IIG Prospectus - London Stock Exchange

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actions which could have a material adverse effect on IIG’s business, financial condition, results ofoperations or prospects.Risks relating to the IssuerNo operating historyThe Issuer is a newly formed entity and has no operating history. The Issuer will have nomaterial assets other than the Trust Assets. The Issuer’s principal source of funds will be itsentitlement to its share of profit under the Mudarabah Agreement and amounts payable by theObligor under the terms of the Purchase Undertaking. Distributions of Mudarabah profit willdepend on the successful implementation of the Investment Plan.Limited RecourseThe Certificates are not debt obligations of the Issuer. In particular, the Certificates do notrepresent bonds or notes issued by the Issuer. The Certificates represent entitlements solely to theTrust Assets. Recourse to the Issuer is limited to the Trust Assets and proceeds of the Trust Assetsare the sole source of payments on the Certificates. Upon occurrence of a Dissolution Event, theonly remedy available to Certificateholders will be to require the Trustee to serve an ExerciseNotice and exercise the option under the Purchase Undertaking to require the Obligor to purchasethe assets of the Mudarabah at the Exercise Price and to take steps to enforce the SecuritiesPortfolio Pledge if the Obligor fails to pay amounts due following service of an Exercise Notice.Certificateholders will otherwise have no recourse to any assets of the Issuer (including its directorsand corporate services provider), the Trustee, the Delegate, IIG (in each of its respective capacitiesunder the Transaction Documents), the Lead Manager or the Agents or any affiliate of any of theforegoing entities in respect of any shortfall in any amounts realised from the Trust Assets (to theextent that each fulfils its obligations under the relevant Transaction Documents to which it is aparty). The Obligor is obliged to make its payments under the Transaction Documents to which itis a party directly to the Issuer, and the Issuer, as trustee for the benefit of the Certificateholders,will have direct recourse against the Obligor to recover payment due to the Issuer from theObligor pursuant to the Transaction Documents to which the Obligor is a party. Accordingly,investors have no direct recourse to the Obligor and there can be no assurance that the proceedsof the realisation of, or the enforcement with respect to, the Trust Assets will be sufficient to makeall payments due in respect of the Certificates.Risks Relating to IIG’s BusinessIIG’s business expansion strategy may not be successfully implemented and could lead to increasedcosts and lower profitabilityAlthough IIG was incorporated in 1987, it re-assessed its strategy in the early 2000s and,since 2004, has adopted a new business model involving investment in a range of different butgenerally complementary, business areas and the subsequent expansion and development of thosebusinesses. Accordingly, IIG has a limited operating history under its present strategy on which aninvestor can base its evaluation of IIG’s business and prospects. IIG plans to expand and developsignificantly the businesses in which it currently invests, both in geographic terms and in the rangeof products and services offered and customers attracted. Accordingly, IIG’s business and prospectsmust be considered in light of the inherent risks, uncertainties, expenses and difficultiesencountered by companies such as IIG in the early stages of their development. There can be noassurance that IIG will be successful in implementing its business strategy in the future and anyfailure to do so could have a material adverse effect on IIG’s business, results of operations andfinancial condition.In particular, the development and expansion of the businesses in which IIG invests, whetherorganically or by acquisition, entails significant difficulties and costs, including recruitment andcompliance costs as well as the costs of integrating newly acquired businesses. Unless and until thebusinesses in which IIG invests generate revenues to offset these costs, the results of operations ofthose businesses (and therefore of IIG) will be adversely affected by the costs.A significant part of IIG’s strategy depends upon realising synergies within and across itsdifferent businesses. For example, IIG intends to develop integrated product structuring, claimsmanagement, reinsurance and back office functions for its insurance businesses as well asintegrated back office and other functions for its consumer and real estate finance businesses.However, its ability to achieve this will be constrained by the nature and location of the businesses18
concerned and there can be no assurance as to the timing or extent of any cost savings to beachieved. In addition, IIG anticipates that it should be able to generate significant cross sellingbenefits among certain of its different businesses but again no assurance can be given that it willbe successful in achieving these benefits.IIG incurs significant risks in implementing new business investment decisionsInvestment by IIG and its associated companies in new businesses involves a number ofsignificant risks including:* limited capital resources: an acquired business may have limited financial resources andmay be unable to meet its financial obligations;* limited operating history: an acquired businesses may have a limited operating history,narrower product lines and smaller market shares than established business, which couldrender them more vulnerable to competitors’ actions and market conditions, as well asto general economic downturns;* limited information: generally, little public information exists about the businesses inwhich IIG and its associated companies invest and IIG must rely on the ability of itssenior management to obtain adequate information to evaluate the potential returnsfrom the proposed investment. Any failure to obtain all material information could resultin the investment underperforming or being loss making;* dependence on senior management: certain businesses in which IIG or its associatedcompanies invest may depend on a small management group and the loss of any one ofthese could significantly adversely impact the acquired business and therefore IIG and/orthe relevant associated company;* other risks: these include the risk that the acquired businesses may not have predictableoperating results, may experience or be parties to litigation and may require significantnew capital to support their operations, finance their expansion or maintain theircompetitive position.As a result of the above factors, investments made by IIG or any of its associated companiesmay not perform as expected and this could have a material adverse effect on the business, resultsof operations and financial condition of both IIG and the associated company concerned.IIG is largely dependant on the development and performance of its investments in associatedcompaniesAlthough IIG currently carries on an asset management business (which it intends to transferto an associated company during 2007) and a limited corporate finance business, almost all of itsrevenues are derived from the following two sources:* realised gains made by selling shares it owns in associated and other companies andunrealised gains made be marking to market certain of its investments; and* its share of the profit of associated companies.Accordingly, IIG’s liquidity and ability to service its financial obligations are dependant uponthe performance and development of its associated companies.Since 2004, IIG has realised, and plans to continue to realise, significant revenues through thesale of shares in businesses in which it has invested. In particular, in 2005 IIG arranged the listingof the shares in two associated companies, Grand Real Estates Projects Company K.S.C.C. (Grand)and Gulf Petroleum investment Company K.S.C.C. (GPI), and at the time of listing sold significantholdings in these companies. During 2007, IIG plans to complete the listing of certain otherassociated companies and it is its current intention to sell shares in those companies at the time oftheir listing. IIG’s ability to arrange successful listings and sales of shares will be dependant on anumber of factors outside its control including, in particular, appropriate market conditionsprevailing at the time of the proposed listing and sale.In 2005, IIG recorded significant gains from marking to market certain of its fair valuethrough profit and loss (FVTPL) investments, reflecting buoyant stock market conditions in thatyear. In 2006, and reflecting less attractive stock market conditions, IIG significantly reduced thesize of its FVTPL portfolio resulting in virtually no unrealised gains being recorded. No assurancecan be given in relation to the size and future performance of IIG’s FVTPL portfolio.19
