Keystone Equity Partners strongly believes in the GCC markets and in select locations of the Mena region.
Keystone Equity Partners strongly believes in the GCC markets and in select locations of the Mena region.

Mena well served by old-school principles



The private equity business in developed markets and the Mena region is still taking stock of the events sparked by the collapse of Lehman Brothers in September 2008.

The period between 2000 and 2008 was tainted with excessive leverage and dominated by financial engineering, rather than extraction of value through operational efficiencies. But the definition of maximising shareholders' value cannot be confined to one investment strategy.

Borrowing a mountain of debt from willing lenders at record low rates to buy undervalued assets was viewed as the path to superior returns. If that is not maximising value, what is?

In fairness, few horror stories came out of the private equity industry as compared with the more established, and much more regulated, banking sector. Perhaps the lack of a "too big to fail" policy in private equity - as opposed to the large banks - has caused a natural curbing of "moral hazard" and limited the downfall.

But private equity was not untouched. Those firms that used excessive leverage to make overvalued acquisitions, only to see their value evaporate in the economic meltdown, have paid a dear price - both economic and reputational. Think of TPG and Washington Mutual, Terra Firma and EMI and the now defunct Candover.

Today the private equity industry - especially in the recovering US - is back into the borrowers' market. Total private equity investments last year were US$204.9 billion (Dh752.57bn), according to the industry consultancy Preqin, compared with $91bn in 2009 and $181bn in 2008.

The Mena region has been spared most of the horrific effects of the global financial crisis. This was not due to a superior breed of managers or to exceptionally good assets.

Simply put, the region has been practising the trade according to "old school" principles: no excessive leverage (if at all); reputable and experienced owner-managers; solid income-producing targets; and mid-level enterprises with plenty of growth potential. The companies that played by these rules will reap the benefits of the global recovery.

Few firms in Mena have been landed with bad assets. Others have missed on growth opportunities but very few (if any) have suffered from the weight of excessive leverage and the distressed restructurings that follow except for a limited number of Dubai-based vehicles that have invested outside the region.

Banks in the region trust in hard collateral only, ranging from property to personal guarantees to cash deposits. All other forms of lending are denied even to the best names in business.

This has erected a safety wall against excessive lending and as a result has disciplined private equity firms in deploying their equity capital more wisely, if not more thinly, among several investments. This has also robbed the industry from its ambitious plans to conduct multibillion-dollar deals.

A number of firms have based their investment strategies on short-term holding periods in anticipation of an initial public offering (IPO). Those instances of equity arbitrage worked well during the boom times (2005 to early 2008) but such realisations were brought to a halt when the IPO market went into hibernation in late 2008.

As a result few private equity firms were stuck with some assets but they did not falter under the weight of debt repayment as their western counterparts. The exit horizons got prolonged and the returns to investors delayed, but value was not wiped out, except in a few instances that were not related to the debt component of acquisitions.

In mid-2007, we set up GrowthGate Capital Corporation, which is managed by Keystone, as a specialist buyout firm (not a fund) comprising a select group of government-owned banks, public pension funds, and single-family offices.

At such time, and without the benefit of hindsight, we set our investment strategy of "acquiring stakes in well managed, profitable and growing middle market companies located principally in the GCC markets". (A single-family office is a professional team assembled by a merchant group or a wealthy family to manage and monitor its personal investment portfolios.)

We have shunned excessive leverage as a matter of principle, not due to lack of bank funding, and have not insisted on size (both in terms of equity stake acquired or volume of targets).

We have emphasised quality of management, commitment of owners, the premium nature of the services offered or products sold, and the chances for such businesses to grow from a domestic market to a dominant regional position.

Between mid-2007 to mid-2010, we have completed eight platform acquisitions, mainly in the GCC, with equity stakes ranging from a high 57 per cent to a low 10 per cent, and in industries as diversified as logistics and transport, private jet management and aviation services, manufacturing and distribution of building materials, waste management and environmental services, animation studios, biometrics, steel fabrication and food processing and distribution.

(A platform acquisition is a term used in private equity to describe the main private enterprise that is acquired by the buyout firm, and which becomes the platform to conduct and add to it other acquisitions to take the business to the next level of size.)

Additionally, we have conducted in excess of 15 bolt-on acquisitions for our portfolio companies. Our total assets under monitoring have grown from a mere $50 million in June 2007 to circa $1.25bn as of last December.

Having bravely invested during the crisis years we are planning two exits this year, one through an IPO and one through a trade sale, in the Mena region to respective public investors and strategic buyers, each depending on the nature of the business and its future plans.

Following a "buy & build" strategy has served us well in the region, where businesses of a large size are either state-owned or held by traditional merchant groups who are unwilling to part with any of their "sacred cows", let alone share their crops with investors.

We strongly believe in the GCC markets and in select locations of the Mena region. We are adamant supporters of promising mid-sized enterprises that are starved from cash by the traditional capital providers (banks) but that are abundant with growth opportunities.

