Investment firm Kuwait Projects Company (Kipco) said it was in talks with around 10 European companies about setting up a Middle East pensions firm and could sell global depositary receipts (GDRs) worth up to $1 billion (Dh3.6bn).

"We are now shortlisting and are in the final stage… we want to create a pension product for the region," said Chief Executive Faisal Al Ayyar. "The business plan is ready," he said.

Kipco wants to introduce programmes for pensioners in the region where poor elderly people in the region often rely on relatives to support them. "Most products in the region are imported and are tailored to the high-end," he said.

Kipco and its potential partners may start the joint venture as early as September in countries such as Kuwait, Algeria and Egypt before expanding in the Middle East on a large scale, Ayyar said.

Kipco, Kuwait's largest investment firm by market value, expects bigger returns from the project about 10 years after its launch. "Nobody says it will be easy. It will be very difficult in the first five years," he said.

Ayyar did not give further details on the plan, but said different laws and regulations, restrictions in investing in some currencies and a need to train specialised staff would make this business a challenging long-term plan.

"This has good potential. Doing this on a large scale is new in the Middle East," said Mustapha Behbehani, a director at Gulf Consulting Company in Kuwait.

Kipco insurance unit Gulf Insurance Company might take a stake in the new firm, Ayyar said.

Kipco is also considering selling between $500 million and $1bn of GDRs in Europe, said Ayyar, adding that a decision on the possible sale could be made this month.

"We would hope that long-term investors are coming. Here in Kuwait we have a lot of short-term investors who love to make quick gains," he said.

Net income this year could fall to between dinars 105m and dinars 110m dinars, unchanged from a previous forecast. Kipco's 2007 profit surged to dinars 521m on the sale of its National Mobile Telecommunications Company stake. Profit the year before was dinars 50.07m, according to Reuters data.

"We have been achieving and over-achieving our targets for the past five years. What we gave we always achieved and I think this year will not be different," Ayyar.

The central bank, battling against near record inflation, has tightened lending restrictions, which may affect Kipco unit Burgan Bank.

Kipco is hoping to double assets under management in the coming five years from about $25bn currently, Ayyar said. Kipco has unveiled plans to create a dedicated commercial banking unit and another for asset management and investment banking as part of plans to expand in the Middle East.

Its asset management arm Kipco Asset Management Company (Kamco) would acquire an asset management firm in Saudi Arabia "very soon", while it was also in talks to buy 25 per cent in a local brokerage, he said, declining to be specific.

Ayyar said Burgan Bank wants to buy United Gulf Bank's (UGB) stake in Syria Gulf Bank but had to await regulatory approval first.

Both companies are owned by Kipco.

UBG also agreed to buy a 30 per cent stake in Dubai Islamic Bank's Islamic banking unit Millennium Finance Corporation.

Apart from the Middle East, Kipco would also look at buying into the financial industry in Europe or the United States where asset prices have fallen due to the global credit crisis.

"We are on the sidelines. We are looking at opportunities. We need things to be settling down. If there is something interesting we will go in," he said.

Ayyar also said Kipco was in talks with media firms to merge its pay TV channel Showtime Arabia, which might be floated. (Reuters)