fyi

1. Al Nefaie
FIX & GROW
Asset Management Plan
HANY HUSSEIN, RG146, MSc, CFA
10 /2019

2. CONTENTS
2
Strategy
Summary
&
OBJECTIVE
SWOT
Business
Model
Legacy Products
Marketing
Strategy
Business
Requirem-
ents
Appendix

3. Summary
after
before before• This document sheds light on the Asset Management Plan for Al Nefaie Investment Group over the next 3-5
years. We started with our business objectives which we aim to achieve over short, medium and long term.
• The plan is built on the Fix & Grow strategy, where we will first fix the inherited legacy before building on it to
achieve the desirable growth.
• In an attempt to fix current legacy, we have to understand the surrounding strength, weakness, opportunities
and threats. Hence, a brief SWOT would definitely add a value in shaping our sight.
• Rest of document is covering our Business Model we aspire to develop. A typical Asset Management business
model consists of:
• Product Development Strategy
• Investment Management Operations
• Distribution & Marketing Plan
• Financial & KPIs to assess our success in achieving objectives.
• As part of Fix, we also include the required resources we will need such as human resources, IT Systems, …etc.
It is understood that some of these resources might not be available over the immediate short term, some
others are must to have due to our legal Fiduciary Responsibility.
3

4. Objective
after
before before
Al Nefaie Asset Management aims to provide a comprehensive total wealth
management service for Wealthy Individuals, Families, and Corporates. We aspire to
be the most attractive wealth management proposition in Saudi Arabia, offering our
clients peace of mind and a new experience in managing their assets. To achieve
this, we place great emphasis on a) innovative range of offerings, b) research driven
investment process, and 3) excellent customer services to deliver superior
investment performance.
4

5. STRATEGY

6. FIX
6
Marketing Channels
• New website
• Corporate profile
• Marketing materials and Clients pitch deck on products & services
https://www.slideshare.net/hcf100/al-nefaie-sukuk-handbook
Business Documentation
• Business manuals
• Standard operating procedures (SOPs)
• Funds’ fact sheets ( English & Arabic)
• Funds’ Offering Documents (English & Arabic)
Daily Operations
Review and rationalize existing asset management practice including investment management,
operations, accounting, and performance evaluation.
Investment Management
Assume ownership of existing products:
• Saudi DPMs
• Saudi IPO Fund: Finalize the modification process, open new brokerage accounts
through MENA region and improve the fund’s returns relative to its appropriate
benchmark
• Mazaya MM Fund: Improve the performance from 2.0% p.a. to 4% p.a. through direct
investment in Sukuk markets in addition to direct banking Murabaha.
• Tasharuk Fund: Work closely with brokerage team to streamline the fund’s
management.

7. 7
Product Development Strategy
• Open-Architecture including third party products covering all asset classes.
• Articulate DPMs mandates / proposals
• Launching innovative products & services with focus on those with high demand
• Investment advisory, wealth management solutions and Family office services
Investment Management
• Research driven investment process.
• Variety of investment strategies, styles and themes.
• Attractive returns compared to rest of peer group.
In House Research Capability
• Research center in India to cover pubic & private markets
• PR publicity and position Al Nefaie as the trusted advisor in Saudi Arabia
IT Resources
Bloomberg or Reuters, Arqam Research Portal, and Portfolio Management System
Reach & Expansion
• Regional partnerships & alliances with banks across the GCC
• Rep. Office in DIFC, Dubai
Marketing & Distribution Strategy
• Market segmentation & specialization
• RMs training & Certification
• Advisory type customer service
• Adopt New Technologies: digital financial services, robotic advisory & Fintech solutions.
• PR Strategy, Corporate Image, and Brand Recognition
GROW

8. SWOT

9. SWOT
10/14/2019 9
SW
OT
• Poor investment performance
• Lack of AM track record
• Understaffed and financial position
• Missing requirements; research & IT
• Staff needs significant training
• Location. Riyadh vs. Jeddah
• Marketing materials and
communication channels
• Saudi Arabia, the largest market and
the wealthiest in the region.
• There is a demand for good Asset
Managers who can provide high
quality service.
• Al Nefaie has been in Saudi Arabia
for the past 10 years
• Good reputation and legacy as a
stock broker
• Excellent coverage with two locations
in Jeddah & Riyadh
• Global economies heading into
recession.
• Oil is hovering around $50 pb for too
long
• Subdued local economy coupled
with geopolitical risks
S O
W
T

