The ONIC Chronicle
The vision of two men may spark off a transformation in the currently dull Oman mutual fund scenario. ONIC Holding is scripting a new path in alliance with a Canadian investment management company to usher in the world to Oman investors. Ramesh Kumar chronicles the path-breaking venture by tracking the promoters

On the surface, there is nothing common between the Sultanate of Oman and Canada. They are worlds apart: politically, socially and economically. And, things would have remained that way but for one individual – Zaigham Shah from Pakistan.

When Zaigham Shah first set foot on the Sultanate soil a couple of years ago, he could not have visualised the prospect of being the architect of the first-ever joint venture between an Omani corporate entity and a Canadian one. He neither knew the affable Akbar Habib, the Group Chief Executive Officer of ONIC Holding, nor did he know of the existence of Asif Khan, an Indian entrepreneur settled in Toronto, running FrontierAlt. It was sheer coincidence that brought Zaigham into contact with both these men. It was a time when both Habib and Asif Khan were looking at the world map, seeking to explore new territories beyond their respective zones: Akbar beyond Oman and Asif beyond Canada. It was August 2006 and Shah had left Oman to join Asif in Toronto. His stay in Oman had put him in touch with Akbar’s ambition, his drive, and his vision. And once in Toronto, he soon realised that Asif was a carbon copy of the ONIC Holding honcho. Their ‘shared vision’ unknown to each other, spotted by Zaigham, resulted in a meeting between them. The net result: the first-ever Omani-Canadian joint venture of one listed and one private company.

Why Middle East?
“The Middle East was part of our growth plans long before we met the team from ONIC. A new world financial centre is developing in the region that rivals Europe and the US. Also, there is a large market of investors that are only now beginning to be offered products that meet their needs and preferences. We see this as an important opportunity,” reasons the bespectacled mid-30s FrontierAlt chief.

The Middle East market is very important to FrontierAlt. In addition to participating in the excellent growth of the region, FrontierAlt wants to be at the heart of the emerging, but booming, Islamic investment industry.

For ONIC Holding, the motivation was different. The 2001-03 phase was a tough period for the Omani company. It was in the doldrums. Survival was the focus area. Akbar admits that flagship assets such as the Commercial Bank of Oman, Al Ahlia Securities, Warranty Holding had been sold. The enormity of the situation can be gauged from the fact that ONIC Holding’s consolidated total assets came down from US$196.3 million in March 2001 to US$107.5 million in March 2003. In the process, the company also reduced its debt burden – by almost two-thirds – from US$77.9 million (March 2001) to US$25.9 million (March 2002).

Once the firefighting was complete, Akbar began looking at a fresh canvas. Stability was next on his agenda and over the next two years (April 2003-March 2005) he restructured the group by turning around and selling OIFC and building value in Al Ahlia Insurance, Orix Leasing and National Life Insurance. Net result: total assets ballooned to US$202 million by March 2005, with net profit increasing to US$33.2 million.

In April 2005, a resurgent ONIC Holding went into a strategic huddle to pencil a scorching growth plan. “As is evident, we have been pursuing a planned path to achieve the company’s vision of building assets to secure sustainable income. We anticipate that by 2010 more than 50 per cent of our sustainable income would be generated from outside Oman and we will have an asset management company with a global footprint, associates and partners. It is part of this global aspiration that made us look beyond Oman,” elaborates Akbar, seated in his spacious Ruwi corporate headquarters, hardly a stone’s throwaway from the Ministry of Commerce & Industry.

Once the Look Beyond Oman exercise began in April 2005, Akbar and his team began scouting various emerging markets and developed countries. “Canada – a G7 country with a strong financial services market attracted our attention,” says Akbar. “And in FrontierAlt, we found a perfect fit.”

It was not that the Canadian company was solely banking on ONIC for its Middle East entry. It had held wide-ranging dialogue with several other groups but, luckily or unluckily, none represented the same level of fit that ONIC did. What interested Asif the most was ONIC’s team. “They’re a smart, ethical group with a vision and outlook similar to ours. Also, ONIC’s partners and investors represent some of the very best companies in the Middle East region. There are synergies at all levels. In addition, ONIC is beginning its international growth process and we believe that there is a good case for FrontierAlt to grow in step with ONIC,” explains Asif.

FrontierAlt plans to leverage the ONIC network for exposure in the Middle East, specifically Oman. The FrontierAlt Oasis group of Shariah funds are a particularly good fit and the joint venture will endeavour to make the ME community aware of their benefits.

What does the FA-ONIC alliance mean to Oman? FrontierAlt currently works with some of the very best money managers in Canada – from small teams of two or three award-winning managers, to Canada’s largest company by market cap. This will be used as a resource to support local investment management in Oman. FrontierAlt, together with ONIC, offers a North American gateway for Omani businesses and investors.

