Dubai's High-Profile Money Man
There's little doubt Dubai is taking the lead as the Arab world's center of high finance. And when you go there—to the Dubai International Financial Center which aspires to be the Wall Street of Arabia—Sameer Al Ansari is one of the key people to see.
The chairman and chief executive of Dubai International Capital (DIC), Al Ansari presides over more than $6 billion in funds. He mainly manages money for Dubai's ruler, Sheikh Mohammed bin Rashid Al Maktoum, but also is trying to attract investment from other institutions, including Gulf governments and families (see BusinessWeek.com, 3/20/07, "As Arab Market Matures, Dubai Cashes In").
A measured but straight-talking, 44-year-old, Dubai native, Al Ansari was chief financial officer of the Sheikh's executive office until the fall of 2004, when he set up Dubai International Capital. The idea was to build an organization to invest some of the Sheikh's profits from his hotels and other businesses outside of Dubai. "We thought it was prudent to take some of the excess cash flow and diversify beyond Dubai real estate," Al Ansari says.
Joining the Club
There are now several such government- or royal family-linked funds operating in the Gulf region, and they're starting to throw their weight around. Investment vehicles linked to the rulers or governments of Abu Dhabi, Qatar, and Dubai already have made an estimated $8 billion to $10 billion in private equity investments, Al Ansari estimates. While they may be in their early stages, they have the resources to hire good people and their contacts in the region are nonpareil.
Few of Al Ansari's investments to date have been directly in Western companies. His preference is for private equity deals—albeit with a conservative approach. One of his first moves was to place about $400 million with firms such as Carlyle Group and Kohlberg Kravis Roberts. Investing in the funds of these seasoned pros was "the quickest and most efficient way to be part of the club," Al Ansari said in an interview with BusinessWeek.com.
Al Ansari has not been content to be just a passive investor. He has already made three substantial direct investments in British companies: $1.6 billion in theme park giant Tussauds Group, $1.2 billion in industrial manufacturer Doncasters Group, and $1.23 billion in hotel chain Travelodge. He recently sold most of his stake in Tussauds to the Blackstone Group, the U.S. private equity giant for about $2 billion, retaining a 20% share (see BusinessWeek.com, 3/6/07, "No Mystery in Blackstone's Wax Museum").
Game Winning Strategy
Al Ansari acquired all three of these companies from other private equity firms, and he says this approach is no accident. He wants someone else to do the heavy lifting of finding new leadership for a company. "We don't have the resources to manage companies or spend months finding replacement management teams," he says.
Instead, his strategy is to retain existing management and take advantage of private equity rivals' need to divest the companies in their portfolios to pay back investors. "By doing it with a less risky strategy we know we are not going to be hitting home runs," he says. But he still figures that these companies can provide the 15% to 20% annual returns he is targeting.
How is Al Ansari doing? He has made only one exit so far, from Tussauds, and that was a pretty good deal. He has his cash back, grew the valuation by more than 50%, and still retains a 20% stake. The combination of Tussauds with Blackstone's substantial other theme park assets should produce economies of scale and market impact.
Sidelined in Football Game
Al Ansari also is mulling taking big stakes in some of the world's biggest companies. In October, 2004, Dubai Holding, the ruler's umbrella company, bought $1 billion worth of Daimler Chrysler (DCX) shares. DIC now manages the stake. Al Ansari says that ruler has made about 60% on his investment, which has been pared back.
Following that success, Al Ansari now says he is targeting other top companies, in part through a new $1 billion vehicle called the Global Strategic Equities Fund. Among other companies, Al Ansari says he is talking to EADS (European Aeronautic Defence and Space Company) about a possible investment. He has also set up a $500 million Middle East and North Africa fund with HSBC (HBC).
Still, the deal that Al Ansari may have wanted most eluded him. Earlier this year he came close to acquiring the Liverpool Football Club. Educated in Britain, Al Ansari is a lifelong Liverpool fan, but he dropped out when the price got too high. Eventually U.S. investors Tom Hicks and George Gillett Jr. landed the club for $430 million. "You have to be somewhat dispassionate about these things," says Al Ansari. Spoken like a dealmaker who knows he's in for the long haul.
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