10. LEGACY

11. DPM Investment Performance
(4,000,000.00)
(3,000,000.00)
(2,000,000.00)
(1,000,000.00)
-
1,000,000.00
2,000,000.00
3,000,000.00
4,000,000.00
5,000,000.00
6,000,000.00
Client 1 Client 2 Client 3 Client 4 Client 5 Client 6 Client 7 Client 8 Client 9 Client 10
Portfolio At Inception Plus Net Deposits Today's Value Profit / Loss
-10,000,000
-5,000,000
0
5,000,000
10,000,000
15,000,000
20,000,000
Portfolio At
Inception
Today's Value Profit / Loss
DPM Aggregate Performance in Absolute Terms -
SAR
-25.0%
-20.0%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Individual Portfolios vs. Tadawul
Client 1 Client 2 Client 4 Client 5 Client 6
Client 7 Client 8 Client 9 Tadawul Index 11
• Our DPM is a small business practice of SR 140 million.
• The investment management practice is not a research
driven and relies purely on technical indicators. While
technical analysis is a great tool in timing the entry and
exit points, fundamental and financial analysis is a “Must”
to chose which companies to invest in from first place.
• Accordingly, we lost almost half the money we received,
underperformed the general market in absolute basis as
well as relative basis.
• Clients are not happy with our performance, they leave us,
and DPM contribution to P&L is almost nil.
• Raising AUMs would be challenging bearing in mind the
word of mouth effect.
Source: Al Nefaie

12. Comprehensive Equity Fund
• A small fund of SR 3.0 million.
• The fund has significantly underperformed its benchmark.
• Usually fund managers – within IPO investment strategy –
complain from limited investment universe. Hence, the
fund was recently changed from a Saudi IPO Equity Fund
to a plain vanilla MENA Equity Fund.
• It terms of performance, it is among the bottom quartile
in the market.
• Selling the fund is a challenge bearing in mind its small
size and poor performance.
• Again, investment management relies on manager’s
personal gut feeling and his trading style. No
fundamental research, document investment process or
trading plan were found.
• Recently, fund manager opened an account with EFG
Hermes in an attempt to trade rest of MENA Equity
markets.
-6
-4
-2
0
2
4
6
8
10
12
14
Al Inma Derayia Falcom MEFIC Al Nefaie BMK Tharwat Al Rajhi
Saudi IPO Funds - YTD Return %
Source: Bloomberg
12
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
Al Nefaie IPO Fund (Now Comprehensive Fund) vs. Its Benchmark
Al Nefaie IPO Fund Benchmark

13. Mazaya MM Fund
• A small fund of SR 15 million and among the bottom
quartile.
• The Fund’s assets are invested mainly in third party funds
whose investment strategy is similar to ours such as Al
Khair Sukuk Fund and Itqan Murabaha & Sukuk Fund.
• Upon launch, there was a dispute between fund manager
and appointed Custodian on fees which led to delay in
fund’s assets deployment for a month. This delay will have
a negative impact on the fund’s performance going
forward.
• Recently, the fund manger opened an account with SICO
and Al Jazera to trade Sukuk directly in an attempt to
improve annualized returns to 4%.
0
0.5
1
1.5
2
2.5
3
3.5
4
% YTD CHANGE
13

14. BUSINESS MODEL

15. BUSINESS MODEL
after
before
15
Product Development
Off-Shelf & Bespoke
Investment
Management
Distribution
Riyadh & Jeddah
Market Research
& Clients’ Risk and
Return Objectives
Investment
Research Team
India – Bangalore
(The Kitchen)