We also trust PE investments that follow a disciplined and charted approach will be the primary partner of such promising businesses and will play a key role in the revival of a swathe of economic sectors, and in the creation of few, durable regional champions.

Karim Souaid is managing partner at Keystone Equity Partners

Day 2, Dubai Test: At a glance

Moment of the day Pakistan’s effort in the field had hints of shambles about it. The wheels were officially off when Wahab Riaz lost his run up and aborted the delivery four times in a row. He re-measured his run, jogged in for two practice goes. Then, when he was finally ready to go, he bailed out again. It was a total cringefest.

Stat of the day – 139.5 Yasir Shah has bowled 139.5 overs in three innings so far in this Test series. Judged by his returns, the workload has not withered him. He has 14 wickets so far, and became history’s first spinner to take five-wickets in an innings in five consecutive Tests. Not bad for someone whose fitness was in question before the series.

The verdict Stranger things have happened, but it is going to take something extraordinary for Pakistan to keep their undefeated record in Test series in the UAE in tact from this position. At least Shan Masood and Sami Aslam have made a positive start to the salvage effort.

Dengue fever symptoms

High fever (40°C/104°F)
Severe headache
Pain behind the eyes
Muscle and joint pains
Nausea
Vomiting
Swollen glands
Rash

The burning issue

The internal combustion engine is facing a watershed moment – major manufacturer Volvo is to stop producing petroleum-powered vehicles by 2021 and countries in Europe, including the UK, have vowed to ban their sale before 2040. The National takes a look at the story of one of the most successful technologies of the last 100 years and how it has impacted life in the UAE.

Part three: an affection for classic cars lives on

Read part two: how climate change drove the race for an alternative 

Read part one: how cars came to the UAE

The specs

Engine: 4-cylinder 2.0L TSI
Transmission: Dual clutch 7-speed
Power: 320HP / 235kW
Torque: 400Nm
Price: from $49,709
On sale: now

COMPANY PROFILE

Company name: Klipit

Started: 2022

Founders: Venkat Reddy, Mohammed Al Bulooki, Bilal Merchant, Asif Ahmed, Ovais Merchant

Based: Dubai, UAE

Industry: Digital receipts, finance, blockchain

Funding: $4 million

Investors: Privately/self-funded

In-demand jobs and monthly salaries
  • Technology expert in robotics and automation: Dh20,000 to Dh40,000 
  • Energy engineer: Dh25,000 to Dh30,000 
  • Production engineer: Dh30,000 to Dh40,000 
  • Data-driven supply chain management professional: Dh30,000 to Dh50,000 
  • HR leader: Dh40,000 to Dh60,000 
  • Engineering leader: Dh30,000 to Dh55,000 
  • Project manager: Dh55,000 to Dh65,000 
  • Senior reservoir engineer: Dh40,000 to Dh55,000 
  • Senior drilling engineer: Dh38,000 to Dh46,000 
  • Senior process engineer: Dh28,000 to Dh38,000 
  • Senior maintenance engineer: Dh22,000 to Dh34,000 
  • Field engineer: Dh6,500 to Dh7,500
  • Field supervisor: Dh9,000 to Dh12,000
  • Field operator: Dh5,000 to Dh7,000
Sarfira

Director: Sudha Kongara Prasad

Starring: Akshay Kumar, Radhika Madan, Paresh Rawal

Rating: 2/5

Know your cyber adversaries

Cryptojacking: Compromises a device or network to mine cryptocurrencies without an organisation's knowledge.

Distributed denial-of-service: Floods systems, servers or networks with information, effectively blocking them.

Man-in-the-middle attack: Intercepts two-way communication to obtain information, spy on participants or alter the outcome.

Malware: Installs itself in a network when a user clicks on a compromised link or email attachment.

Phishing: Aims to secure personal information, such as passwords and credit card numbers.

Ransomware: Encrypts user data, denying access and demands a payment to decrypt it.

Spyware: Collects information without the user's knowledge, which is then passed on to bad actors.

Trojans: Create a backdoor into systems, which becomes a point of entry for an attack.

Viruses: Infect applications in a system and replicate themselves as they go, just like their biological counterparts.

Worms: Send copies of themselves to other users or contacts. They don't attack the system, but they overload it.

Zero-day exploit: Exploits a vulnerability in software before a fix is found.

The Specs

Engine: 1.6-litre 4-cylinder petrol
Power: 118hp
Torque: 149Nm
Transmission: Six-speed automatic
Price: From Dh61,500
On sale: Now

About Tenderd

Started: May 2018

Founder: Arjun Mohan

Based: Dubai

Size: 23 employees 

Funding: Raised $5.8m in a seed fund round in December 2018. Backers include Y Combinator, Beco Capital, Venturesouq, Paul Graham, Peter Thiel, Paul Buchheit, Justin Mateen, Matt Mickiewicz, SOMA, Dynamo and Global Founders Capital

Batti Gul Meter Chalu

Producers: KRTI Productions, T-Series
Director: Sree Narayan Singh
Cast: Shahid Kapoor, Shraddha Kapoor, Divyenndu Sharma, Yami Gautam
Rating: 2/5

'The worst thing you can eat'

Trans fat is typically found in fried and baked goods, but you may be consuming more than you think.

