Portfolio undergoes rigorous liquidity assessment and benchmarking study to evaluate robustness of assets in the wake of the pandemic
London and Tripoli – July 20, 2020 – The Libyan Investment Authority (LIA) has announced the completion of a series of portfolio stress tests, intended to assess the potential impact of COVID19 on the fund’s assets.
Working with both Oliver Wyman, the LIA’s strategic advisor, and Deloitte, its financial advisor, the fund was recently subjected to a benchmarking analysis, comparing its response to the pandemic to other sovereign wealth funds.
Following this initial analysis, the LIA undertook a comprehensive portfolio liquidity assessment, with the primary intention of better understanding the impact of COVID-19 on its operating subsidiaries. This included a particular focus on assets operating in the oil and gas, and hospitality sectors.
The study identified 18 priority assets within the wider portfolio that required further liquidity assessment. The detailed liquidity needs for these assets were evaluated for the short term (September 2020), near term (December 2020) and the medium term (April 2021), yielding tailored recommendations for each subsidiary as to how best to operate through the remainder of the COVID-19 restrictions.
Recommendations for the relevant LIA subsidiaries include: working capital improvement initiatives; cost reduction; debt restructuring; re-capitalisation; short-term liquidity management; alternative sources of funding; foreign exchange risk; capital expenditure; and changes in product as well as market dynamics.
Commenting on the stress test and benchmarking programme, Dr Ali Mahmoud Hassan Mohamed, Chairman of the LIA, said, “As part of the LIA’s commitment to transparency and accountability, our team continues to work closely with Oliver Wyman and Deloitte to comprehensively assess the current and likely future impact of the COVID-19 pandemic, and the associated global restrictions, on our wider portfolio. The recommendations detailed in the study are now being implemented by our subsidiary management teams. The LIA’s leadership team will closely monitor these actions in the coming months ahead.”
This strategic initiative is part of the LIA’s comprehensive transformation programme. The LIA is committed to implementing real change in the pursuit of institutional excellence, and is working closely with international experts to implement positive reforms and bring the institution in line with best-in-class sovereign wealth funds.
Deloitte was appointed by the LIA in December 2019 to prepare standalone financial statements in alignment with International Financial Reporting Standards, and complete a valuation of all of its assets. The appointment of firms such as Deloitte and Oliver Wyman are key steps in ensuring that the LIA complies with UN resolutions and the Santiago Principles.