Private equity has sustained Qatar First Investment Bank thus far, but CEO Mike de Graffenried has much bigger plans in store for the lender
Mike de Graffenried could hardly be described as your average Gulf banker. Not long ago, he retired from a stellar 31-year career that had taken him from Citibank to a stint with Saudi Arabia’s Samba Financial Group. Job well done, you might say. Ditching the corporate world, the former banker turned to working with a Palestinian-oriented aid agency and even took an arts course back in New York. But there was clearly something still niggling in his mind.
“I wasn’t looking for a job, and then I started getting some calls. The proposition seemed very interesting and it was completely different to what I had done previously,” de Graffenried says. “I had worked for a large organisation for more than 30 years, and the ability to be a part of something getting built, rather than just executing the policies, procedures and business plans of a large institution, was interesting. It makes for a capstone on a career.”
For de Graffenried, the call of the Gulf proved irresistible. So, in 2008, he found himself in Qatar, heading up Qatar First Investment Bank (QFIB), the first fully Sharia-compliant investment house in the Gulf state. Not only that, but the bank also had its board meeting on the first day after the Lehman Brothers collapse on September 16. At first glance, this might not seem to have been the most fortuitous time to launch a bank. Put another way, however, any finance outfit that launched after that date is guaranteed to have no contagion stemming from the difficulties associated with the financial fallout in the US.
So for QFIB, launching towards the end of 2008 was actually something of a boon. The bank stuck to its business plan, raised capital over the summer of that year, and eventually collected around $430m, which became substantial dry powder power post-Lehman.
“I’m not saying that the pricing [of private equity transactions] was all that more favourable than it might have been, but we did get introduced into transactions that others weren’t in a position to deal with,” de Graffenried says. “So, in fact, for someone in our very specific circumstances, it was a very good time to be in business. It was propitious, at a time when no-one else probably would have described the time as propitious.”
Fast forward to 2010, and QFIB looks to be in rude health. Posting a profit in its first full-year of operations certainly helped, and the bank is continuing to build its portfolio of offerings, qualifying for a full Islamic banking licence from the Qatar Financial Centre (QFC) in the process.
In addition, QFIB has continued with further private equity transactions, having already completed a couple in the healthcare field — in Turkey and Abu Dhabi. de Graffenried says that several are live, with another in Turkey, one in Saudi Arabia, and spread across various sectors. Although all of the transactions completed so far have been proprietary, the CEO is keen to go in alongside other investors in the future.
“Part of the banking business — if you didn’t know it before — is that diversification is very important. So we’re looking at things in the food industry, we’re seeing transactions in oilfield services, in the oil and gas area in general,” he adds. “We’re trying to build a balanced portfolio both in terms of regional and business sectors, and then as well trying to add additional different kinds of business — in the sense of the deposit-taking business or the asset management business.”