Illustration by Chris Burke for The National
Illustration by Chris Burke for The National

Family man luxuriates in joint rule



Patrick Chalhoub is a family man.

He sits down to eat every evening with his wife, even if he goes out for dinner on business.

He has two sons, and takes them on annual discovery holidays to places such as the historic Machu Picchu site in Peru and safari parks in South Africa.

He owns a golden retriever called Speedy who is also very much part of the family.

Mr Chalhoub, 54, is the co-chief executive of the Chalhoub Group, and alongside his brother, Anthony, he has helped to shape his parents' business for more than 30 years into what is now the biggest luxury retailer in the Middle East.

"I enjoy spending time with my family, whether it be with my wife, chatting about our day, reading, travelling, or be it with my children as well. Family occupies a large part of my life. Much more today than it used to do 10 or 20 years ago."

Sitting in a plush office at the company's headquarters in Jebel Ali, Mr Chalhoub politely offers coffee and inquires about his visitor's New Year's Eve activities.

Upmarket white and dark chocolates adorn the coffee table, alongside huge hardback books by major luxury brands such as Christian Dior.

Mr Chalhoub, dressed in a smart blue suit, crosses his legs and leans back on the sofa while constantly using his hands to describe a fact or anecdote.

He likes blue. His suit, shirt and spotted tie are also blue.

But his mood is nothing like the colour of his attire. He seems most content, most animated and most engaging when he talks about his wife, sons and extended family.

"We have a family house in the south of France, which is owned by my parents, where we all meet in the summer, with my brother, his children, my children. It's tradition since the birth of our first child, which is my elder son," Mr Chalhoub says. "There are a few occasions, be it at the family mansion, a discovery trip or some sporting event, which put us together. We also always spend Christmas together at home."

Mr Chalhoub entered the family business in 1979 when the group had just 100 employees. His brother had joined three years before when it had 30.

The group now has more than 7,000 employees in the Middle East, with about a third of them in Dubai. Through partnerships with global brands such as Chanel, Fendi, Christian Dior, Louis Vuitton and Saks Fifth Avenue, Mr Chalhoub estimates the group has a 20 per cent market share in luxury retail in the region.

"You have to give him credit," says Mohi-Din BinHendi, the president of BinHendi Enterprises, talking about Mr Chalhoub. "He's focused on what he's doing, he's friendly and a good man."

Mr BinHendi, who has been a player in the luxury retail sector for more than 30 years in the Middle East, says Mr Chalhoub's wife, Ingie, is also known to have a shrewd retail mind. "She's known as a tough lady. She does not take any fooling around."

Mr Chalhoub's eldest son, Michael, who is the chief executive of Sport360, says his father has a clear order of priorities in his life, starting with his wife, then his two sons, his extended family, his work and finally, his health.

"We always have an understanding that there's not much in quantity of time together, but the quality is always there," says Michael. "His family life comes above all."

The Chalhoub empire began in Damascus in 1955. Set up by Mr Chalhoub's Syrian parents, it has since been headquartered in Lebanon, Kuwait and Dubai.

A mathematician and physicist, Patrick Chalhoub did not always want to join the family retail and distribution business, particularly when he was a student in Paris.

"I thought about moving more into mathematical research or research of the brain," he says. "But I came back to reality and asked: can I make a living out if it? Is it really what interests me? So I decided I was going to move into the family business with a lot of support at home."

Although Mr Chalhoub did not feel forced into joining the business, he concedes there was pressure to do so. But he and his brother initially lived in the same house with his parents and had the support network and mentoring to build the business.

"My brother and I have worked very closely with our parents, and this has helped a lot in establishing a working relationship among ourselves," Mr Chalhoub says of the group's joint chief executive management structure.

"We respect each other a lot and know each other extremely well, our strengths and weaknesses. It's not the easiest situation, but it is very dynamic and we get the best out of it."

The brothers do occasionally disagree.

"We might have a clash on a daily basis, but fundamental clashes, I do not remember ever having," he says.

Michael agrees that although the brothers are quite different, they work well together in business - which is proved by the longevity of their tenure as joint chief executives.

"They complement each other a lot," he says.

The joint chief executives speak with each other every day and strategically review the business four times a year. They avoid talking shop when they are with their families and likewise try to keep the tumult of family life separate from the office.

Like Patrick, Anthony has two sons, so from an outside perspective the question of management succession might seem a tricky one. But Patrick has a clear view when it comes to his own children.

"The philosophy I have developed with my wife about our children is to say [their position] is neither an obligation or a right. And I think as a philosophy it's very important," he says.

"It's not an obligation. If they don't like the business, they shouldn't go into it, but it's not a right that because they are a member of the family, they will occupy a position."

For now, Michael says he is content to be the chief executive of Sport360, but would be "honoured" to work in the family business in the future.

His father is one of a number of financial backers in Sport360 and is always ready to offer advice on the business or his son's career.

"He told me I should not follow anything other than my dream," says Michael.

The Chalhoub Group is trying to clearly separate the ownership, which will remain within the family, from the management, which is open to anyone of merit.

"For us, it will be the third generation, which is always the most critical. It makes or breaks [the business]," says Patrick. "What I am trying to implement on myself and others is go for your passion, what you like and inspires you."

From a luxury perspective, that means a different brand for a different purpose or item of clothing, he says.

As the head of a luxury goods empire, does he have a favourite brand?

"It depends on the moment and what I am looking for today," he says, struggling, for once, to come up with a coherent response.

"If it is the values portrayed from a brand - for me its totally Louis Vuitton, but I don't wear many products of Louis Vuitton. The simple answer is follow what you like for yourself and not for others."

Emergency

Director: Kangana Ranaut

Stars: Kangana Ranaut, Anupam Kher, Shreyas Talpade, Milind Soman, Mahima Chaudhry 

Rating: 2/5

AUSTRALIA SQUAD

Steve Smith (capt), David Warner, Cameron Bancroft, Jackson Bird, Pat Cummins, Peter Handscomb, Josh Hazlewood, Usman Khawaja, Nathan Lyon, Shaun Marsh, Tim Paine, Chadd Sayers, Mitchell Starc.

COMPANY PROFILE
Name: HyperSpace
 
Started: 2020
 
Founders: Alexander Heller, Rama Allen and Desi Gonzalez
 
Based: Dubai, UAE
 
Sector: Entertainment 
 
Number of staff: 210 
 
Investment raised: $75 million from investors including Galaxy Interactive, Riyadh Season, Sega Ventures and Apis Venture Partners
Vidaamuyarchi

Director: Magizh Thirumeni

Stars: Ajith Kumar, Arjun Sarja, Trisha Krishnan, Regina Cassandra

Rating: 4/5

 

Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
 
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
 
Round 3: February 7-9, Dubai Autodrome – Dubai
 
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
 
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
The specs

Engine: 2.0-litre 4-cylturbo

Transmission: seven-speed DSG automatic

Power: 242bhp

Torque: 370Nm

Price: Dh136,814

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

THE LIGHT

Director: Tom Tykwer

Starring: Tala Al Deen, Nicolette Krebitz, Lars Eidinger

Rating: 3/5

TO A LAND UNKNOWN

Director: Mahdi Fleifel

Starring: Mahmoud Bakri, Aram Sabbah, Mohammad Alsurafa

Rating: 4.5/5

COMPANY%20PROFILE
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