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Mon 16 Feb 2015 09:29 AM

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Exclusive: Inside the mind of Omar Alghanim

The scion of the billionaire Kuwaiti trading family and the fifth-generation CEO of conglomerate Alghanim Industries talks power, passion and politics

Exclusive: Inside the mind of Omar Alghanim

Once Omar Kutayba Alghanim gets going, he’s hard to stop. Over a two-hour interview at his chalet with incredible views of the Arabian Gulf, the chief executive of one of the Middle East’s largest and most closely held family firms is in a candid mood. Whether it’s dealing with the region’s youth bulge, the lack of bankruptcy laws or the impact of the oil price, Alghanim has a ready answer.

“I’ve always been driven,” he says, simply. “That’s thanks to my father and the way he raised me. I’m close to my father and my grandfather, and working for this business is something that always had a deeper call. It’s a connection, it’s something I grew up with.”

That drive is certainly helping the fortunes of Alghanim Industries, a sprawling conglomerate with interests in a series of sectors in various emerging markets across the world. Although the company has not released any financial results since 2009, when it reported $2.5bn in revenue, its presence in 40 countries and 14,000-strong workforce makes it a force to be reckoned with.

The Alghanim connection with Kuwait is a lengthy one; the family settled in the area in the 18th century, and became prosperous merchants. In the early 20th century, Yusuf Alghanim (Omar’s grandfather) provided aggregate for the Abadan refinery being built by the Anglo-Persian Oil Company (APOC — later to become BP), and later became the British oil firm’s agent in Kuwait. As well as his work with APOC, Yusuf also formed the foundations of Alghanim Industries as it is today, by creating ties with the likes of America’s General Motors to expand into several new fields.

After helping APOC win the rights to the first Kuwaiti oil concession (alongside Gulf Oil Corporation — now Chevron), Yusuf was knighted by Britain’s Queen Elizabeth II. Yusuf was succeeded by Kutayba Alghanim (Omar’s father) who remains as chairman of the group today.

But Omar Alghanim’s decision to join the family business was never a given, he says. Other graduates from his class at Harvard Business School found themselves working at Google — at a particularly exciting time for the tech industry — or heading off into private equity. The 29-year-old Alghanim, instead, swapped the gruelling and rarefied world of an investment banking training programme with Morgan Stanley for a hothouse experience of an entirely different kind. On his first day of work, in 2002, for the family firm back in Kuwait, he found himself on a dusty car lot, selling second-hand Chevrolet Suburbans to local families.

“My father had a very strong thing about coming in — if I wanted to take a leadership role in the family business, not only did he need to know that I was most qualified to run the company, but also that everyone else in the company knew that too,” Alghanim says.

“My father was one of many siblings, and he was chosen by my grandfather to run the business. And my grandfather was also one of several siblings chosen to run the business. So there’s a heritage of meritocracy there, and I appreciated that I had to prove myself.”

It wasn’t the easiest way for the young MBA graduate to cut his teeth, but Alghanim says he learnt a lot from the experience. The company’s ties with General Motors date back nearly 70 years, and today Alghanim Industries operates the biggest GM service centre in the world.

“Understanding what the value proposition is to that customer in order to make the sale was at first frustrating,” the CEO admits. “But it proved to be really valuable to me as my career went on. Because when you’re out there, and you actually have to make a sale, you need to be able to understand how to speak with the customer. I didn’t understand that so much then, but looking back now, I can see how important that was.”

Since that experience, Alghanim has risen through the ranks, eventually being appointed CEO of Alghanim Industries in 2006. As well as that position, he also plays a prominent role in Alghanim International (the family’s global investment arm) and Alghanim Investments (which has interests in the likes of Gulf Bank, Perella Weinberg and Asiya Investments). But Alghanim Industries, which represents over 300 global brands, is where most of his attention lies.

Aside from Alghanim Automotive, which is the exclusive distributor for Chevrolet and Cadillac vehicles in Kuwait, the group portfolio also includes: Gulf Trading & Refrigerating, a major fast-moving consumer goods distributor; Costa Coffee’s Kuwait operations; Kirby Building Systems, a pre-engineered building specialist; several insulation manufacturers, including KIMMCO, Izocam and Rockwool India; and X-cite, Kuwait’s biggest consumer electronics chain. Other interests include insurance, oil and gas, engineering and logistics.

Not that it has been an easy ride for the CEO. Since taking over, he has changed the senior management team twice as he put the company on a more modern footing. Along with a new team, Alghanim has also focused on attempting to create a true meritocracy — no easy task in a region which has traditionally focused on insider contacts and influence in order to get business done.

“A true meritocracy — that’s easily said, right?” Alghanim says. “That sounds great — but to do that was tough. My management style is very different. I want to get the very best people possible, put them in a position and then empower them.

“One of the true constraints [in family firms] is the owner. They sit there and say ‘you have to come back and check with me before you do that’. You have managers that are scared and managers that don’t know what’s going on, and careers tend to progress based on who’s close to the family, and who’s trusted by the family.

