Our priority is consolidation: Zabeel

(SUPPLIED)   


 
Zabeel Capital’s focus, currently, will be on the Light Group, a Las Vegas hospitality company where it has a 50 per cent stake, said Jbran Rahal, the new firm’s managing director. The company also plans to expand the Light Group’s business know-how into the region.

Zabeel Capital’s joint venture with the Light Group is slated to be the first of a number of investments by the company in the United States. The company has expressed its intentions to benefit from a fall in asset prices in the United States and buy hotel properties there.

“Opportunities are everywhere, and currently it’s in the United States,” said Rahal, who is also the former chief financial officer of Zabeel Investments.

Expansions at home are in sight, too. “We’re trying to see if we can drive or expand into the [Middle East] region,” said Rahal. “We are a Dubai-based company. This is our home town and this is the region that we know best. So we will always try to make an impact here.”

Zabeel Investments finally entered the US market in February by acquiring a 50 per cent stake in The Light Group, a Las Vegas hospitality company. Is it currently easy to invest in the United States?

Each region has certain complications so we rely on advisors, services and consultants. The Light Group is a private company so we did not have to interact with the regulators and the public.

It was easier because we had been working with them casually for a while.

Does that mean that you would opt to invest more in private companies instead of publicly listed companies?

We are not targeting only private or only public. We look at each opportunity individually and then we assess the complications. We assess how smooth the investment process will be and we assess the investment. So no, we are not excluding private or public. Our priority is not whether it is a public or private company but whether it fits Zabeel’s strategy.

So what is your strategy?

That’s a very big question. Our first priority in Zabeel Capital is to consolidate what we have.

Zabeel Capital is now the investment manager of Zabeel Investments so we need to work closely with the existing portfolio, focus on the investment integration plan and put some housekeeping in place, in terms of international strategy. In the next two years, we’d like to make Zabeel Capital a big investment house.

Zabeel Investments was established in 2006. It a is relatively young company but is already robust in terms of assets. What is the need to create Zabeel Capital? What is the rationale behind creating a separate entity?

When you are a newly formed entity and you have people working towards certain objectives, you need to create a level of autonomy, accountability and focus.

We now have the property business and direct cash investments, so we need to create accountability for us to focus.

And since we do have a long-term plan to grow, we need to put a proper platform and create a pool of talent that can deliver the objective of our company.

So what happens now to Zabeel Investments?

Zabeel Investments will always be the holding entity – the holding arm of Zabeel Capital and Zabeel Properties. It is like the mother company where the centralised function lies.

Will you also be managing Zabeel’s assets in the Light Group and in EADS, the parent company of Airbus?

EADS is an investment made by Zabeel together with Dubai Investment Capital, so it is more of a strategic fund. We would probably be more involved in the Light Group, because we have a direct investment there, than in EADS which has its own umbrella.

What are your future plans for the Light Group?

Obviously, it is our plan to grow and expand the business and it is our intention to bring the Light Group’s know-how into the region, particularly into Dubai.

When did you start talking with the Light Group?

There were some casual discussions to start with and we visited their offices and operations on a casual basis. But actually we started to formally talk to them last year, around the second half.

Was it then the sub-prime credit crisis struck the US economy?

No one really knows exactly when the sub-prime crisis happened, people have not yet agreed on when, some say two years ago.

Zabeel Executive Chairman Mohammed Al Hashimi recently said that the company intends to buy hotel properties in the United States to benefit from the fall in asset prices. What about your view? What is your outlook on the property and hospitality market?

I’m very bullish. We have some big investments in the United States and we are seeing the sector being segmented into different levels. Now you have the upper market, mid-market and budget hotels. So we are looking at opportunities there.

So do you think it is the right time now to invest in the United States?

Opportunities are everywhere, and currently it is in the United States. But people have to be very careful. Investors have to observe and wait for the right moment to make a decision for investment.

What funds do you currently have and how much would you be earmarking in the next two to three years?

Zabeel Investments’ property portfolio is approximately Dh15 billion and Zabeel Capital has an initial portfolio of Dh3.67bn. Our current portfolio is therefore around $1bn but it changes on a daily basis, so it could be more by now. That’s our asset on the margin.

Currently Zabeel Capital is a privately held investment platform so we do not classify our investment like other public funds. What we do have is a portfolio of investment. I do not think we will, at this stage, go to the fund structure.

But how much are you going to invest in the next two to three years?

That’s a very tricky question. The amount of capital allocated to investment is something we can’t talk about. But I can tell you that we have a clear investment plan, which first starts with consolidating what we have. And then, when opportunities come, we’ll discuss asset allocation.

Are you looking at mergers and acquisitions as well?

Again, it depends on the set of opportunities. Currently we are trying to create a structure that should cater to any kind of opportunities that may arise. If there is an opportunity, the structure should be there.

Which sectors would you probably focus on?

Since Zabeel Investments, the mother company, has quite a sizeable property and hospitality portfolio, we would always look for opportunities that will synergise with our mother company’s portfolio.

But we are also a diversified investment company: in our portfolio we have construction, healthcare, aviation… now how do you grow this? You look for diversified opportunities and at the same time you try to look for opportunities that synergise with your existing portfolio.

Which is your priority, international rather than regional investments?

We are a Dubai-based company. This is our hometown and this is the region that we know. And we will always try to make an impact here. At the same time, there are also opportunities abroad. So we are also looking at international expansions and projects.

What regions are you looking at?

For us, regions are generally classified as Europe, Far East and the Mena region. We have assets in the UAE and we started investments in the United States. We’re trying to see if we can drive or expand to other regions if possible. Europe, Far East or Africa, it’s not yet clear.

Almost everyone’s looking to the emerging markets in the East. Are you adopting the same strategy?

We have not done anything in Asia yet. I believe China and India are the two fastest-growing major economies of the world. They are still emerging markets but have proved that they can create their own economy. I do see a definite opportunity but we need to be careful when to enter.

 

 

PROFILE: Jbran Rahal, Managing Director, Zabeel Capital

 
Prior to his current position, Rahal was Zabeel Investments’ chief financial officer where he oversaw all finance-related matters, as well as the smooth running of internal control systems, to ensure Zabeel Investments adhered to a strict corporate governance policy.


Rahal also heads the investments activities of Zabeel Investments and provides advice and counsel to the executive chairman in matters of investments and opportunities for strategic expansion.

He has 12 years of finance experience and holds a bachelors’ degree in finance from the Faculty of Economics of the Syrian University in Damascus. Having gained his CPA (certified public accountant) qualification in the United States, Rahal is an affiliate member with the American Institute of Chartered Public Accountants (AICPA) and is a member of the Institute of Certified Internal Auditors (ICIA).

Rahal earlier worked with Arthur Andersen, Middle East and Tecom Investments.
 
 

The investments

 
Zabeel has direct investments in:


  - Abraaj Capital

  - Arzaq Holding

  - Asteco Development Management

  - Asteco Property Management

  - Capital Club Limited

  - Depa United Group

  - Emaar Industries and Investments

  - Empire Aviation Group

  - Madaares (National Bonds)

  - The Light Group

  - Tiara Hotels & Resorts
 
  - Zed Communications


Zabeel has equity stakes in:


  - Advanced Industries Group

  - European Aeronautic Defence and Space Company (EADS)

  - Sony Corporation

  - ZSML (Joint venture with Sembol Construction Company)
 
 
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