COMPARISON BETWEEN INOVEST & OASIS CAPITAL

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ECON 340/Section 08
Managerial Economics
Semester 02/2014

Submitted to Dr. Farkhanda Sha

COMPARISON BETWEEN INOVEST & OASIS CAPITAL

Introduction

Inovest Investment Company is a sharia complaint investment bank

established under the 1st category license by the CBB in 2008 in the Kingdom Of
Bahrain. It believes in the spirit of dynamic, innovative and result oriented system
of operation. Financed by the people who established Al Khaleej Development
Company Tameer. Inovest is built upon a robust business model that encourages
efficient business and risk taking practices. The vision of the bank is to be a market
leader not only within the kingdom but in the whole of Middle East. The mission is
to be recognized as a gateway for innovative investment techniques and offerings
and to develop best possible relationship with its stakeholders.
Oasis Capital Bank started as a private banking service including asset
allocation, advisory services, trusts and other services as well as developed and
arranged property, infrastructure and private equity management. But due to the
financial crisis of 2008, the bank has to undergo a major revamp of it business
strategy and restricted it services to investment banking only. So the bank applied
for an investment banking license from the Central Bank of Bahrain (CBB) in
2012. The vision and mission of the bank is to take the capital from the high net
value to ultra-high net value clients and invest the money into investment that will
be beneficial for both the bank and its shareholders without taking high risk.

Similarities
Inovest & Oasis capital are investment banks based in Bahrain, both were
established in 2008. They try to take the funds from wealthy individuals or
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COMPARISON BETWEEN INOVEST & OASIS CAPITAL

investment groups and invest the money in investment. Both banks are licensed
and regulated by the Central Bank of Bahrain (CBB).

Differences
Even though both firms are investment management companies, they have a
different approach to conduct day to day business. Inovest believes that small and
big investors are same and have an equal roll in the firm funds and profits.
Whereas Oasis Capital carter its services for high value to ultra-high value clients.
Furthermore Inovest believes in a concrete, innovative and dynamic approach to
business. It emphasizes on the need to take risk for better returns but still staying
within the regulation from CBB. On the other hand Oasis Capital believes in
investing in very high rated securities and investments to reduce the risk of default.
But investing in very high rated investments is costly and have lower returns than
in high risk investment, which have a great impact on Return on Investment.

Services Offered
Both the firms provide a wide array of services such as asset allocation,
consultancy, advisory services, trusts, risk management, etc. But the main services
are divided as following.

Services provided by Inovest

i)

Asset Management
Inovest have an expert investment team that takes into consideration
the amount of the investment, acceptable risk and expected returns of

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Managerial Economics
Semester 02/2014

COMPARISON BETWEEN INOVEST & OASIS CAPITAL

the clients and provide them with a wide range of investments that
ii)

best suits their needs.

Private Equity & Venture capital
In this division, in addition to the aforementioned requirements of the
clients, the team also determines in which industry and what type of
investment (short & long term) is preferred by the client. And provide
the client with strategic investment which will benefit both the firm

iii)

and its client in the future.

Real Estate investment
Inovest also carter for the need of the people looking to invest in the
niche value market of the real estate and follow the guidelines of its
fully owned subsidiary Al-Khaleej Development Company Tameer
which is a prominent player in the Real Estate Industry.

Services provided by Oasis Capital

i)

Property & Infrastructure Investment Division

Unlike Inovest, Oasis Capital believes in investing in very high rated
and risk free investments. They only invest in a limited investment.
Some of their investments in the current portfolio are:
a) Student Accommodation Properties (U.K) (75% ownership
Interest)
b) Bristol Commercial Office Property (U.K) (Wholly owned)

ii)

Private Equity Investments

This division acts as a principle acquisition department. It acquires
ordinary equities with easily identifiable values and above average
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Managerial Economics
Semester 02/2014

COMPARISON BETWEEN INOVEST & OASIS CAPITAL

risk-weighted returns. Some of the investments in this divisions

portfolio are:
a)
b)
c)
d)

Capital Springs (U.S)

The Foundry Vision mongers (U.K)
Syncron (U.S)
Linxens (France)

Major Owners of the Banks

Inovest Investment Company
i)
ii)

KFH Capital Investment Company K.S.C.C. (Bayth Capital) (15.74%)

Dubai Islamic Bank (6.89%)

Oasis Capital Bank

i)
ii)
iii)
iv)
v)
vi)

Palm Capital Company W.L.L (28.57 %)

Tasameem Real Estate L.L.C (11.66%)
D.C.G Advisor L.L.C. (c) (7.78%)
National Bank of Bahrain B.S.C (7.78%)
Social Insurance Organization (7.78%)
Bahrain Mumtalakut Holding Co. B.S.C (3.89%)

Financial Analysis
Both Inovest and Oasis Capital started operation in 2008 and have issued
financial statement up to December 2014. We spread our analysis over every
even year from the first annual report to the most current one.