“That creates an atmosphere of politics. And I grew up with that, but I was educated outside, so I had a different view. I don’t have any favourites in the company. I don’t have any friends working for the company.”

The CEO is hoping to put his words into practice in the second half of this year when the company moves its head office away from the industrial area of Shuwaikh to a decidedly glitzier location in Al Hamra Tower, Kuwait’s tallest building.  Alghanim Industries is taking over the highest office floor of the skyscraper, and is putting in place an open-floor plan that will see Alghanim himself sitting among his colleagues.

The company is also focusing heavily on enticing local talent away from lucrative jobs in the public sector. Kuwait spends around half of its budget on salaries, subsidies and wages for its citizens, which means that more than 90 percent of the Kuwaiti workforce is employed by the government. Only around 6 percent of the private sector workforce are Kuwaiti, with expats making up the shortfall. Even subsidies offered by the government to citizens to work in the private sector have little effect. As one of the largest companies in the country, Alghanim says that his team are working hard to identify “high-potential” Kuwaitis.

“Every Kuwaiti that graduates with an MBA we’re in front of, we’re talking to, we go to their schools,” he says. “We get a disproportionately large number to come and work for us. I’m a huge believer in hiring not only Kuwaitis but Gulf nationals as well, because we’re largely serving a Gulf consumer, and when you have Gulf nationals speaking to a Gulf consumer, you’re able to come up with value propositions that resonate better.

“I had a meeting with our top 100 managers and I was a bit upset. I said that if we had stereotypes going around the company about Indians, or Americans or any other nationality it would be racist and unacceptable. But it seems like when we talk about Gulf nationals, we allow stereotypes to perpetuate, and when you have those stereotypes, you never open yourself to the possibility that there are some tremendously talented nationals out there.”

To that end, Alghanim is also a board member at INJAZ Al Arab, the regional organisation that focuses on education, training and getting young people into work, and he’s also the chairman of INJAZ Kuwait.

Right now, the CEO is focusing on expanding its portfolio both within the Gulf and overseas. That growth is taking place on several levels. On the retail side, consumer electronics chain X-cite will open its first overseas store, in Riyadh, in the second quarter of this year.

Elsewhere in the portfolio it’s clear that Alghanim is focusing on franchise opportunities too. The company recently took over the rights to Costa Coffee in Kuwait, after two previous partners of the brand had tried, and failed, to turn a profit. By investing in top-tier locations, like in the seaside Miral Mall overlooking Mangaf Beach, and completely revamping the menu, the firm thinks it has found a recipe for success. Last week, the company also announced that it had bought the Middle East and North Africa (MENA) franchise rights to US burger giant Wendy’s for an undisclosed sum. As part of the deal, Alghanim has taken over all Wendy’s outlets in the UAE, and has plans to open additional stores across the region over the next decade.

With regard to Kirby, Alghanim says that the firm is planning to increase its range of products, and the number of markets in which it operates. The pre-engineered building giant already has six plants across the world, in Kuwait, the UAE, India and Vietnam. Furthermore, Alghanim also sees more demand for the firm’s insulation materials group, which has arms in Turkey (Izocam), the Gulf (KIMMCO) and India (Rockwool India). While insulation may not be the sexiest industry around, the CEO says that it is garnering ever increasing interest as local governments seek to prevent energy being wasted.

“If you look at the different levers a government has in order to be able to conserve energy, the insulation of buildings account for 70 percent of energy usage,” Alghanim says. “Look at Saudi Arabia, and the problems they are facing with electricity. If they don’t start insulating, they are going to end up using all their oil production just to produce electricity for themselves. It’s the single largest lever that we have in order to reduce pollution and conserve the amount of energy we are using.”

More generally, Alghanim says he sees growth opportunities in the Gulf, Turkey, India and South-East Asia, although he declines to give further detail.  When questioned as to whether any of the company’s units may eventually be listed or divested, the CEO says that Alghanim Industries is currently undertaking a strategic review.

“I think probably in the next 18 months to two years, we’ll rethink through some of the things we are doing and reshuffle,” he adds. “As part of every strategy process, you have to make trade-offs — you can’t just say you want to do everything, because that’s a failing strategy.

“We will be looking unemotionally, and with a critical eye, and if we decide there are certain areas we want to move out of, then we’ll find the channel that would maximise our exit opportunities.”

 Alghanim’s other main role is as chairman of Gulf Bank, Kuwait’s third-largest lender by market cap, a position he took on in 2013. The financial crisis had not been kind to the bank, which saw its chairman resign and investors panic over derivatives losses back in 2008. The tumult resulted in a $1.27bn emergency capital injection from the Kuwait Investment Authority a year later, with the bank attempting to stabilise itself ever since.

However, Gulf Bank’s final-quarter 2014 results showed a 10.7 percent rise in profits to $30.4m.  More importantly, the lender’s non-performing loan (NPL) ratio fell to 3.2 percent, down from a high of 30 percent, and company officials declared that the bank’s recovery was now complete.

