Arcapita is a private-equity firm headquartered in Bahrain with offices in Atlanta and London. Like a traditional private-equity firm, Arcapita takes controlling equity positions in companies and ventures. Unlike one, it targets a unique investor base. Arcapita, a leader in Islamic finance, structures and offers Sharia-compliant investments (investments that adhere to Islamic principles concerning social and financial activities) to affluent Muslim investors in the Middle East (see BusinessWeek.com, 10/26/06, "Islamic Finance Comes of Age").
As an associate in the Atlanta office of the real estate investments group at Arcapita, I spend my days learning about and analyzing potential real estate investment ideas, managing investment processes, and helping to oversee existing investments. After graduating from the University of North Carolina's Kenan-Flagler Business School in May, 2005, I went to work in New York as an analyst for Bank of America's (BAC) Investment Banking division in the Global Industries Advisory group (where I had interned the summer between my junior and senior years of college).
Toward the end of my first year, I began looking for private-equity opportunities in the South, where I would be closer to my family in North Carolina and would be able to enjoy a better work-life balance (see BusinessWeek.com, 10/10/06, "Bonus Babies: Digging Into the Lifestyle"). I got lucky when I found Arcapita, which was looking to hire an associate for its U.S. real estate team. I immediately clicked with the other members of the team, who had very similar backgrounds (a couple having gone to Kenan-Flagler as well), and accepted an offer after a few rounds of interviews.
Arcapita is a great firm for building a career. It offers many of the benefits of a large and established firm while having many of the positive factors of a smaller, entrepreneurial firm with a collegial culture. Now, four months into my job, I still learn something new every day about real estate, finance, law, private equity, and Islamic finance.
8:00 a.m. — It's Monday morning, and I want to get into the office a little early to kick off the week. I leave my condo building in midtown Atlanta to make the three-block trek to my office. One of my co-workers reminds me that I'm one of the few (lucky) people in Atlanta who walks to work. Atlanta traffic can make commuting by car pretty painful.
8:15 a.m. — I sit down at my desk with a cup of coffee and begin to comb over various financial and industry news sources. Staying informed of trends in real estate, business, capital markets, and both regional and global economies is important, as they collectively affect our investment decisions.
9:00 a.m. — Time to have our Monday morning conference call with the other real estate teams in Bahrain and London. I take a seat in my executive director's office with the other four members of the U.S. team. I listen and take notes as each office discusses projects that are in the closing process or still being analyzed. Today, the London team is giving its views on pursuing investments in Eastern Europe, and later the global head of real estate discusses the status of our newly created Singapore office.
9:45 a.m. — After the conference call is over, the five of us on the U.S. team remain in the office to have a more thorough discussion of our team's projects and where they are in the analysis and execution stages. We also discuss project ideas that were presented to us by potential partners over the past couple of weeks to get various perspectives on their attractiveness.
10:30 a.m. — I sit back down at my desk and review the notes I took during the morning's meetings. I also update our team's project-tracker—a database that allows us to keep track of relevant information on all of our projects and easily disseminate it for review.
10:45 a.m. — A broker e-mailed us a confidential information memorandum earlier this morning, following up on a call we had with him last week. A confidential information memorandum, or "CIM," is a detailed overview (both qualitative and quantitative) of an investment opportunity and can vary in length. This one is about 80 pages long. This project is for a new resort development on a Caribbean island, and I need to read up on the various details—market overview, economic assessment of the island, basic plan for construction and sales, timing of the project, and how much money is involved in the investment.
12:15 p.m. — After reading the qualitative portion of the CIM, I know a lot more about the particular Caribbean island and the development idea than I did a couple of hours ago. I still need to find more information on the local economy and government, but I'm hungry and ask a few co-workers if they want to grab lunch.
1:00 p.m. — After lunch, I log onto ESPN.com and catch up on the latest news in sports. I'm a little concerned by the planetary imbalance that could result from a Mets-Tigers World Series, but I push that out of my mind and get back to work.
1:10 p.m. — I pull out the printout of the model for the Caribbean project to get a basic idea of the financials. I look at the total project cost to determine the approximate equity contribution Arcapita will have to make, because I know the equity required is typically 20% to 30% of the total cost. In a basic sense, private-equity capital structures are analogous to mortgages.