Page 2 and 3: This Offering Circular comprises li
Page 4 and 5: given, and has not withdrawn, his c
Page 6 and 7: FORWARD LOOKING STATEMENTSSome stat
Page 8 and 9: STRUCTURE DIAGRAM AND CASHFLOWSThe
Page 10 and 11: PartiesIssuerOVERVIEW OF THE OFFERI
Page 12 and 13: On the exercise of the Trustee’s
Page 14 and 15: Periodic DistributionsRedemptionExc
Page 16 and 17: Redemption at the Option ofCertific
Page 18 and 19: Definitive Certificates evidencing
Page 20 and 21: Withholding TaxUse of ProceedsListi
Page 24 and 25: The performance of IIG’s investme
Page 26 and 27: the insurance interests within the
Page 28 and 29: Certificateholders will bear the ri
Page 30 and 31: Enforcing foreign arbitration award
Page 32 and 33: 1. Form, Denomination, Title and De
Page 34 and 35: Delegate, the Agents or any of thei
Page 36 and 37: 4.2 Application of Proceeds from Tr
Page 38 and 39: In order to exercise such right, a
Page 40 and 41: as a result of the issue of Shares
Page 42 and 43: of the relevant Certificate and the
Page 44 and 45: (c)(d)(e)(f)(g)Relevant Share Amoun
Page 46 and 47: (k)(l)(m)(n)Liabilities: In exercis
Page 48 and 49: and, in each case, there will be no
Page 50 and 51: (b)Adjustment EventsSubject to Cond
Page 52 and 53: (vi)Where:PdTis the arithmetic aver
Page 54 and 55: ecome effective immediately before
Page 56 and 57: eplacement, the Delegate shall be e
Page 58 and 59: (c)where such withholding or deduct
Page 60 and 61: (b)mailed to them by first class pr
Page 62 and 63: 21.2 The Issuer has in the Declarat
Page 64 and 65: ‘‘Current Market Price’’ me
Page 66 and 67: ‘‘Late Payment Amount’’ mea
Page 68 and 69: aggregate Net Proceeds of Sale and
Page 70 and 71: ‘‘Trading Day’’ means, in r
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GLOBAL CERTIFICATEThe Global Certif
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USE OF PROCEEDSThe proceeds of the
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IIG - SELECTED FINANCIAL INFORMATIO
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ecorded principally as net income f
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Finance costsFinance costs comprise
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its net cash used in investing acti
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investments comprised 50 per cent.
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new company, for example Ajal Finan
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IIG also intends in the next few ye
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IIG has entered into a number of cu
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the productivity of oil and gas wel
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CompetitionIIG expects that First K
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indirectly, 70 per cent. of the sha
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* distribution of borrowings, claim
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* Chairman and Managing Director of
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Name Title AgeYear firststarted wit
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SHAREHOLDERSIIG has been a publicly
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Shareholders holding at least 25 pe
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The table below sets forth the repo
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There are no other outstanding secu
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The strengthening of the Kuwait eco
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THE TRUST ASSETSPursuant to the Dec
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in each case, there will be no rest
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with the covenant relating to the L
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‘‘Independent Appraiser’’ m
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‘‘Total Consolidated Contingent
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For these purposes:‘‘Material S
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TAXATIONThe following is a general
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CLEARANCE AND SETTLEMENTThe informa
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SUBSCRIPTION AND SALEBarclays Bank
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exempt offer under sub-paragraph (3
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GENERAL INFORMATION1. Application h
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APPENDIX - FINANCIAL STATEMENTSFina
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International Investment Group Comp
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F-15
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166Independent Auditior’s ReportF
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188International Investment Group K
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EXHIBIT DINTERNATIONAL INVESTMENT G
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EXHIBIT CINTERNATIONAL INVESTMENT G
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-2-As per the revised IAS 39, unrea
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-4-Gains or losses arising from tra
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-6-n) Treasury sharesTreasury share
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-8-5. Murabaha receivables2005KD200
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-10-Compensation to key management
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-12-During the year, the company ha
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-14-19. Treasury sharesThe Company
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-16-29. Fiduciary assetsThe Company
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-18-iii)Mudaraba receivables and ot
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-20-32. ZakatAccording to State of
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F-63
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F-65
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F-67
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F-69
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F-71
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F-73
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F-75
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F-77
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F-79
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F-81
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F-83
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THE ISSUER AND TRUSTEEIIG Funding L
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IIG Prospectus - London Stock Exchange

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