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Fri 3 Apr 2015 01:12 AM

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Kuwaiti backers on plans to make $3.6bn London theme park project profitable within 2 years

Abdulla Al Humaidi, Group CEO of Kuwaiti European Holding Group on why he is determined the London Paramount Entertainment Resort will not go the way of popular — but loss-making — rival Disneyland Paris

Kuwaiti backers on plans to make $3.6bn London theme park project profitable within 2 years

When you look at some of the region’s biggest corporate feuds, family fallouts or internal disputes one often wonders how the seemingly minor squabbles manage to escalate to such a degree where a solution cannot be found without bringing in the lawyers.

Abdulla Al Humaidi (pictured below), whose family runs one of the oldest and most respected merchant houses in Kuwait and has built a successful and prominent business profile in the country since the 1940s, has a theory.

“Sadly we have this mentality in the Middle East where if you are doing any transaction that there is always a winner and a loser, and this creates huge problems. When you sit in the table the person in front of you, most of the time, they try to do anything to be the winner or they perceive themselves as the loser. This doesn’t create lasting relationships and this is a problem we face in the Middle East,” he believes.

Al Humaidi set up the Kuwaiti European Holding (KEH) Group in 2008 to invest in projects and assets in the UK and Europe, and he believes the British approach to doing business is much more effective.

“Dealing with the UK market and doing business is much better than doing business in the Middle East,” he believes. “When we conduct anything with an institution or individual you leave the room and both parties think it is a win-win transaction to the people involved. So it is much easier in the UK and we are blessed with a professional team at our offices there... Sadly, we do find professionalism in Kuwait but it is rare. The case is different in the UK.”

Set up at the beginning of the global financial crisis, KEH Group is fully owned by the Al Humaidi family and was set up to work in markets which the family conglomerate had not worked in before, mainly Europe and the UK.

It currently has a diverse range of assets, from hotels in southern England and Egypt, medical facilities, a gym network in Saudi Arabia and real estate assets in Central London. However, its standout project is the theme park and resort it is developing just outside the British capital.

“The most notable project is the London Paramount Entertainment Resort. Since inception, we have always wondered why there isn’t a world-class entertainment resort or venue in London. I can say it is the capital of the globe and it is the most visited tourist destination in the world and yet there is no major entertainment centre,” Al Humaidi says.

“We initially wanted to set up something from scratch but two years ago we came across a company under the name of London Resort Company Holdings, which had a licence agreement with Paramount Pictures, had initial plans and had identified a site resort.

“So we purchased and funded that company heavily over the last two years and we are at the stage where the vast majority of the plans are ready to be submitted for planning permission,” he adds.

London Paramount Entertainment Resort will be built in Kent on a site located just 17 minutes on the train from Central London. Announced in October 2012, construction is scheduled to start in autumn 2016, with the opening set for Easter 2020.

If given the green light, the development will transform an 872-acre brownfield site on Kent’s Swanscombe peninsula and will be twice the size of the Olympic Park in East London. London Resort Company Holdings (LRCH) has a licensing agreement with Paramount Licencing Inc, giving it exclusive rights to use Paramount’s intellectual property in the UK as part of the resort, including ‘The Godfather,’ ‘Breakfast at Tiffany’s,’ ‘Mission Impossible,’ ‘Star Trek,’ ‘The Italian Job’ and ‘Titanic.’

In addition the company has signed a number of agreements with significant UK institutions in a bid to make sure the resort has a truly British feel to it.

In December, LRCH signed a deal with BBC Worldwide, giving the resort access to some of the British broadcaster’s most popular shows including ‘Doctor Who’, ‘Top Gear’ and ‘Sherlock’, which could all be turned into theme park rides and attractions for visiting fans.

