NEW YORK--(BUSINESS WIRE)--Abraham Merchant and Kenneth Kuhn, managing directors of Global Capital Investments, announced today the launch of the Iraq Fund L.P. The Fund will invest primarily in listed equities of the Iraq Stock Exchange (ISX) and up to 20% of its assets in private, less liquid, early-stage investment opportunities that focus on Iraq’s infrastructure and natural resources. Merchant and Kuhn say recent trends in Iraq make the petroleum-rich country a compelling investment opportunity.
“As Iraq’s economy transitions, it is in the process of adopting legal and regulatory reforms that will make its financial markets more attractive to outside investors,” says Mr. Merchant. Interest rates have fallen from 20% to 6% annually, exports have risen, the dinar is stabilizing, and the country has minimal national debt. Mr. Kuhn adds, “The quality of corporate profits is rising and there’s economic and market support from the U.S. and internationally,” citing a $3.6 billion in economic aid awarded to Iraq by the IMF in February 2010 and a $250 million award from the World Bank.
“As Iraq’s economy strengthens, inflation becomes more manageable and the economy expands, currency appreciation will result in the appreciation of all Iraqi capital investments,” Mr. Merchant notes. Global Capital Investments, the general partner of the Iraq Fund, L.P., is launching the Fund now to get ahead of the investing crowds it thinks will follow as Iraq’s development continues.
To put Iraq’s long-term growth potential in perspective, the stock markets of the Gulf Cooperation Council, a federation made up of six countries that neighbor Iraq, have market caps on average that are 70-100% of GDP. Iraq’s current market cap, by contrast, stands at $3.5 billion, or 3.5% of its $100 billion GDP. According to IMF estimates, Iraq’s GDP is expected to outpace its GCC neighbors in coming years.
That growth will be petroleum-based. Iraq, which ranked 13th among the world could become the 2nd largest producer, based on its expected and proven oil reserves. "Only a fraction of Iraq's known fields are in development while 80% of the country remains unexplored. As redevelopment progresses, it will further strengthen the overall economy for the Iraqi people," adds Mr. Kuhn. Iraq depends on oil for the bulk of the foreign currency earnings it needs to rebuild the economy. The country produced about 2.3 million barrels of crude per day, according to September estimates. The Iraq government has stated that it would like to double output in the near term. In 2009 it awarded rights "to a number of international oil companies to develop 10 oil fields with the aim of boosting output to more than 12 million barrels per day within six years."
About Global Capital Investments, Inc.
Global Capital Investments, Inc. is an Illinois incorporated company that serves as the general partner of the Iraq Fund. Established in 2010 by Abraham Merchant and Kenneth Kuhn, Global Capital Investments Inc. created the U.S.-based private investment fund for sophisticated investors who wish to invest in the long-term growth potential of the emerging Iraqi economy. The objective of the fund is to seek long-term capital appreciation over a broad range of Iraqi listed securities, a small number of private investments and Iraqi dependent equities which trade internationally.