Ominvest – Ratings Affirmed with Positive Outlook

(MENAFN- Capital Intelligence Ltd) Capital Intelligence Ratings (CI Ratings or CI) today announced it has affirmed the Long-Term Foreign Currency Rating (LT FCR) and Short-Term FCR (ST FCR) of Oman International Development and investment Company (Ominvest) at ‘BB’ and ‘B’, respectively. The Outlook for the FCR remains Positive. Ominvest’s FCRs and Outlook remain in line with those of the Omani sovereign (‘BB’/‘B’/Positive). At the same time, CI Ratings has affirmed Ominvest’s Long-Term Oman National Scale Rating at ‘omAA’ with a Positive Outlook, and Short-Term National Rating at ‘omA1+’.

For Ominvest, the most important factors when considering liquidity risk and short-term debt repayment capacity at the parent company level are: (i) cash and bank deposits; (ii) readily saleable investment securities; and (iii) unused borrowing capacity.

Most listed securities are either held in the form of quoted investments in subsidiaries or associates, or are held through 100%-owned subsidiary Jabreen Capital. Although Jabreen is not itself listed, it is debt free and fully controlled by Ominvest. As it is not a regulated entity, there are no restrictions on its ability to sell investments and upstream the proceeds to the parent.

Ominvest’s ratings continue to be supported by the Company’s status as the leading listed investment company in Oman, and as one of the largest in the GCC region. Other supporting factors are the good profitability record at the total comprehensive income (TCI) level, the Company’s still moderate leverage and debt to equity ratios (capital + perpetual funds equivalent to almost 52% of the asset base), the effective liquidity and high quality of the asset base, as well as the maturity profile of the debt funding base.

The ratings are still principally constrained by the sovereign ratings for Oman. However, the sovereign was placed on a positive outlook in March of this year – as were the ratings of Ominvest. Given the Company’s strong performance on both a consolidated and parent-only basis over 2019-22, it is very probable its ratings would be significantly higher than at present were the degree of sovereign constraint to be lessened.

Despite the geographical diversification strategy, Ominvest’s investments are still mainly Oman-based (albeit the degree of international diversification is growing more rapidly, and is now over 49% of the asset base). Concentrations by sector remain a credit challenge, although the degree of diversification is increasing. Other rating challenges include potential volatility in profit calculated on a TCI basis due to swings in other comprehensive income (OCI). The volatility in TCI reflects general stock market movements in Oman affecting the FVOCI valuations of two strategic investments – both of which are performing well.

In terms of non-financial supporting factors, the Company has a strong and experienced management team, a well-defined strategy and investment philosophy, robust governance, and solid risk management architecture. Ominvest does not normally seek to play a role in the day to day management of its subsidiaries and associates. Instead, Company management concentrates its corporate oversight efforts in ensuring that strong teams are in place and then providing strategic directions through Board level representations, with the clear objective of value creation at each subsidiary company.

Although Ominvest no longer discloses the carrying value of individual investments in subsidiaries or associates, the two large investments in Oman Arab Bank and insurance company National Life & General Insurance Co. constitute a significant degree of concentration; together with the investment in Bank Muscat, they make up slightly over one half of the asset base. The balance of the asset base is however reasonably well diversified by sector and company, although most are still related to the wider financial services segment, which is an area the management has the longest track record and the widest experience. These holdings are further diversified across the banking, leasing and insurance segments, thereby reducing concentration risk to some extent. More recently, the focus has further widened to include non-GCC investments and private equity. Apart from the small proportion of the asset base invested in private equity and in real estate, nearly all holdings are either in listed companies or in subsidiaries which themselves are mainly invested in liquid companies. The good overall liquidity profile has been maintained.

At the parent company level, funding comes from equity, from two perpetual debt issues, and from bank borrowings. There is little dependence on short-term lines, and the overall maturity profile is favourable. The Company continues to enjoy a low cost of funds. The debt service position is therefore expected to remain sound in both H2 23 and into 2024, supported by sizeable committed and unutilised facility limits. Cash flow for debt service is also good as the main investments by Ominvest are in companies with a good record of progressive dividend policies.

As Ominvest chooses to report earnings on a TCI basis, rather than in terms of a traditional profit and loss, volatility in OCI due to fair value changes on assets (which are largely held through subsidiaries) has the potential to produce considerable volatility in the TCI bottom line as well. This remains a constraining factor despite the consistent performance on a TCI basis in recent periods.

In Q1 23, the Group increased its shareholding in NASDAQ listed International General Insurance (IGI) to 20%, from 14.5%. IGI’s market cap is around USD365mn.

Rating Outlook

The Positive Outlook indicates that CI expects Ominvest’s ratings to rise by one notch within the next 12 months. As the Company’s ratings are set at the sovereign level, such a rise would require an upward adjustment to the ratings of the sovereign.

Rating Dynamics: Upside Scenario

While an increase in the Company’s ratings of more than one notch is a possibility, this would require an increase in the rating of the sovereign of two or more notches, something that is seen as being unlikely over the next 12 months, although it remains a medium term possibility. Beyond the already probable raising of the sovereign ratings during the next 12 months, further upward revisions would require that the government be seen to continue on the path of fiscal reforms. These are designed to reduce the budget deficit and the surplus posted in Q1 of this year is encouraging. However, sustained progress in deficit reduction over time would also need to be demonstrated.

Rating Dynamics: Downside Scenario

Although not our expectation, the Outlook could again be lowered to Stable if the sovereign outlook were to be lowered. In the absence of such a sovereign action, Ominvest’s ratings could still be returned to a Stable Outlook or even reduced by one notch should earnings performance decline sharply and balance sheet metrics worsen significantly in terms of the debt to equity ratio, leverage and liquidity, with such a deterioration being of sufficient degree to put pressure on the ratings. Such a deterioration is seen as being unlikely at this time, especially at the current rating level and given continued strong earnings performance.

Primary Analyst: Rory Keelan, Senior Credit Analyst.
Secondary Analyst: Agnes Seah, Senior Credit Analyst
Committee Chairperson: Morris Helal, Senior Credit Analyst

The following information sources were used to prepare the credit ratings: public information and information provided by the rated entity. Financial data and metrics have been derived by CI from the rated entity’s financial statements for FY2018-22 and Q1 2023. CI may also have relied upon non-public financial information provided by the rated entity and may also have used financial information from credible, independent third-party data providers. CI considers the quality of information available on the rated entity to be satisfactory for the purposes of assigning and maintaining credit ratings. CI does not audit or independently verify information received during the rating process.

The principal methodologies used to determine the ratings are the Corporate Rating Methodology (see and the National Scale Ratings Criteria for Oman, dated 3 March 2021 (see Information on rating scales and definitions, the time horizon of rating outlooks, and the definition of default can be found at Historical performance data, including default rates, are available from a central repository established by ESMA (CEREP) at

This rating action follows an ad hoc review of the rated entity. International ratings on the entity were first released in October 2017 and last updated in March 2023. National ratings on the entity were first released in May 2018 and last updated in March 2023. The ratings and rating outlook were disclosed to the rated entity prior to publication and were not amended following that disclosure. The ratings have been assigned or maintained at the request of the rated entity or a related third party.

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