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Fri 22 Jan 2010 04:00 AM

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Out of the flames

QFIB chairman Abdullah Al Marri is convinced that Qatar will be an investment hotspot for a long time.

Out of the flames
Out of the flames

Qatar First Investment Bank chairman Abdullah Al Marri is convinced that the resource-rich Gulf state will be an investment hotspot for decades to come.

Whether or not you believe in omens, the board of Qatar First Investment Bank (QFIB) must have been a little perturbed on the occasion of their first official engagement. The date was September 16 2008, and the financial world was reeling from news that would go down in the annals of banking infamy.

"Our first board meeting was the day after Lehman Brothers had fallen," recalls QFIB chairman Abdullah Bin Fahad Bin Ghorab Al Marri, raising his eyebrows as a smile creases his face. "The idea for QFIB started before the crisis when everything was going up, and it seemed like everything you did went well. This last 18 months, so many things have changed."

Though born in the shadow of Lehman's spectacular collapse, QFIB's prospects are bright. The Shariah-compliant bank has gone from strength to strength, even as Wall Street's collapse continues to cast a pall on economies around the globe.

"We are fortunate that we started just after the crisis, although of course we had to do a new business plan," admits Al Marri. "In the first few months we were building the bank, and at the same time just watching how things were working out for the international market.

"However we believed that there was inflation in the market - the prices of so many things were higher than they should have been," he continues. "Now maybe, a few months later, we would be in a position to have a number of investments on the table, at a hugely discounted rate."

This confidence stemmed from an unshakeable belief in the long-term potential of Qatar as a centre for investment. As the Gulf state's first standalone investment bank licensed by the Qatar Financial Centre (QFC), and with an authorised capital of $1bn, QFIB is purposely positioning itself to take advantage of the huge revenues the resource-rich country is set to generate over the next decade.

"We felt that Qatar was going through huge growth, mainly because of the investment the government made in the energy sector," recalls Al Marri. "The information that was public was that Qatar was on the way to becoming the largest exporter of natural gas worldwide, which means Qatar was about to enjoy huge wealth.

"Before we were selling 350,000 barrels of oil at $20; now we are selling three times that at three times the price, and that's only oil," he continues. "In Qatar now we can't spend all the money internally because it takes time to build internally, so that's why you see the cash going out and investing in Porsche, Barclay's, Sainsbury's and Chelsea Barracks."

At the time of the bank's inception, says Al Marri, Qatar's investment banking landscape was dominated by institutions from other GCC nations, or the US and Europe. In a state set to be flush with cash, there was clear potential for a home-grown investment bank to establish itself as a major player, especially after the launch of the QFC as a platform for new operators.

"Qatar started late in terms of being a financial centre, perhaps because the ability of the government to be ready for these projects and to be a centre, was not there," says Al Marri. "But then in the last few years Qatar and Abu Dhabi have become the new strong players, of course enjoying the support of their very strong financial resources. So we thought because of all these reasons, and having a platform that could give us a licence, we could launch a bank."Al Marri and his management team bought with them a wealth of experience; the chairman served as vice chairman of Qatar Islamic Bank from 1993 to 2002, while his colleagues include former stars from Citigroup, Goldman Sachs, Merrill Lynch, Credit Suisse, and others.

"There is an Arabic saying that says ‘some people benefit from the bad times of others', and we took advantage of the suffering of other financial institutions, to bring in some very good people," says Al Marri proudly. "Most of the deals we have in the pipeline came through the connections of our own team."

Deals already concluded include QFIB's acquisition of a 71 percent share in Emirates National Factory for Plastics Industries, and a 41 percent stake in Qatar Engineering and Construction Company (QECC), which specialises in oil and gas project services. And in the pipeline for Q1 2010 is a further foray into the oil and gas sector, with a "global" firm whose interests are nevertheless "very different" from that of QECC.

"The region is the region of oil and gas, not of agriculture or tourism," points out Al Marri. "There might be some projects here and there, but the core business of the region is oil and gas.

"If you see the official statements by the minister of oil or finance in the region, you hear astronomical numbers," he continues. "They are spending hundreds of millions of dollars, billions of dollars, in improving the energy sector in Saudi, and Abu Dhabi, and in Iraq."

While the chairman denies that QFIB is looking at direct investment into a real estate project in Kurdistan, as had previously been reported, he and his team have identified healthcare, consumer goods, and manufacturing as sectors upon which to launch a $250m spending blitz this year. Its target area is "MENA plus Turkey", though Al Marri does admit that the firm "would go outside for a particularly good deal".

The bank's success has been noted by firms themselves looking for a good deal - in its short history, QFIB has twice been approached with merger proposals. And although both approaches were dismissed out of hand, Al Marri suggests that the region's banking sector is set to enter a period of consolidation.

"The Gulf market is about to become one market," he insists. "In Kuwait, at the GCC summit last month, there were some setbacks about the dates for the single currency and the single market, but I think they are determined.

"Once they have worked out their differences, the banks will find themselves in need of either getting bigger or merging - the markets are getting bigger, and so you need bigger players," he continues. "I think there will be more takeovers than mergers in the future, and banks will find themselves looking."

Such consolidation is contingent, of course, on Gulf States' economies continuing to grow. And Al Marri is convinced that the region is uniquely placed to emerge strongly from the global economic crisis.

Even Dubai, with its mountains of debt, will come out of the downturn "sooner than people expect".

"There is a long list of international companies across all sectors that are in Dubai; that is why it is still a centre," he says. "Also there is a generation of young leaders that Dubai has created over the last ten years, which has experienced the shock, but will come out of it stronger.

"In this region we have rich rulers who have a lot of money, and they want their countries to be a destination for everybody," he adds. "As long as the world consumes energy, there will be a lot of business taking place, a lot of huge wealth coming into the region, and therefore a lot of spending. How good you are and how fast you are at attracting business: that's your challenge."

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