Alghanim Industries is one of the Gulf's biggest family companies, with over 30 businesses in 40 countries. CEO Omar Alghanim tells Andrew White how the group intends to expand throughout Asia.
Business is the art of copying intelligently; it's not the art of reinventing the wheel," insists Omar Kutayba Alghanim, CEO of Alghanim Industries, as he leans forward and takes a sip of water.
"If you try to come up with original ideas every time, it's awfully inefficient - pretty much everything you want to do, the chances are somebody out there has already done it," he continues.
There are some people who love to talk about what they do, and are very vocal about what they do and scream it from the mountaintops. We are more low-profile and we like to stay below the radar.
What I try to do is track down whoever's done it best, and see how I can learn from that, adapt it to my market, and put it in place in the most efficient manner possible.
Today Alghanim Industries is one of the largest privately-owned companies in the Gulf region. A multinational company in outlook with operations in 40 countries, it is a multi-billion dollar conglomerate with more than 30 businesses under its umbrella.
The group employs around 12,000 staff from 45 countries across sectors as diverse as advertising and media to FMCG wholesale and distribution, projects engineering and shipping services.
The firm has established strongholds in the Middle East, India and Turkey, dealing with over 300 global brands and agencies, and is a market leader or significant player in almost every major business in each major region it operates in. Right now, however, Harvard-educated Alghanim has his eyes set firmly on expansion into the East.
"We're spending a lot of our time now growing into new markets, and we're spending a lot of time looking at Asia," he reveals. "I think we're well positioned in high-growth markets, and we hope to have a presence in both Malaysia and Thailand by the end of the year.
The group is strengthening its presence in Turkey too. Kirby Building Systems, a subsidiary of Alghanim Industries, last month announced the opening of a joint stock company, Kirby Yapi Sistemleri Sanayi Anonim Sirketi, registered in Istanbul.
Kirby is a market leader in steel Pre-Engineered Buildings (PEB), which are designed and manufactured for a wide range of applications including warehouses, factories, aircraft hangars, commercial centres, offices, recreation centres and showrooms.
Kirby has activities spread across more than 70 countries and has created more than 35,000 landmark projects to date, while its Istanbul venture marks the latest addition to a 24-strong complement of offices spread across the Middle East, Africa and Far East.
Looking West, and while he admits that there are opportunities in the "huge" US market, Alghanim is less sure about the prospect of direct investment in the ailing US economy.
The Alghanim group already has financial operations in the States - where it has an investment office and has invested in around 45 hedge funds - yet it appears content to limit its exposure through roundabout routes into the country.
Although Alghanim notes that Kuwait's depegging from the dollar has given firms an advantage over their GCC competitors, he characterises the US market as "highly competitive, tough to do business in, heavily regulated and litigious", and insists that any injection of cash from Alghanim would be in the form of indirect investment.
"We are very much looking at the US as potential investment opportunities, across a broad range of sectors," explains Alghanim. "If I was to go in [to the US] I'd want to go in and buy intellectual property (IP).
We're looking at a couple of opportunities with other funds that may buy the physical assets, and then we'd have rights for the IP.
"We will take that IP - whether it is technology, thoughts, concepts, software or whatever - and be able to capitalise on that within our markets.
However, it is not long before Alghanim's thoughts are wandering East again.
"There is something a very wise professor of mine once taught me, which is that whenever you have an opportunity a great way to gauge it is by looking at your next best alternative," he recalls."For me I look at the Indian market," he continues. "In 10 years' time it will have a middle class of 200 million people, it is a growing market just two hours away from us, and has strong historical ties with the Gulf, so I would much rather spend my time focusing there.
"There's a lot more upside and a lot more white space in India than there is in the US," Alghanim adds. "It doesn't mean that we wouldn't do something in the US, but it would have to be extraordinarily amazing.
While Alghanim will not be drawn on the nature of the group's planned expansion into Asia, the CEO is not likely to be short of options.
Whenever you have an opportunity a great way to gauge it is by looking at your next best alternative.
