Face to face: Mahmood Alkooheji, Bahrain Mumtalakat Holding Company
Mahmood Alkooheji, chief executive officer of Bahrain’s sovereign wealth fund, Mumtalakat, explains why his organisation and its portfolio companies are not content to rely on government handouts in order to deliver projects
As chief executive officer of Bahrain Mumtalakat Holding Company, Mahmood H Alkooheji represents a steady hand on the tiller of the Gulf state’s investments.
Bahrain’s sovereign wealth fund was established in 2006 to build and manage a diverse portfolio of assets for the kingdom. In little over a decade, Mumtalakat has grown this portfolio to include stakes in more than 50 commercial enterprises, which span the fields of logistics, consumer and healthcare products, general services, financial services, industrial manufacturing, real estate and tourism, and telecommunications and technology.
As such, Mumtalakat’s construction-related interests are expansive, to say the least. The organisation owns stakes in a broad range of high-profile companies, including Aluminium Bahrain (Alba), Bahrain Airport Company, Bahrain Real Estate Development (Edamah), Durrat Khaleej Al Bahrain Company, and Southern Area Development.
Yet despite the breadth of his remit, and the national interests at stake, Alkooheji is unwilling to entertain the idea of government handouts. On the contrary, Mumtalakat’s CEO is adamant that both his organisation and its portfolio companies must remain self-sufficient in order to add value to Bahrain’s economy. If a Mumtalakat company wishes to expand, he explains, it must demonstrate the feasibility of its plans, and secure the requisite funding based on the strength of its own finances.
“We seek private sector investment in all of our projects,” begins Alkooheji. “We do not pursue projects [solely because of a perceived need]. If the private sector believes there is demand for a project, and it has the potential to result in a healthy return, then we will proceed. Private sector involvement is very important. It brings business and commercial sense to proceedings.”
When it comes to development, Alkooheji views the private sector as both an effective source of funding, and a valuable second opinion. He elaborates: “When one of our commercial enterprises approaches a bank for funding, we gain a second pair of eyes on the project. The bank will look at the proposal and, if it’s feasible, provide funding. If the bank is not comfortable, it will [refuse funding]. Because it’s the bank’s money that is being invested, it adds discipline to the process.
“At Mumtalakat, we don’t obtain funding from the government,” Alkooheji continues. “We fund our projects based on our own cash flow and balance sheets. So when [wider economic circumstances affect national revenues,] our work is not disrupted. That’s why I believe that our companies need to be self-sustainable. If they require equity, we will work with them to obtain it, but we do not lend to our companies. That is the banks’ role, and Mumtalakat is not a bank.”
One of the largest projects within Mumtalakat’s current portfolio is Alba’s Line 6 expansion. US-headquartered construction giant, Bechtel, has been appointed as the engineering, procurement, and construction management (EPCM) contractor for the $3bn (BHD1.1bn) initiative, which will add 540,000 tonnes to the aluminium smelter’s annual capacity, taking its total production capacity to 1.5 million tonnes per year. Main construction works for the project commenced last year, and the new pot line is expected to begin production activities in Q1 2019.
“Alba’s Line 6 expansion project involves the development of a new production line on the existing site,” Alkooheji tells Construction Week. “Once completed, this will be the largest single-site aluminium smelter in the world.”
In keeping with Mumtalakat’s philosophy of self-sustainability, Alba’s Line 6 expansion was subject to significant scrutiny during the planning stage, and this diligent approach has been extended into the construction phase. Despite the magnitude of the project, Alkooheji is supremely confident in the Alba team’s ability to deliver the expansion within the targeted parameters. When asked whether he expects the project to meet its proposed deadline, he responds: “I have no doubt. I think that Alba’s track record speaks for itself. The company has always been very disciplined in this respect.
“And let me tell you something else,” Alkooheji continues. “When one of Mumtalakat’s companies puts a plan in place, we [monitor] it by the day – not by the month. If they say they will start production on a particular date, they usually deliver on that date. We may allow them a few extra hours, but not days,” says Alkooheji, only half-jokingly.
Mumtalakat’s CEO goes on to point out that Alba’s continuous expansion has led to growth in local aluminium demand, thereby benefitting Bahrain’s wider manufacturing segment. He explains: “Alba’s growth has led to significant expansion in the downstream sector, creating more jobs with lower levels of required investment. I think that this is an achievement that a lot of people [do not recognise]. Elsewhere, raw metal [tends to be] shipped to other countries, whereas here, approximately 50% of Alba’s aluminium is used locally.
“What’s more, the development of Alba’s Line 6 is expected to add approximately 500 permanent, direct jobs. During construction, we expect between 2,000 and 3,000 people to work on the project. And all of these works are taking place without any interruption to the facility’s ongoing production activities.”
Outside of the manufacturing sector, Durrat Khaleej Al Bahrain Company – a joint venture between Mumtalakat and Kuwait Finance House – is in the final stages of delivering Durrat Al Bahrain, a 21km2 master-planned community that has been developed on 15 artificial islands in the south of the country. Upon completion, the megaproject is slated to include more than 1,000 beachfront villas, luxury apartments and offices, several high-end hospitality resorts, a 400-berth marina, and a broad range of community amenities. Durrat Al Bahrain has been designed to accommodate 60,000 residents, and up to 4,500 visitors per day.
“Mumtalakat and Kuwait Finance House have been working on Durrat Al Bahrain for many years,” says Alkooheji. “As of early 2017, the final phase of Durrat Al Bahrain’s initial development was substantially complete, with the majority of the constructed units having been handed over to their buyers. The remaining undeveloped land has been distributed proportionally to each of the development’s shareholders.”
In turn, a separate management company will take operational responsibility for Durrat Al Bahrain’s developed projects once they complete, and the majority of the decision-making will be conducted by the community’s residents.
“Eventually, Durrat Al Bahrain will be run by the people who live on the island,” Alkooheji explains. “Mumtalakat will [withdraw its involvement,] and the community will become self-managing. The tenants are paying the fees, so they should make the decisions.”
Meanwhile, Mumtalakat’s real estate development arm, Edamah, is working on an array of initiatives across Bahrain, with an ongoing project portfolio valued at almost $3bn (BHD1.1bn). Edamah’s current activities include a cultural project in Muharraq, an eco-friendly development on Hawar Island, the transformation of Al Jazayer into a 1.6km-long public beach and tourist destination, and the construction of a series of much-needed car parks.
While all of Mumtalakat’s projects are designed to serve Bahrain’s denizens, Alkooheji reiterates that they must also benefit the public purse.
“Balancing commercial considerations with the public good can be a challenge, especially in the early stages of a project,” he explains. “For example, if a government entity or local authority asks us to build a car park, we say: ‘Fine, we want to build this for you but, for the project to be viable, it needs to be integrated with other commercial elements.’ It takes a bit of… I wouldn’t say negotiation, but perhaps convincing in the beginning. But so far, Mumtalakat has been very convincing in its arguments.”
Alkooheji concludes: “We aim to introduce commercial thinking into all of our projects. [Will we] build something just because you need it? No. Let’s first find out what will make it self-sustainable. I believe in financial sustainability in the same way that I believe in environmental sustainability. For me, it’s the same thing. A development should not depend on Mumtalakat or the Bahraini government. It should be capable of supporting itself.”