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Kuwaiti investors view all options

President Anastasiades and Finance Minister Harris Georgiades discussed various investment options with the Kuwaiti delegation

By Elias Hazou

A GROUP of investors from the Gulf state of Kuwait were yesterday exploring various potential business ventures in Cyprus while the government further gauged Deutsche Bank’s interest in co-bankrolling a mooted gas liquefaction terminal on the island.

Three investment funds, under the Kuwait Projects Company Holding (KIPCO), here on a fact-finding mission, held a succession of meetings with government officials and business leaders.

The KIPCO team first met the Cyprus Promotion Investment Agency (CIPA). They then headed up to the Palace for a meeting with the President and the ministers of finance and energy. Later in the day the Kuwaiti investors held separate meetings with finance minister Harris Georgiades and energy and trade minister Giorgos Lakkotrypis.

CIPA chairman Christodoulos Angastiniotis said the agency gave the Kuwaitis a rundown of Cyprus’ legal and tax systems and the property market.

Today, the KIPCO team is expected to visit a number of sites of existing and prospective real estate ventures, including the Aphrodite Hills golf and holiday resort in Paphos, as well as coastal property projects in Limassol, such as tourist developments and multi-purpose buildings.

“They’re here to learn about potential opportunities. This is just an initial exploratory visit… they will be back,” Angastiniotis told the Mail.

Speaking to reporters, energy minister Lakkotrypis confirmed that the Kuwaiti funds were interested in tourism-related projects, marinas and golf courses, as well as “large-scale development projects that are on the cards.”

“All the signs are there – be it the upgrading of our (credit) rating or the yields abroad of Cypriot bonds – that this is a good time for foreigners to invest in Cyprus,” he said.

Coming out of his meeting with the KIPCO people, Lakkotrypis said they were also looking into the petrochemicals industry.

Such an industry presupposes the existence of cheap natural gas on land, he added.

Sources said KIPCO was investigating the possibility of an ammonia plant in Cyprus.

As its website states, the KIPCO Group is one of the largest diversified holding companies in the Middle East and North Africa, with consolidated assets of US$30.5bn. The group is involved in a number of industries: financial services, media and technology, real estate and the industrial sector. KIPCO owns Qurain Petrochemical Industries Company.

Local media reports also suggested that the Kuwaitis were sniffing out a possible stake in certain semi-governmental organisations that are slated to be privatized over the next three years.

The investors’ trip here comes six months after the President’s visit to Kuwait. Earlier this month, Anastasiades paid a four-day visit to the United Arab Emirates.

The government is keen to attract foreign direct investment in a bid to put a stagnant economy back on a growth path. Still reeling from the near-collapse of the banking sector last year, which led to the seizure of savers’ deposits, Cyprus’ GDP has taken a big blow and is forecast to contract further in 2014.

The other track for economic recovery – monetising the island’s hydrocarbon reserves – was also discussed yesterday at a meeting between the energy minister and a high-level delegation of Deutsche Bank.

The Deutsche Bank reps were here to discuss finance prospects for an onshore natural gas liquefaction terminal.

Lakkotrypis said they talked about ways of funding the LNG project, which could be done either through direct financing or other methods.

“These were preliminary discussions. Of course, for the time being there is not enough gas for the LNG plant. But we are laying the groundwork from the finance side of things,” Lakkotrypis told the Mail later.

Sources knowledgeable about yesterday’s contacts said Noble Energy officials also took part in the meeting between the minister and Deutsche Bank. The German banking giant is involved in a management role in Israel’s Leviathan offshore gasfield, where Noble is also a partner.

Deutsche Bank’s talks with the Cyprus government on the LNG project date back to 2012.

Charles Ellinas, former head of the national hydrocarbons company, said the Germans believe the LNG project is “bankable.”

“They see no associated risks,” said the gas expert, who has sat down with Deutsche Bank reps on more than one occasion.

The German lender, he explained, is positioning itself to be the arranging bank for possible future financing of the LNG project. Once the venture gets the green light from the energy companies, Deutsche Bank would undertake to form a syndication of banks to co-finance the multi-billion facility and related infrastructures.

Alternatively, Deutsche Bank could lend some of the capital and likewise seek other investors for the project.

“Depending on their estimates on the rate of return on investment, the energy companies themselves – Noble, Delek – can maybe put up 30 to 40 per cent of the equity; the rest of the financing must come from elsewhere,” Ellinas explained.

And even though it is the energy companies which ultimately call the shots on the LNG project, Deutsche Bank must talk with the government as the Cypriot state is the owner of approximately 60 per cent of the gas in offshore Block 12.

That’s irrespective of whether the state decides to hold a shareholding stake in the LNG plant or restrict itself to an administrative role.

The government has been mulling its options with regard to the LNG facility, after consultants recommended that it stay out of investing in the infrastructure.

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