Capital focus

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POSITIVE: Ithmar co-founder Khaldoun Haj Hasan.

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Andrew White meets Khaldoun Haj Hasan, co-founder and managing partner of Ithmar Capital, one of the region's most promising private equity players.

In a region obsessed with going ‘from local to global', there is something refreshing about Ithmar Capital and its tight geographic focus on the GCC. While Ithmar does have a London office, the Private Equity (PE) management company is concentrating firmly on opportunities closer to home.

"As a PE investor, we believe we're an active investor - we don't play a passive role," insists Khaldoun Haj Hasan, co-founder and managing partner, as we settle into a warm meeting room at Ithmar headquarters in Dubai.

"To play a role in a company is a function of your expertise as a team, and your connectivity from a shareholder base and from an investor base," he continues. "At the end of the day our team has a lot of GCC experience, as well as a lot of global experience, but our shareholder base and investor base is most predominantly from the GCC. Naturally, that means that we can only add value through the GCC economies."

While there is a certain amount of latitude within these operational parameters - Haj Hasan says Ithmar will invest anywhere in the world as long as there is "a GCC aspect to it" - the company appears less obsessed with marking its territory on the global stage, than it is with consolidating its reputation at a regional level. Even when Ithmar does take a leap outside GCC borders, it is careful not to overexpose itself.

"We can look at a company that is based in the UK, but for example if it has 30% of its business in the GCC, then that becomes a GCC-related opportunity for us," he explains. "However, a prerequisite for that investment for us is having another international PE firm in the deal with us. They overlook the global side of the business, and we overlook the GCC side."

A strategic alliance with international PE giant 3i ensures that Ithmar will never be short of support in markets it is unfamiliar with. Moreover, the relationship provides Ithmar with tremendous sector expertise that other regional PE firms might struggle to match.

"This is a very important relationship in the sense that most of the PE players in the region are sector opportunistic," explains Haj Hasan. "Yet if you want to be sector opportunistic, you can't possibly hire experts in every sector to have under one roof. So you need to tap into someone that has a tremendous reservoir of sector expertise - and that's where 3i becomes a very attractive proposition."

In the GCC, Ithmar is focused on investment into regional companies "whose expansion and development we can influence", says Haj Hasan.

"To convince someone to do a deal with you at an attractive valuation, you need to demonstrate that you're bringing something beyond money," he continues. "In China, for example, although it is a very attractive investment opportunity, we can bring value through our platform, but it would not be convincing enough."

Ithmar's performance in the Gulf has been supremely convincing to date, as the firm has used its second fund to manage proprietary investments in excess of US$500m, in the oil and gas and construction sectors in particular.

"Over the next few years, the construction sector in the UAE will be worth over US$100bn a year," says Haj Hasan. "People can argue the numbers, but it's a massive sector by any standards, and one that is very important to us.

"With all these projects announced you actually have a shortage of contractors to build them, and that's what is happening in the UAE," he continues.

"So the UAE is probably the region's most attractive market in terms of potential, and most of the construction companies in the region would actually like to expand into the UAE."

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