16. OUR OFFERINGS
16
DPMs / WRAPPER
Open Architecture
Al Nefaie
MANAGED FUNDS
WEALTH MANAGEMENT FAMILY OFFICE
• These are off-shelf products
irrespective of clients’
needs or market conditions:
• Mazaya MM
• Tasharuk
• Saudi IPO
• We will develop new funds
once there is an appetite
for a new investment
theme such as Sukuk,
Private Lending, and Hedge
Funds (Forex, Commodities,
Major Indices).
• We will develop funds once
there an attractive
transaction such as PE
Funds or Real Estate Funds.
• Wealth management is an
investment advisory service
that combines other
financial services to address
the needs of affluent
clients:
• Brokerage
• Portfolio
Management
• Savings
• Insurance / Takaful
• Awqaf / Philanthropy
• Pension / Retirement
• Estate planning /
succession planning
Managing the family’s wealth as
a whole and ensure to pass that
wealth to new generation
safely.
• Wealth Management
• Trust & Corporate Services
• Financial Planning
• Tax, Legal & Financial
Reporting
• Charity & Philanthropy
• We understand the client’s own
needs, develop his own profile (
e.g. risk, return, …etc.), and
draft his personal Investment
Policy Statement.
• Accordingly, structure,
develop, and provide our client
with bespoke investment
solution based on his own
needs.
• Our recommended solution will
be in the form of DPM /
Wrapper and will include best
available investments
(securities, third party funds,
ready products, murabaha , or
unique investment transitions)

17. PRODUCT
DEVELOPMENT
STRATEGY

18. Over Immediate Short Term
Third Party Products
18
Fund Asset Class Manager Risk Return
Rasmala Sukuk Fund Sukuk Rasmala Medium 4.0%-6.0%
Franklin Templeton Sukuk
Fund
Sukuk Franklin Templeton Medium 4.0%-6.0%
Trade Finance Fund Trade Finance Rasmala Medium 4.0%-5.0%
Al Nujoom Balanced Fund Equity/Sukuk Rasmala Medium 6% +
Al Nujoom Aggressive Fund Equity/Sukuk Rasmala High 7% +
GCC Islamic Equity Rasmala High 8% +
Global Equity Fund Equity Old Mutual High 8% +
Real Estate Long Income
Fund
Real Estate Rasmala High 7+%
European Real Estate
Income Fund
Real Estate Rasmala High 7+%

19. 19
RISK & RETURN SPECTRUM
Low Risk / Low Return Moderate Risk/ Moderate Return High Risk / High Return
Risk
Return
Mazaya
Tasharuk
Rasmala Sukuk
FT
Sukuk
Trade Finance
Njoum
Balanced
Saudi
IPO / GCC Islamic /
Global Equity
RE Long Income /
European RE Income
Bank
Murabaha

20. IPS Is The Core of Our Offerings
20
Money Market
Sukuk
Stocks
Money Market
Sukuk
Stocks
Real Estate
Money Market
Sukuk
Stocks
Real Estate
Real Estate
Money Market
Sukuk
Stocks
Real Estate
Real Estate
Commodities
Money Market
Sukuk
Stocks
Real Estate
Real Estate
Commodities
VC
Defensive
2%-3%
Low Risk
4%-5%
Balanced
5%-6%
Growth
7%-9%
Aggressive
10%+
https://www.slideshare.net/hcf100/dpm-proposal

21. Open
Architecture
43%
23%
34%
Portfolio
Equity / Sukuk Fund A
Income Generating Property
% of Private Equity Transaction

22. Al NEFAIE FUNDS &
New THEMES

23. IF WE ARE HEADING
INTO RECESSION,
THEN WE HAVE TO COME UP WITH
PRODUCTS THAT CONTINUE
WORKING
23

24. Planned Products
24
Fund Asset Class Manager Risk Return
Sukuk Fund Income Al Nefaie Medium 4%-6%
Private Credit (Aviation / Equipment Lease/ Project
Finance)
Financing Al Nefaie High 7% -8%
Real Estate Opportunistic
(Income Generating, REIT, Development)
Real Estate Al Nefaie High 8% - 10%
Private Equity
Education, Healthcare, F&B & Agri
Private Equity Al Nefaie High 15%-20%
Fintech / VC Venture Capital Al Nefaie High 25%+
Commodities, Forex, Indices Hedge Funds Al Nefaie High 30%+

