Offset Fund Established By NBK Capital
NBK Capital, one of the leading regional investment banks in Kuwait,
has successfully launched the Kuwait Investment Opportunities Fund
with assets under management of $125 million.
The Fund is focused on investing in private equity opportunities in
Kuwait and is approved by the National Offset Company (NOC) as a
vehicle for foreign contractors to fulfill their offset obligations.
The investment strategy is to focus on private equity investments in
high-growth sectors such as education, healthcare, manufacturing,
and technology within the State of Kuwait.
While mainly investing in growth capital, the Fund will also
participate in specific early-stage opportunities that offer a
favorable risk/return profile. In addition, it will actively pursue
opportunities that will further the NOC�s objective to cultivate
social, economic, and technological developments for Kuwait.
The Fund will enable foreign contractors to transfer the burden of
arranging their offset obligations to NBK Capital, relieving them of
the requirement to invest resources in identifying, analyzing,
operating, monitoring, and eventually exiting offset business
NBK Capital has assembled a highly professional team skilled in the
structuring of complex financial transactions with in-depth
knowledge of the legal, administrative, and market specifics of
Offset, as a form of counter-trade, resembles a compulsory
commitment requiring transnational corporations that receive large
government contracts to carry out an investment scheme as a
prerequisite to a winning contract. Offset programs are a common and
a growing feature of worldwide government procurement contracts,
both military and, to a lesser extent, civilian, as about 60% of
countries with military offset programs impose offset obligations on
civilian contracts as well.
Offset has started and become widely applicable in the advanced
countries, which accounted for a majority of the value of the global
offset contracts; then it was extended to the developing countries
and economies in transition. The average offset obligation reached
around 100% of the value of the supply contract in Europe, and
around 60% in the rest of the world. By comparison, Kuwait imposes
an offset obligation of 35% of the monetary value of the supply
Direct Offset projects:
offset investments made by the foreign contractors in areas relating
to their core competencies, or to benefit the beneficiary government
entity. It has proven particularly useful in developing local
suppliers, transferring to them the technical and managerial
know-how on a sustained basis and in a cost-effective manner.
Indirect Offset projects:
offset investments made by the foreign contractors, or third
parties, in areas unrelated to their contracts. They include
maintenance, training, marketing, and technology transfers. It
provides an opportunity to diversify the domestic economic base.