In recent weeks, LRCH has also signed another two deals to further enhance its Britishness. In February, it signed a Memorandum of Understanding (MoU) with Aardman Animations, one of the UK’s leading animation studios, and the producers behind a number of award-winning feature films and TV series including ‘Chicken Run’, ‘Pirates Band of Misfits’, the ‘Wallace and Gromit’ franchise and the ‘Shaun The Sheep’ TV series.

Just last month, LRCH announced that the British Film Institute (BFI) had joined the project to provide strategic cultural counsel. The BFI was set up in 1933 and it maintains the world’s largest film archive, containing more than 50,000 fiction films, over 100,000 non-fiction titles and around 625,000 television programmes.

The agreement will see the BFI acting as a ‘cultural adviser’ to the project, providing strategic input on how British films and talent can be best incorporated into the entertainment resort.

“Our vision for the London Paramount Entertainment Resort is to create a world-class entertainment destination that combines the glamour of Hollywood with the best of British culture. Having the BFI onboard with their unrivalled knowledge of the UK film industry will help us identify the right mix of British film and talent to entertain our visitors, who will have travelled from all corners of the world to enjoy the resort,” David Testa, director at London Paramount, said of the deal last month.

The £2.5bn ($3.6bn) project is expected to attract around 15 million people a year, or around 50,000 a day, when it opens in five years time. It will include multiple zones, including Adventure Isle, Land of Legends, Cartoon Circus, Starfleet Command, Action Square, Port Paramount and Entertainment City.

In addition to 50 rides and attractions, it will include a 2,000 seat theatre with regular West End quality shows, 11,000 sq m of exhibition space showcasing the best of British inventions and brands, over 11,000 restaurant covers in a variety of food outlets, 15,000 sq m of retail space, a plaza area with regular live entertainment, a cinema and comedy venue, the largest indoor water park in Europe, 5,000 hotel bedrooms and a creative business space for British businesses. “We do not call it a theme park as it is an entire resort, with a theme park as one of the components,” Al Humaidi says proudly.

When launched in 2012, a comment piece by the London Evening Standard called into question the commitment of some of the project’s development partners, namely landowner Lafarge Tarmac. However, the project was given a boost when it was announced in December 2012 Chris Townsend had been appointed the project’s commercial director. Townsend had previously performed the same role on behalf of the London 2012 Olympic Games and is charged with attracting investors for debt and equity funding.

In addition, it was announced in January that Lafarge Tarmac had signed an agreement to sell land required for the delivery of the project. “With this agreement in place, the vision for North Kent as the home of a nationally significant, multi-billion pound entertainment resort employing thousands of people is moving closer to becoming a reality. It further underlines our commitment to delivering the project and is welcome news as we continue to consult and engage with the local Dartford and Gravesham communities living near the site and more widely with our interested parties,” Testa said.

In addition, the project also was designated as ‘Nationally Significant’ in May 2014 by the Secretary of State for Communities and Local Government.

“We start the project gaining the Nationally Significant Infrastructure Project by the UK government, which is the first commercial project to gain such status,” Al Humaidi explains.

“It means that instead of taking the usual local planning route we apply directly to central government and there is a fixed timeline to respond to the application. In autumn 2016 the answer will be provided.”

Two stages of public consultation have been held by LRCH to date, involving over 4,000 members of the Kent community.

Upon its opening in 2020, the London project will be a major new rival for Disneyland Paris, which is currently Europe’s biggest theme park. While Disneyland Paris, which is 10 percent owned by Saudi Arabia’s Prince Alwaleed Bin Talal, also attracts around 15 million visitors each year, it has faced a lot of financial troubles since it opened in 1992 and last year Walt Disney had to rescue the loss-making subsidiary via a $1.3bn funding deal. Located 20 miles east of Paris, the resort has struggled amid the economic downturn in Europe, with attendances down by 700,000 to 800,000 visitors at just over 14 million visitors in the last year. At the same time, its total debt has risen to €1.75bn ($1.88bn) and revenues for the year ended 30 September fell by up to 3 percent, resulting in its net losses rising to between €110-€120m.