His ‘intelligent copying' has resulted in a set of successful business models across the various sectors Alghanim is engaged in, and any could make the leap deeper into the continent. For example, ‘Platform' is a construction materials distribution concept in partnership with French multinational Saint-Gobain.
"It's different to a Home Depot or a B&Q, as we're really buy-it-yourself rather than do-it-yourself," explains Alghanim. "We have had DIY concepts in the Middle East before that didn't work, so why not BIY and have someone else install it? After all, when was the last time you saw an Emirati go to work on his home with a power drill?"
The group has plans to open as many as 24 Platform stores across the region, in addition to the flagships branch already trading in Kuwait. "We cater to some locals coming in and buying, but mainly to small and medium-sized contractors coming in to buy their supplies," Alghanim explains.
The value proposition is that instead of going to eight locations as they have to today to stock up for a day's job, we provide the best prices, and have the products always in stock, in one location.
Alghanim is already heavily involved in the industrial sector - and not just from a retail perspective. "We are one of the top producers of insulation materials in the world, and we want to go up those rankings," he insists, explaining that the group will look to expand through a combination of acquisitions and organic growth.
There are "a bunch of things" in the pipeline, he says, in an industry that has already delivered lucrative returns for the company.
"It's a nice piece of business, as insulation really is the number one lever a government has in order to reduce energy costs," Alghanim continues. "Insulating homes and offices reduces the energy costs about 40%, which is dramatic. If you put everybody into smart cars but you don't insulate their homes, you are losing out.
Alghanim expects the firm's growth within the insulation business to be "rapid", although he declines to outline specific targets or make any grand declarations. "I always like to under-promise and over-deliver," he smiles.
One Middle East market that the group is unlikely to launch itself into in the near future is Iraq. Although the Iraqi government is in the process of inviting tenders for potentially lucrative industrial concessions across the conflict-torn nation, Alghanim will not venture into the republic until the troubles have eased significantly.
"It's tough to do business in Iraq, and I don't think anybody's building in Iraq yet," he says. "Concessions are one thing but whether anyone actually puts a spade in the ground and their money in the ground is a different thing, as it's too risky.
"I think of the Iraqi market as one with tremendous potential - it's tremendously wealthy in terms of its people, its mineral wealth and agricultural wealth - but given the current political climate I think it's a fairly inhospitable place to be doing business," he continues.
There are no supermarkets opening up across Iraq; there are no shopping malls opening up across Iraq. I hope and pray that it happens sooner rather than later, but unfortunately the situation still looks very fluid.
Although Alghanim is always on the lookout for potential acquisition targets, he believes that it is not just security concerns that make it particularly difficult to "get deals done" in the region. In truth, the reality is far more mundane.
"You have to do due diligence and it's a long process, so by the time you're done a long time has passed," he points out. "It's some part bureaucracy, and some part people having trouble letting go of their assets - it's an emotional attachment.
So by the time you engage and try to finish a deal, your hit rate isn't that high.It is for this reason, Alghanim contends, that the Gulf is unlikely to see the private equity (PE) explosion that many have predicted. The region is awash with capital, but there just aren't the deals out there to soak all that cash up.
"You will see a lot more M&A activity than there has been historically, as a lot of people are looking to make exits from businesses, to consolidate and administer roll-ups," he admits. "However, I don't think [the PE market is] going to be as crazy as everybody thinks it's going to be.
Alghanim's credentials suggest that others should take heed of his analysis of the Gulf PE market. Prior to joining Alghanim Industries, he worked in the Investment Banking Division of Morgan Stanley in London where he took part on large global transactions including the US$71bn merger of Astra and Zeneca to form AstraZeneca, and the US$29bn merger of Hoechst and Rhone-Poulenc to form Aventis.
"There are some people who love to talk about what they do, and are very vocal about what they do and scream it from the mountaintops. Well, bravo to them," he shrugs nonchalantly.
"We are more low-profile and we like to stay below the radar - it's not about the ego, it's about the return.