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Managerial Economics
Semester 02/2014

COMPARISON BETWEEN INOVEST & OASIS CAPITAL

Total Assets (In millions)

600
500
400
300
200
100
0
2008

2009

2010
Inovest (T.A)

2011

2012

2013

2014

Oasis Capital (T.A)

At the end of the first year of the operation Inovest had a total assets account
of $527.57 million as compared to Oasis Capital which had $245 million in
total assets. After a couple of year of changes and getting used to the industry.
Inovest reduced its Investment in Properties to get rid of bad investments which
lead to a decrease of total assets in 2010. According to the financial statements,
Inovest T.A decreased by 29.98% to $369.38 million, while on the other hand
T.A of Oasis Capital increased by just 1.99% over the last two years to $249.89
million. In the following two years Inovest continued to get rid of the bad or
low return investments and reduced its T.A for the 4th year in a row to $292.54
million, a 20% reduction from two years ago. While Oasis capital from 2010 to
2012 collected a bulk of their Account Receivables and invested that money
into investment and paid off some of the equity in 2011. Because the company
paid the money back to its shareholders the T.A & T.L decreased. As on
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Managerial Economics
Semester 02/2014

COMPARISON BETWEEN INOVEST & OASIS CAPITAL

December 2012 TA for the Oasis Capital were 204.2 million dollars (18.29%
reduction over 2 years).
In the following two years Inovest purchased some new investment but
continued the trend of getting rid of the bad investments and reduced its assets
to $268.12 million (8.35% decrease over last 2 years). Even though 2013 was
normal year for Oasis Capital and it experienced a mere 0.9% increase in T.A.
But the company decided to further payoff its equity in 2014 reducing its T.A by
$50.7 million to a net T.A of $152.73 million (a 25% reduction in T.A over last
two years).
Even though none of the companies increased their assets over the period
from inception to current state. Both companies followed their vision and
mission. Inovest was Dynamic and innovative in its investment portfolio
whereas Oasis Capital tried to reduce its liabilities and stabilizing the firm for
the long run.

Net Income
In the first year of the establishment of the bank Inovest had a net income of
$91.16 million and paid dividends of 38.67 cents per share. One of the reason
for the net income of bank in its first year of establishment was its robust
system and action oriented approach to business and its backing by Al Khaleej
Development Company Tameer. While Oasis Capital was a new firm in the
industry and it suffered a net loss of $1.89 million, which was allocated as a 1
cent loss per share.
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Managerial Economics
Semester 02/2014

COMPARISON BETWEEN INOVEST & OASIS CAPITAL

Net Profit (In millions)

100
80
60
40
20
0
2008
-20

2009

2010

2011

2012

2013

2014

-40
-60
Inovest (Net Profit)

Oasis Capital (Net Profit)

Dividends (In Cents)

50
40
30
20
10
0
2008
-10

2009

2010

2011

2012

2013

2014

-20
Inovest

Oasis Capital

In 2010, two year from the banks establishment. Inovest started getting rid
of bad investment, due to the losses suffered from the aforementioned bad
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Managerial Economics
Semester 02/2014

COMPARISON BETWEEN INOVEST & OASIS CAPITAL

investments the bank suffered its first loss in 2010 of $34.87 million which was
allocated as 12.25 cents reduction to per share. On the other hand Oasis Capital got
its first profit in 2010 of $7.53 million and declared dividends of 2 cents per share.
For the next two years Inovest continued selling its bad investment and suffered a
loss for the 3rd year in a row, Inovest declared a loss of $9.02 million which was
allocated as 3.17 cents per share. Oasis Capital during the mentioned period
suffered low returns from investments and declared a loss of $3.44 million. Which
was deducted by 2 cents per share.
In 2014, Inovest recovered from its bad investment crisis of 2012 and after 4
year of losses declared a net income of $0.54 million only which was
overshadowed by a loss provision of $4.38 million. Inovest net income was
converted in to loss after the addition of provisions which was allocated as 1.35
cents reduction per share. Following the 2012 losses, Oasis Capital underwent a
major revamp to its business strategy and declared a net profit of $13.26 million.
Oasis Capital gave out dividends of 7.5 cents per share for year 2014.

Conclusion
After deliberate research and studies through the financial statements of both
the companies we came to the conclusion that both the companies are relatively
new to the investment banking industry. Both try to achieve maximum returns
while following the vision and mission of their establishment. Inovest have a very
positive and aggressive approach to the business, it has shown in its financial
statement how action oriented they are. They purchased high amount of
investments taking a huge risk and paid a very high dividend at the end of its first
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Managerial Economics
Semester 02/2014

COMPARISON BETWEEN INOVEST & OASIS CAPITAL

year of operation. But due to the political unrest Arab Spring in the region
property prices declined which led to a sudden decrease in a booming property
market, which in turn led to a decision of selling those properties as soon as
possible. Resulting in a loss in the concurrent periods.
On the other hand Oasis Capital had a prospector or moderate approach to
the business, from the first day they believed in low risk investments and believed
that low returns from low risk investment was better than taking a lot of risk and
losing a lot of money. Because of their low risk approach they did not suffer huge
losses as suffered by Inovest. They slowly and steadily increased their investment
portfolio. Oasis capital believes in a stable working environment which have less
or no uncertainties, it can be a reason why they started buying their shares back
from the public, so that the company have more control over its operations.

Recommendations
At the end we would like to give some recommendations to increase the
revenues and profitability of both the firms, Even though Inovest have a very
unique and innovative approach, their above average risk taking have led to a loss
for the company for 4 years in a row. They should reassess their risk taking policies
and try to take average risk, which will reduce the default risk and will increase the
revenues and income generated from the investments.
Oasis Capitals approach is moderate, but because of their tendency to invest
in very low risk investments, they are limiting their returns. It may be safer to
invest in low risk investments but they should try to invest in average risk
investments and increase their revenues and profits. They should also consider to
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Managerial Economics
Semester 02/2014

COMPARISON BETWEEN INOVEST & OASIS CAPITAL

reassess their target market segment and target for individuals from all classes,
instead of only high to ultra-high net value clients. It will increase the funds
available to them and result in more investing activities that will increase their
revenue further.

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ECON 340/Section 08
Managerial Economics
Semester 02/2014