only and is intended for Professional Clients as defined by the DFSA Conduct of Business
module, and must not be relied upon by any another person
 The information contained herein may include “forward looking statements.” All statements other than statements of historical fact may constitute
forward looking statements. These statements are based on beliefs and assumptions, which we believe are reasonable. However, we can give
no assurance that these expectations will prove to be correct and actual results may differ significantly than those discussed in the forward
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such distribution or offer is unlawful or not authorized or where they are not available for distribution in the jurisdiction of the reader of this
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 Past performance is no guarantee nor is it necessarily indicative of future results, and no representation or warranty, express or implied, is made
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Disclaimer
2

3. Do you know the difference between these two?
3
The Garden 1925
By Joan Miro
Blue City 2002
By Dia Azzawi

4. No, I am not here to talk about Arts…
4
The Garden 1925
By Joan Miro
Blue City 2002
By Dia Azzawi
Modern art refers to the period that began
in the 1880s and that lasted until the
1960s.
Contemporary art can be said to be the
art that was developed after the 1960s. It
is one created by artists who are still
living.
If Global Developed Markets are Contemporary Arts, MENA Markets are Modern Arts.
MENA markets have not yet reached their maturity and are still in an exploratory mode.
…MORE ARBITRAGE OPPORTUNITIES…

5. 5
MENA Markets Features
 MENA being Saudi Arabia, UAE, Qatar, Kuwait, Bahrain, Oman, Jordan, Lebanon,
Egypt, Morocco
2,751
703
1,362
4,801
364
1,669
1,393
Brazil Russia MENA India Indonesia Turkey South
Africa
Average daily traded value (2018, ADVT USD mn)
Market Cap (2018, USD bn)
896
540
1,141
1,933
427
148
468
Brazil Russia MENA India Indonesia Turkey South
Africa
Company Count
279 201 1,355 3,000 580 390 300
MSCI Emerging Market Index Country Breakdown
32.3%
12.2% 11.8%
8.6% 7.5%
4.9% 4.1%
18.7%
0%
13%
25%
38%
50%
China Korea Taiwan India Brazil South
Africa
Saudi,
Qatar,
UAE
Others
Market Cap Breakdown by MENA Country (2018, USD bn)
43%
21%
14%
22%
0%
20%
40%
60%
80%
Saudi Arabia UAE Qatar Other MENA
% of MENA ADVT
69% 8% 5% 18%
Source: Bloomberg; IMF

6. 6
Saudi Market Ownership & Value Traded by Nationality*
* For the month of September 2019
26%
62%
64%
12%
2%
3%
9%
24%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Market Ownership Value Traded
Saudi Individuals Saudi Institutions GCC Investors Foreign Investors
As a proxy to the region, the Saudi market is 26% owned by Saudi Individuals. These Individuals
represent on average c.62% of the ADVT.
The Saudi
Market remains a
retail driven
market
Source: Tadawul

7. 7
Our Trade idea
Our trade idea is a Merger Arbitrage specific to the MENA markets.
What’s the big deal in a Merge Arbitrage?
A totally distorted risk / reward profile …thankfully tilted towards
the REWARD side! A Modern Art version of the Merger Arb

8. 8
Typical Return Profile of Merger Arbitrage
Spread
Risk
Reduction
Factor
(time)
Offer Due
Diligence
Boards
Approval
Regulatory
Approvals
Anti-Trust
AGM
Approval
Deal
Completion

9. 9
Example of Global Merger Arbitrage: Fiserv Inc. acquisition of First Data Corp
-5%
0%
5%
10%
15%
20%
25%
30%
35% Offer & BoD Approvals
AGM Approvals
Completion
Spread % (1)
1. Spread: The difference between the theoretical price of First Data divided by its current price on the NYSE
Source: Bloomberg

10. 10
What if we show you this return profile?
Offer Due
Diligence
Board
Approval
Regulatory
Approvals
Anti-Trust
AGM
Approval
Deal
Completion
Return
Risk
Reduction
Factor
(time)
Return does not really compress until very close to closing despite transaction risk HEAVILY DIMINISHED `

11. 11
How can this discrepancy in Merger Arbitrage happen in MENA?
Contemporary: Developed Modern: MENA
Markets Efficient Asymmetrical & inefficient
Investors Type More Institutional More Retail
Transparency
Strong IR function &
Information Depth
Weak IR with poor
disclosures
Regulator Enforcement Very Strong
Evolving
Depends on Market
Research Coverage Very Strong Limited to large Caps
Shorting Tools Direct Synthetic
Inventory Abundant – non callable
Not always available -
callable
Cost of Borrow Minimal Relatively Expensive
Usually Driven by Management BoD & Major Shareholders

