The other piece of the pie

Most investment managers in the region have been focused on the top two percentile of the investment pie. That is a very limited club of high net worth individuals but the remaining 98% are what we call the ‘ignored'," says Dr Akram Yosri. The managing partner and founder of global investment giant 3i Capital Group explains that this was one of reasons that prompted the group to create the first open-ended public fund in the Middle East.

Inmaa or the Dubai Growth Fund, launched in March 16, 2007, differs from any other fund created in the region for a number of reasons, according to Dr Yosri. One of the reasons he says: "It's a segregated fund, meaning it's a family of funds that consists of three classes of shares each of which is US$100m but can be scaled up higher because it is an open-ended fund."

Dr Yosri points out that most of the funds in the region tend to be close-ended in which an investor makes an investment and the fund manager says: ‘I'll see you after a year,' depending on the life of the fund. "During that time investors have no control or freedom to get in or out if they choose to - they are subject to the mercy of the market," he says.

The dawning realisation that today's investor is no longer easily lured into making such investments gave the group a push to create Inmaa, a fund with a minimum investment of US$1000, despite the very high risk involved.

"We wanted to make this a fund open to the masses. That's why it is truly the first public fund, meaning it has the structure of a public fund regulated as such, that we can offer to the public at large," says Dr. Yosri, adding: "This carries with it a great sense of responsibility because if we do so we need to deliver, but the opportunity is great and we have captured the right audience." Why regional private equity companies have so far shied away from such a move is certainly explainable and as Dr Yosri puts it, "very few are willing to take the same kind of risk".

"They are not interested in an exotic return on investment of 100 or 200% as marketed by competition - without mentioning names - but they are interested in a moderate growth in their net worth but at the same time minimising their risk as much as possible," he says.

3i Capital, however, was determined to take an investor rather than an "inward profitability" approach. The focus according to Dr Yosri was the investors and what they wanted as well as understanding their psyche, particularly with the tremendous growth in the region that was followed by a setback in the financial markets. This was enough evidence for 3i Capital that today's typical investor is looking to maximise their return on their investment, while at the same time mitigating their risk.

"Striking the balance between maximising the opportunity and mitigating the risk is a very delicate balancing act and requires a lot of care. That's why we put Inmaa together," he says.

Dr Yosri further explains that the group's intention was to avoid replicating what other private equity companies in the region are doing. "We are not interested in the quick-dollar profit, that's not why we are here. We are here to set the foundations, to position ourselves as a major regional fund, hopefully the first regional fund with thousands and thousands and thousands of investors," he says adding: "I'm not going to mention companies but their focus is very different. Their focus is today and tomorrow and literally tomorrow. They are not taking more of the strategic approach towards where we are going to be in the future."

He explains that "plenty of these companies" claim to be the "best in this class" whereas all one has to do is "look at where their net value assets are".

"It's dwindling, it's going down; and that's not where we want to be. We are interested in a very strong and stable foundation in the years to come," he says.

Taking a glance at the company's board, you are inclined to believe there's a great possibility in achieving that. Assembling the team was based on what Dr Yosri calls the "best of breed philosophy". This, he explains, means that 3i Capital, unlike many investors here, "does not claim to be good at everything".

"They would pretend to be the jack of all trades; you tell them can you do this? They would say yes, we do custody, administration, management, oh and we do plumbing and heating as well," he says with a hint of sarcasm, adding: "But we said we are going to bring the best companies involved with us in investment institutions."