25. Assets Under Management -mil
25
SAR mil Asset Class Risk Oct-19 2020 2021 2022
Existing Products
Mazaya MM Fund Cash Low 1.5 30 50 100
Tasharuk Fund Finance Low 14 50 75 75
MENA Equity Comprehensive Equity High 3 50 50 100
New Products
DPM Diversified High 100 150 200
Sukuk Fund Fixed Income Medium 50 100 200
Private Equity Funds Private Equity High 200 400 600
Private Credit / Leasing Funds Private Credit High 50 100 200
Real Estate Development / Income Generating Real Estate High 200 400
18.5 530 1,125 1,875

26. Revenues -mil
26
Revenue Assumptions
Placement Fee (Ex. Financial Assets) 1.00%
Management Fee - MM / Fixed Income 0.50%
Management Fee - Financial Assets 1.00%
Management Fee - Alternative Assets 2.00% 2020 2021 2022
Placement Fee - Non Recurring 2.5 4.5 5.0
Management Fee - MM / Fixed Income 0.7 1.1 1.9
Management Fee - Financial Assets 1.5 2.0 3.0
Management Fee - Alternative Assets 1.0 6.0 12.0
Gross Revenues * 5.65 13.63 21.88
Effective Fee / AUMs 1.07% 1.21% 1.17%
* Assumed full AUMs would be raised from beginning of the year

27. Performance Indicators
27
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2020 2021 2022
Assets Under Management in mil
0.00
5.00
10.00
15.00
20.00
25.00
2020 2021 2022
Revenues in mil
1.00%
1.05%
1.10%
1.15%
1.20%
1.25%
2020 2021 2022
Effective Fees Rate

28. MARKETING
STRATEGY

29. MARKETING PLAN
29
MARKET RESEARCH
TARGET MARKET /
SEGMENETATION
SPECIALIZATION /
KNOWLEDGE
Understand our market
• Dynamics
• Patterns
• Trends
• Our market position
(where are we ?)
• Our value proposition (
Why Al Nefaie?)
• Our competitors & their
offerings
Define our target market
• Retail / Affluent
• HNWs / UHNWs
• Institutional – Private
• Institutional – Listed
• Family Offices
• Charities /
Philanthropies
• SWFs
Who is after whom?
• Aml : HNWs / UHNWs /
Family Offices
• Ghaidaa: Private
Institutions
• Bandar: Public
Institution
• Advisory vs. Sales?
• Training & Knowledge

30. MARKETING PLAN
30
High QUALITY
MARKETING MATERIALS
MARKETING CHANNELS/
REACH
KPIs / FOLLOW UP /
MONITOR
• Business Proposals
• Products Presentations
• Clients Marketing Pitch
Deck
• Wealth Periodicals
• Research Notes
• Website
• Wealth / Invest Clubs
and Gatherings
• TV/ Newspaper
Publications
• Digital Marketing /
Applications
• Social Media
• Fintech / Robo Advisory
Establish a set of KPIs /
Goals that can turn into
numbers:
• Number of Calls / Week
• Number of New Clients /
Month
• AUMs / Year

31. BUSINESS
REQUIRMENTS

32. BUSINESS REQUIRMENTS
32
Proprietary
Research
Capability(
2-3 in India)
Portfolio / Fund
Management
Automated
System
Sophisticated
Advisors (not
RMs)
Short Term
Medium Term
Providing PM
with training Moving To
Riyadh???