For growth-focused Akbar, the choice of working with FrontierAlt was irresistible. Elaborates the ONIC chief: “The profile of FrontierAlt perfectly fits our vision and strategy. Considering the strong platform the company has built, FrontierAlt is poised for exponential growth within and outside Canada. It is attractively valued for a company that is about to take off. The company represents a mix of young, dynamic and talented professionals, with a very impressive track record. The company is geared to launch new products like the Global Dividend Fund, Shariah Compliant Funds, a Global IPO Fund, a GCC dedicated fund, etc. The strength of FrontierAlt in the field of AMC and deal sourcing will benefit ONIC in its future investment strategy. FrontierAlt will provide access to ONIC to some of the best global fund managers and fund management companies. Joining hands with FrontierAlt will help our planned asset management company get a global footprint.”

Agrees Asif, “the main option that we considered was to continue our current business plan on our own and take investment from our existing shareholders. ONIC has chosen to invest in FrontierAlt at just the right time – we are breaking out in Canada and the company is at an inflection point. FrontierAlt is seeing unprecedented support from the largest players in the Canadian industry. We are poised for rapid growth and gross profits are growing.”

“Expected revenues would have continued to support the growth of FrontierAlt, but the deal with ONIC has resulted in an alliance that allows for expansion into the GCC at a much faster pace and yields the opportunity to capitalise on the tremendous industry support we are experiencing.”
“Also, most other potential investors overlapped our business and didn’t offer the international reach and matching strategic outlook that ONIC does.”

Synergy
FrontierAlt will provide a good launching pad for ONIC to reach out into the North American financial markets. Canada is a growing economy and the only G7 country running a surplus for eight years running, with a rich natural resource base. Through FrontierAlt, ONIC will be participating in and sharing the growth of the country. Entry into the North American market, with immense opportunities for acquiring undervalued and turnaround companies, will help ONIC to diversify from the GCC region. Through this tie-up, we will be creating a bridge between two major economies. FrontierAlt will be the face for ONIC AMC in North America. ONIC AMC would be the face for the regional investors in the North American market. Cross selling of products and expertise will be possible.

FrontierAlt has a long-standing relationship with several insurance companies, energy and mining companies, which could potentially support growth of their respective core business. This partnership will provide ONIC diversification in its asset mix and source of sustainable income. The acquisition will positively support the growth aspirations of ONIC and will be a step in the direction of becoming a financial services conglomerate with a global outlook and reach.

New Entity
Considering the strong brand and platform created, the name continues to be FrontierAlt Investment Management Corp. However, both sides are reluctant to divulge more financial details. Says Akbar: “ONIC has always placed significant importance on the qualitative aspects rather than the transaction amount. This is because this is just the beginning of the quantum growth expected in FrontierAlt that will require additional capital.” Nonetheless, he hastens to add that ONIC Holding along with Asif Khan are the largest shareholders of FrontierAlt.

Business Plan
“Our business model,” avers Akbar, “is to be a global investment bank that provides a wide range of financial solutions across the globe. It is with this global vision that we are incorporating an asset management company and have acquired 20 per cent stake in FrontierAlt. Through this structure, we will be creating a bridge between GCC and North America.”

ONIC Holding believes in having independent set-ups for its subsidiaries and associates with common and synergistic policies, procedures and philosophies. Consequently, each company will have its own head, with Akbar Habib being the Group CEO. Chairman and CEO of FrontierAlt will continue to be Asif Khan and the company will operate from North America.

Official Launch
As part of corporate governance, the acquisition has been made public to regulators. Product launch will materialise after the AMC is incorporated and will include financial solutions for corporations, financial institutions, governments and high net-worth individuals. Other services include portfolio management, investment advice, and corporate finance. ONIC Holding has already obtained the regulatory approval from the Capital Market Authority (CMA) for setting up the AMC. With a view to synergise the activities between the two companies, FrontierAlt will also participate in some percentage ownership in the AMC. FrontierAlt’s structured products, exclusive limited-partnership deals, etc., in Canada will be also offered for subscription to select clients in the region.

It is no secret that the mutual fund scenario in Oman is dull and lacklustre. Will the ONIC-FrontierAlt marriage change all that? Akbar and Asif are optimistic on that front. “We are building an organisation that will have a global reach – in North America through FrontierAlt, in India through our FII, in Pakistan through Pak Oman AMC (our associate), etc. Consequently, we shall not be restricted to the domestic market. Also, through this platform we shall be in a position to offer global financial solutions to our domestic customers. We believe that with the above stated business model, our global reach, good and dynamic team across all our organisation, excellent network, and support of our board and regulators, we shall be able to provide totally new products and financial solutions that will in due course become an integral part of the investment culture.”

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