Alghanim says that the bank’s future will depend on offering “revolutionary” new services and products both on the retail and wholesale front. He cites Apple’s iWallet and a mortgage product offered by South Korea’s Hana Bank, which allows its customers to obtain home financing in just five steps, as examples of the kind of disruptive offerings that Gulf Bank is working to emulate. However, he is reluctant to give details as to precisely what kind of products will be on offer.

“On the corporate side, it’s again about being a better partner for our customers,” Alghanim explains. “The market is filled with plain vanilla lending. We have an over-liquidity issue across the Gulf right now, and the future will be about those banks that can give their customers the right advice and offer that value add.”

There has been some speculation as to whether Gulf Bank is planning on expanding outside its home market. When questioned as to where that growth might take place, Alghanim says that the rest of the Gulf is obviously a high priority, although he also cites Turkey as a country with plenty of potential.

“If you look at banks within Turkey, if you look at the average price to book, it tends to be one,” he says. “But then again, it’s a very competitive market — there are no free lunches. If the political situation was to settle down in Egypt, you could see that being interesting.”

Further down the line, Alghanim again gives little detail, but says his focus will remain on ensuring the company’s portfolio remains competitive.

“The list of the top 10 companies in the world — even in the last 10 years there has been significant shuffling,” he smiles. “Some of that is because of technological chasms that have opened up, and some of that is because companies just haven’t done a good job of challenging themselves.

“We remain humble and respectful of our competitors, because we have formidable competitors in this part of the world, and unless you’re able to respect the competition, you’ll find yourself shifting out of that list very quickly.” 

It looks like the future of perhaps Kuwait’s greatest trading family is in safe hands.

Inside the Alghanim Industries portfolio:


Located in the Shuaiba industrial area to the south of Kuwait City, the state-of-the-art manufacturing plant was built in 1980 and now produces 64,000 metric tonnes (or 7,000 truckloads) of insulation material every year. The firm has a 55 percent market share for this segment in the Gulf, and an 80 percent share of the Kuwaiti market. The projects that feature KIMMCO’s products include the Burj Khalifa in Dubai, the Makkah Clock Tower in Saudi Arabia and Abu Dhabi’s Masdar City. Sister companies manufacturing similar products are based in Turkey and India, while a new stonewool factory is being built in Yanbu, Saudi Arabia.

Kirby Building Systems

Located next door to the KIMMCO plant is the main Kirby Building Systems factory. The US pre-engineered building giant was bought by Alghanim Industries back in the 1970s and has completed over 50,000 projects globally. The Kuwait factory has a 70 percent share of the local market. But there’s plenty of business overseas as well, which is serviced by plants in Ras Al Khaimah (UAE), Vietnam, Haridwar and Hyderabad (both India). The world’s biggest pre-engineered building, the 350,000 square metre Renault-Nissan factory in India, was built by Kirby.


Taking up a prominent position in Kuwait’s biggest shopping centre — the one-kilometre long Avenues Mall in Farwaniya — X-cite’s flagship store is an easy draw for gadget-hungry locals and expats. In general, Kuwait has become a key market for global retailers, who are competing heavily to sell their products to a small but wealthy market. Originally known as Alghanim Electronics, X-cite is now Kuwait’s biggest consumer electronics chain, with by far the largest market share in the country. Over a million consumers a month visit X-cite’s 17 outlets, many of whom purchase brands owned by Alghanim Industries, such as Wansa, EQ and Bravo. Next up for X-cite is Saudi Arabia; the firm is planning to open its first outlet outside Kuwait in the kingdom, later on this year.

Alghanim Automotive

The exclusive distributor for Cadillac, Chevrolet and Saab cars in Kuwait, Alghanim Automotive’s cavernous after-sales centre in Kuwait is the biggest GM site of its kind in the world. Included in the visitor waiting area above the garage is a Costa outlet and even a small X-cite stall. Integrated elsewhere in the complex is KromOzone, a specialised accessory service that allows customers to modify the interiors and exteriors of their cars.

Omar Alghanim on… the lack of bankruptcy legislation in the Gulf

“If you go to Silicon Valley and talk to a successful entrepreneur there, my guess is that for every successful guy he would have had five or 10 failures. These guys are serial entrepreneurs — they learn. One of the issues we have with our culture in the Arab world is the fear of failure, the stigma of failure. If all of our young people are scared of failing, they are never going to win. So our governments need to help via bankruptcy laws. It’s what we need to become more competitive as a region.”

Omar Alghanim on… the Kuwaiti parliament

“In most countries, you have a parliament that is supposed to overlook the government, like in the UK. Here in Kuwait, you have 93 percent of the workforce employed by the government, so they are also the electorate that votes for the parliament. An analogy one could draw is a company where the board of directors is elected by the employees. Think about the misincentives that could be built into that system. Every politician’s number-one concern is what the electorate thinks, so it creates unhealthy behaviour.” 

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Leji Philip Joseph 4 years ago

Proud to be one among the 14,000.

Abbas Fakhruddin 4 years ago

Really interesting and revealing interview for an powerful Kuwaiti heading a influential family business....very progressive in business thinking...but does the same thought and culture infiltrate lower down in the management order...anyone's guess...