33. THANK YOU

34. Appendix
INVESTMENT
THEMES

35. 35
Al Nefaie High Yield Sukuk Fund
In Recessions, Nothing Better than Fixed Income
Public Credit Income Strategy 5% - 7% p.a.
100
110
120
130
140
150
160
170
180
190
31/08/2009
28/02/2010
31/08/2010
28/02/2011
31/08/2011
29/02/2012
31/08/2012
28/02/2013
31/08/2013
28/02/2014
31/08/2014
28/02/2015
31/08/2015
29/02/2016
31/08/2016
28/02/2017
31/08/2017
28/02/2018
31/08/2018
28/02/2019
31/08/2019
Dow Jones Sukuk A Rated Total Return Index
• Fixed Income Instruments, and due to current concerns over being headed
into recession, are overvalued. More than 16 trillion worth of bonds are
traded at negative yield.
• Over the past 10 years, the historical annualized rate of returns of Dow
Jones Sukuk Index was 4.54% compared to 12.6% over the past 12 months.
The most recent leap was due to the recent yield inversion which some
consider as an indicator for future recession.
• With YTM of 2.64%, Bonds / Sukuk Market is becoming “Opportunistic”
Annualized Rate of Return
10 Years 5 Years 3 Years 1 Yr YTD YTM
D.J. Sukuk Total Return
4.54 4.54 4.93 12.61 11.6 2.64

36. 13
Saudi REIT
Tenants Single Tenants
Price SR 800mil
Cap Rate 8.5% negotiable
Leverage Up to 50%
Fund’s est. Dividend 10%
Tenancy Ave. 10 years
Rent Increases Yes
We are offered a pool of 3 prime commercial malls in Jeddah,
Riyadh, and Al Khobar with asking price of SR 800 mil and
average cap rate of 8.5%.

37. 13
VesselsAviation Equipment
Private Credit
As Bonds are Expensive, Private Credit Gaining Momentum
Income Strategy With Annual Distribution of 7 % -8% p.a.

38. Real Estate / Sale & Lease Back
Healthcare – Abu Dhabi, UAE
37
Tenants Salama Hospital
Price AED 100 mil
ROI - NNN AED 8 – 9 mil
Cap Rate 8% negotiable
Fund’s est. Dividend 6%+
Tenancy 12 years
Rent Increases Yes

39. Real Estate / Sale & Lease Back
RETAIL PORTFOLIO – WALMART & AT HOME
ROCHESTER, NY MSA, USA
38
Tenants Walmart & at home
Price US$ 15.8 mil
ROI - NNN US$ 1.03 mil
Cap Rate 6.5%
Fund’s est. Dividend 4.5%
Remaining Tenancy 10 years
Rent Increases Yes
Renewal Options Yes
• Leases Corporately Guaranteed by Walmart and At Home
• Low Price Per Square Foot – Below Replacement Cost
• Centrally Located in Perspective Retail Corridors
• Anchor Tenants in Perspective Retail Plazas

40. Real Estate / Sale & Lease Back
RETAIL PORTFOLIO – FedEX
3935 AUMSVILLE HIGHWAY, SALEM, OR, USA
39
Tenants FedEx
Price US$ 13 mi
ROI - NNN US$ 1.22 mil
Cap Rate 9.4%
Fund’s est. Dividend 7.4%
Remaining Tenancy 5 years
Renewal Options Yes

41. 41
Food & Beverages
Agriculture
Education
Healthcare
Private Equity Funds – Defensive Play
Growth Strategy With IRR of 15%+

42. 42
Private Equity Funds – Industrial & Petrochemical
Investing in Saudi SMEs incubated by SABIC
Al Asas Iron Ore Slag Crushing Plant
• Our client has established the first Iron Ore
Manufacturing facilities in the GCC region,
located in Mecca region.
• The new facilities with an estimated Capex of
SR 250 mil including inventory extracts iron
ore, silica and aluminium from crushed rocks
using Chinese and Indian crushing machines.
• SABIC has appointed a third party technical
consultant to review and check the industrial
process to ensure the output quality is in line
with market standards before signing an off
take agreement.
• The new fund would acquire – among other
investors whom we might bring – a stake in
the plant.
• Our exit strategy is getting listed on Noum
market.

43. 43
FinTech Fund – Technology & Financial Innovation
A Rapid Growth Strategy With IRR of 20%+
Splitit Payment is an
Australian Fintech listed
company that was offered
at AUD 0.4 /share during
its IPO in Sydney.
Post IPO, the price shot to
AUD 1.6/ share before
facing strong profit taking
pressure.
Recently the stock
started to build upward
momentum.