The buyer of the company (house) puts in 20% equity (personal savings) and then borrows the remaining 80% from a bank. I then look at the amount and timing of cash inflows from selling off the various pieces of the resort. I build a "quick-and-dirty" cash-flow model in Excel to calculate the gross Internal Rate of Return ("IRR").
Seeing the gross IRR based on the partner's projections is a good sanity check for the attractiveness of the project. I know the gross IRR will get diluted by the terms of the cash distribution to the development partner (in a real estate venture, the development partner receives a greater percentage of cash distributions as the venture achieves certain IRR hurdles or goals—this is known as a "promote") and by taxes. So the gross IRR needs to be at least a certain level to result in an appealing net IRR to investors.
2:00 p.m. — I'm about to search for more sources on the economy and government of the Caribbean island, when my senior associate tells me he wants to call another potential partner of ours in 15 minutes. This is a follow-up call with another private-quity firm that invited us to join them in a "club" to bid on a large portfolio of residential assets in the Northeast.
3:15 p.m. — My director asks me to join him in a meeting with some representatives from our public-relations firm to discuss how to market our real estate team effectively.
4:15 p.m. — We receive a call about investing in the development of some industrial assets in the Midwest. The director, senior associate, and I get a brief download from the team organizing the development and will probably get more detailed information from them later (like a CIM).
4:30 p.m. — The three of us make another call to follow up on another resort development project in the Rockies in which we're contemplating investing. To determine if we're still interested in the project, we ask several questions including: Have the developers secured the land loan necessary to purchase the land? Can they extend the deadline for purchasing the land? Has anything changed in the regional market that might affect buyers' interests in this development?
5:15 p.m. — I decide to complete that search for additional information on the Caribbean island. It's a bit of an obscure island, so it takes a little while. I finally find a good International Monetary Fund report. It's pretty long, so I print it out and leave it on my keyboard to read tomorrow morning.
6:15 p.m. — After dropping my things down at home and changing, I head to the gym in my condo building to get in a workout.
8:20 p.m. — I talk on the phone and then cook dinner at home. My roommate is gone Monday through Thursday for his consulting job, so I usually eat at home but occasionally grab dinner with a friend. I find a baseball game to put on in the background and read through the latest issue of The Economist as I eat. I try to read a few articles in The Economist every night. Being a part of an international firm with such diverse employees means that we're more likely to discuss international politics than Major League Baseball, so I need to stay up-to-date on current events around the world.
9:30 p.m. — After cleaning up, I practice the piano for a little while. I just started taking lessons and have them on Tuesday nights. I've wanted to learn how to play the piano for a few years now, and I decided to take advantage of the free time that my new job affords me. It's also nice to have a hobby to mix things up.
10:15 p.m. — I watch a little TV and then head to bed.
Knowing the World
A contact at Bank of America helped me get my foot in the door at Arcapita. What got the rest of my body through the door were the education, training, and work ethic that Bank of America helped me develop. Therefore, I credit both my investment-banking experience and my UNC business degree with helping me land my job with Arcapita.
Given the opportunity to go through undergrad again I would still major in business because I really enjoy finance. What makes my job great is that I can continue to build on my finance education that started at UNC and was greatly enhanced at Bank of America. I would take more non-business courses focused on different geographies and cultures around the world, though.
I also wish I had taken advantage of one of the study-abroad opportunities offered by UNC's business school to learn more about international business. The international nature of Arcapita and the resulting opportunity I have to travel around the world are great features of my job, and I want to make sure I make the most of them.
If the Shoe Fits
A last piece of advice to undergrads: It's not enough to know what field you want to go into, you also need to know what type of work-life balance and corporate culture you want (because they can vary drastically within the same field). You should ask yourself, among many other things: "How many hours a week do I want to work? Do I want to work in a more formal environment or in a more relaxed environment? Do I want to work with people who are office-only acquaintances or with people that I can hang out with outside of work?"
Though I decided to leave Bank of America to seek a better work-life balance, I definitely don't regret working there, and leaving was a difficult decision to make because of the great friends I made. The people took a genuine interest in helping me develop as both an analyst and a person, and they underscored for me the importance of collegiality within a firm.
Cultural fit can make or break a job experience, and consequently was in the forefront of my decision to accept my offer from Arcapita. Now, every time one of my co-workers takes the time to teach me something new about real estate or to talk about the upcoming UNC basketball season, I'm reminded of the value of cultural fit.