However, Al Humaidi believes that while its rival, located just three hours away over the English Channel, is a different beast altogether as it was built on a greenfield site, which required completely new infrastructure to be built and was not significantly European enough to attract local interest.

“As a company it is usual and useful to learn from lessons from the past, especially other companies’ mistakes. We have made sure that it is a brownfield site and the infrastructure is present, although some of it will need upgrading.

“In terms of transport it is just 17 minutes from Central London from St Pancras International on the Eurostar link, so continental Europe is just two hours away from the site. The M25 around London is just a few miles away and Heathrow is on the other side of the M25. It is the best location. It also sits on the River Thames' banks, so there are plans to utilise the river as transport.

“Electricity is there and the infrastructure is there. That was not the case with Disneyland Paris; they built it on a greenfield site and this is not the same. We will make sure in terms of modelling, we will see what others have done and go with the best model for finance,” he says.

In fact, in terms of the finances, Al Humaidi is confident the books will be balanced and, unlike Disneyland Paris, London Paramount Entertainment Resort will be profitable.

“We are not putting in the entire capital. We are funding the entire project until 2017 and we have already funded it for the last two years and will continue to do so until the planning is achieved. Then we will go to the markets for further funding. We believe it is a £2.5bn project and we believe it will be profitable from year two of the project.”

In terms of the reaction from residents, he also believes he has those on side. “The project is hugely supported by the locals. It will provide 27,000 jobs to the local area there and it is a win-win situation for everyone involved in the project so I don’t see how anyone could oppose such a project.”

In a further show of Al Humaidi’s commitment to the Kent region, in May 2013 he bought the local football team, Ebbsfleet United FC.

“It is a loss-making business but we choose a football club at that level, which is in the sixth tier league system. They [English football] have 26 tiers, ours is tier number 6. The aim is to build it up and move up the league system. We settled all the debts and invested in the infrastructure and the playing squad. We are building a main stand now. It will be a £4.5m project; new changing rooms incorporating club retail units, VIP boxes and sponsor lounges.

“At the beginning I didn’t think I would go and see the football matches very often. But last year I went to about 50 percent of them at our ground and the same thing this year. It is a hook and you do get into that fairly quickly. It is a great achievement. We have a great fan base. It opens up many doors and opens up relationships who you can do business with,” Al Humaidi says of the thinking behind the investment.

London Paramount Entertainment Resort and Ebbsfleet United aren’t KEH Group’s only large projects currently in the works in the UK. Al Humaidi reveals it is also about to finalise a big deal in the healthcare sector.

“2010 saw the formation of a medical company, Medcorp Holding. The company since 2010 has been quite successful and has been profitable has passed dividends for the past five years. We do clinics and medical laboratories in Kuwait and Saudi. We are looking to expand in the UK in the medical sector this year as we are looking to conclude a deal by the end of this quarter in the UK, which will see the company improve its cash flow and investments.

“It would be investing in smaller clinics and primary healthcare centres across the UK. We are in negotiations with the party now and we hope to conclude fairly soon. It is a private sector in partnership with one of the leading companies in the UK in terms of name, reputation and market cap. This is the first direct Medcorp venture into the UK. It is around £30m... It is something that is not usual in the UK and we believe the UK market will benefit from something like this,” Al Humaidi says of the ongoing deal.

Over lunch, staff also reveal that KEH Group has bought a prominent tower in the centre of Kuwait City, which it is going to develop into a mixed-use building, while it also has projects to complete in Egypt, Saudi Arabia and the UAE. As a result, Al Humaidi is confident of another profitable year of growth ahead. “We always tend to go with the lucrative numbers, off the top of my head I would say not less than 8 percent [growth] annually but we have achieved more in some sectors.”

It seems clear that — regardless of the sector — he’s emerged the winner in most of the deals he sat around the table for in recent years.

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