Zain’s annual general meeting convened yesterday, where major change occurred to the board, and the company in general. Khalifa Ali Al Khalifa and Aida Salem Al Ali departed the company’s board, and were replaced by Bader Naser AL Kharafi and Shaikha Al Bahar. The implications of the change in Zain’s board has the following implications:
More Homogenous Board:
With talks of Etisalat buying 46% of Zain and the sale of Zain Saudi, opposition voices grew. These voices were coming from the Salem Al Ali and Ali Al Khalifa blocks. With their representatives out of the board, being replaced by individuals loyal to the Al Kharafi block, such deals can go through with less hassle, as the board members now are all on the same page.
The Quarrel of the Economic Elite:
Three of Kuwait’s economic elite quarreled over Zain: Al Kharafi family, Ali Al Salem, and Ali Al Khalifa. Al Kharafi emerged victorious, which may prompt certain repercussions. It has created “bad blood” between the economic blocks, which may lead to further quarrels in different areas.
Overall Implication of Kuwait’s Economy:
As Zain is the biggest company listed on the Kuwait Stock Exchange, it has become a bellwether of the overall economy. As we have seen in the past, the company’s stock can lift the stock market, and vice-versa. If Zain decides on selling more of its assets and distributing the proceeds (which is now an easier task after the departure of the opposition), the extra liquidity will be positive on the overall market.
Zain’s Future:
Zain’s board will serve for three years. These three years are crucial, as now Al Kharafi have no barriers to fulfill their strategy and goals. They can either grow the company and create value to investors or sell off the company’s assets, distribute the proceeds, and shrink the company.
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