12. 12
Merger Arbitrage in MENA Short SABB – Buy ALAWWAL
➢ Merger Background
✓ Country: KSA
✓ Parties: SABB (local outfit of HSBC) & ALAWWAL (The local outfit of RBS/ABN Amro)
➢ Merger Mechanics
✓ Exchange ratio: One ALAWWAL share was exchanged for 0.4853 shares of SABB
✓ SABB Shareholders would own c.73% of the post-merger entity
➢ Merger facts
✓ Saudi is the biggest market in MENA with the lowest banking penetration.
✓ First listed banking merger ever in Saudi Arabia and first banking merger in 20 years
✓ A paradigm shift by the Regulator - favoring consolidation over issuing new licenses
➢ Rationale for transaction
✓ Cross shareholding: consolidation of main shareholders stakes in both entities (Olayan)
✓ Business and Management Alignment: Create the third largest bank by assets – USD 70bn
✓ Synergies: merged entity target a 2-3% of combined revenues; cost synergies of 15-20% of
combined cost base

13. 13
Merger Arbitrage in MENA: Short SABB – Buy ALAWWAL
The Check List:
➢ Regulator Approval: Validated the thesis of regulatory alignment and approval
considering the policy change of SAMA, the Saudi Central Bank
➢ Validated BoD & shareholder alignment;
✓ Cross shareholding ensuring better alignment and higher likelihood for merger
✓ BoD Alignment: Spoke with board members / shareholders and validated
alignment on both sides; further facilitated by families’ involvement
➢ Management Alignment: Create the third largest bank by assets – USD 70bn
➢ Risks:
✓ Low risk of deal falling through as merger is led by BoD/ shareholders
✓ Low interloper risk as merger pushed by BoD and major shareholders
✓ Regulatory Risk: SAMA pushing for consolidation

14. Merger Arbitrage in MENA
Short 0.48 SABB Shares – Buy 1 ALAWWAL share
Spread is
4%+ in the
month prior
to merger
completion
Spread % (1)
ALAWWAL
trading at a
discount
Spread hovered around:
- 25% after binding agreement 8 months till expected closing
- 10%-13% after regulatory and even AGM approvals, 2-3 months before closing
- 4% , 2 weeks before closing !
1. Spread: The difference between the theoretical price of ALAWWAL divided by its current price on Tadawul
0%
5%
10%
15%
20%
25%
30%
Offer: Exchange ratio
announced
Completion
AGM Approvals & Deal
Completion date
announced
Binding Agreement
signed
Regulatory Approvals
Spread averaged
7% from Binding
Agreement to
Closing

15. 15
Our Trade is…

16. 16
Merger Arbitrage in MENA: Short KFH – Buy AUB
➢ Merger Background
✓ Country: Kuwait
✓ Parties: Kuwait Finance House (One of the largest Islamic banks in MENA) & Ahli
United Bank (Regional bank based in Bahrain with significant business in Kuwait and
listed in both countries)
➢ Merger Mechanics
✓ Exchange ratio: One AUB share would be exchanged for 0.4300 shares of KFH
✓ KFH Shareholders would own c.65% of the post-merger entity
➢ Rationale for transaction
✓ Increase Presence in Kuwait: 33% of AUB assets are in Kuwait
✓ Geographical complementarity: AUB has presence in geographies that are of
interest to KFH
✓ Shareholder (SWF) return targets: Inability to increase ROE organically
▪ Dilutive if done organically or locally due to existing competing Islamic banks

17. 17
Merger Arbitrage in MENA: Short KFH – Buy AUB
Check List:
➢ Regulator Approval: Validated regulatory alignment and approval
➢ Cross shareholding: Ensured better alignment and higher likelihood for merger with
various Stakeholders
➢ Risks
✓ Merger falling through as a result of failure to secure remaining regulatory approvals
(many countries regulators required)
✓ Low interloper risk as merger pushed by BoD and major shareholders
➢ Risk Mitigants
✓ If merger falls through, ACP is happy to hold AUB as it is fundamentally more
attractive than KFH
✓ AUB trades at P/B of 2.0x generating ROE of 19% vs KFH trading at P/B 2.5x
generating ROE of 12%

18. 18
Merger Arbitrage in MENA
Short 0.43 KFH Shares – Buy 1 AUB Share
Proposal & DD
Initiation
Kuwait CB
Approval
Exchange ratio
announced
DD Completion
Completion
Expected in
H1 2020
0%
5%
10%
15%
20%
25%
30%
35%
40%
At the Exchange Ratio confirmation date, Spread
was c.13%. If we leverage this return 2x at 4% cost of
borrow (assumed a worst case scenario of a one
year to close), net return would be c.30%
Spread % (1)
AUB trading at
a discount
Exchange Ratio
confirmed post DD
Where we are now
(10% spread)
Spread was:
- 35% at announcement
- 20%- 30% after announcement of exchange ratio
- 15%-20 % after DD completion and confirmation of exchange ratio
- 10% After Regulatory Approval (Kuwait, main central bank involved)
1. Spread: The difference between the theoretical price of AUB divided by its current listed price
Bahrain CB
Approval

19. 19
THANK YOUIF YOU ARE INTERESTED IN THE TRADE
PLEASE REACH OUT