Powdered coffee creamer, microwave popcorn and virtually anything processed with a crust is likely to contain it, as this guide from Mayo Clinic outlines: 

Baked goods - Most cakes, cookies, pie crusts and crackers contain shortening, which is usually made from partially hydrogenated vegetable oil. Ready-made frosting is another source of trans fat.

Snacks - Potato, corn and tortilla chips often contain trans fat. And while popcorn can be a healthy snack, many types of packaged or microwave popcorn use trans fat to help cook or flavour the popcorn.

Fried food - Foods that require deep frying — french fries, doughnuts and fried chicken — can contain trans fat from the oil used in the cooking process.

Refrigerator dough - Products such as canned biscuits and cinnamon rolls often contain trans fat, as do frozen pizza crusts.

Creamer and margarine - Nondairy coffee creamer and stick margarines also may contain partially hydrogenated vegetable oils.

How champions are made

Diet
7am - Protein shake with oats and fruits
10am - 5-6 egg whites
1pm - White rice or chapati (Indian bread) with chicken
4pm - Dry fruits
7.30pm - Pre workout meal – grilled fish or chicken with veggies and fruits
8.30pm to midnight workout
12.30am – Protein shake
Total intake: 4000-4500 calories
Saidu’s weight: 110 kg
Stats: Biceps 19 inches. Forearms 18 inches

MATCH INFO

Euro 2020 qualifier

Croatia v Hungary, Thursday, 10.45pm, UAE

TV: Match on BeIN Sports

Company Profile

Name: Raha
Started: 2022
Based: Kuwait/Saudi
Industry: Tech Logistics
Funding: $14 million
Investors: Soor Capital, eWTP Arabia Capital, Aujan Enterprises, Nox Management, Cedar Mundi Ventures
Number of employees: 166

Some of Darwish's last words

"They see their tomorrows slipping out of their reach. And though it seems to them that everything outside this reality is heaven, yet they do not want to go to that heaven. They stay, because they are afflicted with hope." - Mahmoud Darwish, to attendees of the Palestine Festival of Literature, 2008

His life in brief: Born in a village near Galilee, he lived in exile for most of his life and started writing poetry after high school. He was arrested several times by Israel for what were deemed to be inciteful poems. Most of his work focused on the love and yearning for his homeland, and he was regarded the Palestinian poet of resistance. Over the course of his life, he published more than 30 poetry collections and books of prose, with his work translated into more than 20 languages. Many of his poems were set to music by Arab composers, most significantly Marcel Khalife. Darwish died on August 9, 2008 after undergoing heart surgery in the United States. He was later buried in Ramallah where a shrine was erected in his honour.

Company Profile

Name: HyveGeo
Started: 2023
Founders: Abdulaziz bin Redha, Dr Samsurin Welch, Eva Morales and Dr Harjit Singh
Based: Cambridge and Dubai
Number of employees: 8
Industry: Sustainability & Environment
Funding: $200,000 plus undisclosed grant
Investors: Venture capital and government

Company profile

Company name: Fasset
Started: 2019
Founders: Mohammad Raafi Hossain, Daniel Ahmed
Based: Dubai
Sector: FinTech
Initial investment: $2.45 million
Current number of staff: 86
Investment stage: Pre-series B
Investors: Investcorp, Liberty City Ventures, Fatima Gobi Ventures, Primal Capital, Wealthwell Ventures, FHS Capital, VN2 Capital, local family offices

Profile of RentSher

Started: October 2015 in India, November 2016 in UAE

Founders: Harsh Dhand; Vaibhav and Purvashi Doshi

Based: Bangalore, India and Dubai, UAE

Sector: Online rental marketplace

Size: 40 employees

Investment: $2 million

PFA Premier League team of 2018-19

Allison (Liverpool)

Trent Alexander-Arnold (Liverpool)

Virgil van Dijk (Liverpool)

Aymeric Laporte (Manchester City)

Andrew Robertson (Liverpool)

Paul Pogba (Manchester United)

Fernandinho (Manchester City)

Bernardo Silva (Manchester City)

Raheem Sterling (Manchester City)

Sergio Aguero (Manchester City)

Sadio Mane (Liverpool)

If you go

The flights
There are various ways of getting to the southern Serengeti in Tanzania from the UAE. The exact route and airstrip depends on your overall trip itinerary and which camp you’re staying at. 
Flydubai flies direct from Dubai to Kilimanjaro International Airport from Dh1,350 return, including taxes; this can be followed by a short flight from Kilimanjaro to the Serengeti with Coastal Aviation from about US$700 (Dh2,500) return, including taxes. Kenya Airways, Emirates and Etihad offer flights via Nairobi or Dar es Salaam.   


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