This Dubai businessman is going back to the future

Shirish Saraf of Samena Capital wants the region to know that private equity is exciting and that what was old is now new again
By Michael Jabri-Pickett
Sun 14 May 2017 08:22 AM

Shirish Saraf has a plan. Truth be told, he has many plans. Ask the private equity investor what he has coming up and he will happily talk your ear off. The 49-year-old co-founder and vice chairman of Samena Capital is no shrinking violent when it comes to sharing his ideas or explaining in great detail how he was inspired by something as straightforward as the name of the company he helped found in 2008.

“When we set up Samena, it was a pretty ambitious plan, it was an abstract model,” says the Indian national who was born in Oman, where his father was a businessman and his mother was a dentist. “The name Samena did not exist. Most people know emerging markets as BRIC. I say Samena is the new BRIC. I basically coined it on a beach in Goa. And it was Subcontinent Asia Middle East North Africa.”

Sheikh Nahyan Bin Mubarak Al Nahyan, UAE Minister of Culture and Knowledge Development, with Shirish Saraf.

Saraf imagines that even if he is not known for making good investments, perhaps one day this name/acronym will make him as famous as Brit Jim O’Neill of Goldman Sachs, who is most famous for creating the term BRIC, which represents the theory that the economic potential of Brazil, Russia, India and China could become the dominant economies within the next half century.

Saraf says the world is shifting back to where it was hundreds of years ago, and that the economic realities of the Subcontinent, Asia, the Middle East and North Africa are as relevant today as during the Ming dynasty.

“In the 15th century, India, China, the Middle East dominated the world, and now it looks like we are going back to the future,” Saraf says. “For 1,800 years, 60 percent to 70 percent of the world’s GDP was out of India, China and the Middle East. It was only the last 200 years that was an aberration. You’re seeing that wave come back. These countries cannot be ignored. You can’t box them in with Western jargon because the West is going to have its biggest challenges over the next ten to 15 years.”

Saraf over the years has rubbed elbows with a number of high-profile personalities, including Prince Andrew, the Duke of York.

By his count, Samena has had about 45 exits and $1.2bn of assets raised. The company has returned $600m of capital in what Saraf calls “extraordinary” times.

With deals coming in India and Myanmar, he believes the good times will continue for Samena.

“Myanmar was the richest country in Asia in 1960. It is today the third poorest country in the world. It has every resource you can dream of, over the ground and under the ground. It has 70 percent of the world’s teak — Burmese teak — it has 90 percent of the world’s rubies, it has 40 percent of the world’s jade and it has gas. The second highest finds after Qatar. It has 50 million people and is between India and China. These are opportunities.”

Myanmar is a microcosm of all that Saraf sees in the business world, ie, potential. Countries that are coming up to $2,500 per capita is what Saraf is — ideally — looking for.

Sheikh Nahyan Bin Mubarak Al Nahyan (centre) is among the big-name investors at Samena Capital.

“We call it the sweet spot,” he says. “We start to see consumption explode exponentially. Why do we call it the sweet spot? Because $2,500, on average, is what you need for the basic needs to be met. Once basic needs are met, consumption patterns change astronomically.”

So, if you are going to try and figure out where Saraf needs to be in the next five to ten years, look no further than where Samena is focussed.

“I have to be in countries that have the growth — India, Indonesia, Vietnam, Myanmar, Philippines — all over 6 to 8 percent growth. Fastest growing economies in the world today are these. This isn’t me, the World Bank is saying it.”

Myanmar’s reform efforts are gradually helping the country to catch up with more advanced economies, according to the IMF’s Regional Economic Outlook.

You also have very young populations in these countries. “India has the youngest population in the world,” he says. “It has the biggest democracy in the world. It has rule of law. All these are factors that we must consider when we go in. Places like Myanmar are still at an early stage. We will not make big bets in them, but we will get our feet in there, we will tread very carefully.”

The Subcontinent, Asia and the Middle East is logical because it’s a contiguous region, he says. What this means is that it brings together partners from the Subcontinent and the GCC. The cities in this region are all connected, Saraf says.

Dubai is the best suburb for Bombay, he says. “It’s also the best suburb for Riyadh… and the best suburb for Karachi. It’s literally a new hub. But… there is obviously going to be a lot of cross-border consolidation opportunities in the next five years. We see that as a wave and that was the thesis under which Samena was set up.”

(From left) Anand Mahindra, Ali Habib, Shirish Saraf and Sayid Tarik.

So from an economic perspective, Samena makes complete sense. But recent history suggests everything flows from the West, not from the Subcontinent and the GCC. Traditionally, Saraf says, not many Chinese businesses were bought in India or vice versa, while not many Middle Eastern businesses were bought in India. Today, however, you are seeing that change.

“You are seeing Alibaba’s Paytm in India, which has become the largest online provider. On the other side, you are seeing His Highness Sheikh Mohammed Bin Zayed, the Crown Prince of Abu Dhabi, who just went to India. [In January 2017, which was his second visit in less than a year.] He committed $70bn for investments into India. So the growing ties, economically, integration-wise are all signs not of just friendships being created, these are signs of business realities.”

Saraf with V-Nee Yeh, one of the founding shareholders of Samena Capital.

What makes these economic ties work in this contiguous region is the UAE.

The UAE is the “shining light,” he says. “I see that other countries like Oman and Bahrain are all very progressive and nice, but they are small economies.” They are never going to change the needle, he says.

“I think the UAE has nowhere to go but up, it is no longer a possibility, it is a reality. It is one of the most vibrant countries, it has got the best environment, it has got top quality infrastructure, it has got a very tolerant and lovely system for all religions and cultures to thrive in and live. People have made money here for 50 years. I think it’s a real oasis and it shows that in an Islamic nation how tolerance can be done and how peace can be achieved through strong leadership.”

The business realities are that the growth markets of Asia are not the traditional growth markets of the West, Saraf says.

India’s economy is projected to grow 7.5 percent in 2017-18, according to the Organisation for Economic Co-operation and Development.

The West knows Asia as just China, he says. Which means when some people sit in London and New York and they talk of Asia, they mean China. “When I sit in Samena and I sit in Dubai and I sit in London or I talk of Asia, I talk of the true Asia, which is India, which incorporates the growth engines of Indonesia, of Vietnam, of Myanmar, of the Philippines, of Gulf countries.”

Samena is not Saraf’s first foray into the world of private equity. He was the co-founder and managing director of the Abraaj Group, which grew to manage $6bn. Saraf left Abraaj in 2007, but he looks back on that time fondly.

The Philippines economy grew 6.8 percent last year, and is projected to expand 6.9 percent in 2017, according to the World Bank.

“I’m so proud to have been associated with what is today a quality shop [Abraaj], and one of the largest in the emerging markets worldwide. The opportunity to have co-founded that business and to have taken it to the size and scale so when I left it was amongst the largest in Asia, was truly satisfying.”

But Samena is a different form and a different shape. Samena is more Asia. “It is not really sheikhs doing Asia. It’s Asia as Asia. It’s Indians, it’s Chinese. It’s not an Indian fund manager and a Chinese fund manager. It’s the best-known sovereign wealth funds, merchant families and family groups, coming together with real principles with their names aligned.”

Saraf says that Samena is truly neutral. “We operate as a local player in all of these markets, and we truly are the new Asia.”

Efforts by Vietnamese authorities to create a more business-friendly atomosphere is making the country more attractive for foreign investment.

Samena Capital is one of several investment groups that are turning their attention to the booming economies of Southeast Asia.

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