Where Dubai International Capital (DIC) ends, Jordan Dubai Capital (JD Capital) begins. Announced early in the summer of 2005, JD Capital immediately raised eyebrows with its whopping $300 million capital, making it the second largest company in Jordan after the Arab Bank.

A little background is in order here. DIC, the largest investor in JD Capital, is a subsidiary of Dubai Holding, the massive conglomerate behind large-scale investments such as Dubai Media, Internet, Healthcare and Knowledge Cities; the elite Jumeirah hospitality and leisure brand; the unprecedented Dubailand fantasy entertainment world; and many other strategically positioned investments. There isn't a sector in the burgeoning emirate in which Dubai Holding is not involved.

DIC has made several high-profile investments lately, including the purchase of a $1 billion stake in automaker DaimlerChrysler, making it the third largest shareholder. In addition, the company acquired the Tussauds Group (known for its famous Madame Tussauds wax museums) for $1.4 billion, and invested $150 million in Ishraq, a company which will own and operate 22 Holiday Inn Express budget hotels in the region.

Now, JD Capital will be the footprint of Dubai Holding in Jordan, with an investment of over $80 million by DIC, as well as additional investments by the Social Security Corporation, the Arab Bank, Saudi Oger, and other banks, companies and individuals.

Samir Z. Al-Rifai, former minister of the Royal Hashemite Court and CEO of Jordan Dubai Capital, presented the company in an exclusive first interview with Jordan Business. "The most important thing we hope to bring to the table, through our affiliation with Dubai International Capital and Dubai Holding, is their vast experience, their network, and their expertise in Dubai, which we aim to utilize fully in Jordan," said Mr. Al-Rifai. "Add to that our knowledge of the Jordanian market and its management, and the capital that we bring as the company with the second largest capital in Jordan after the Arab Bank. These three components hopefully will give us a niche that others in Jordan do not enjoy."

In the months since its inception, JD Capital has already announced an investment of $20 million in Saraya Jordan, which is developing a landmark leisure and tourism city on the Aqaba coastline. When asked to confirm rumors that JD Capital is planning to acquire a significant stake in Jordinvest, Mr. Al-Rifai did not elaborate.

However, he did say that February would bring an announcement of a new deal  with "a prominent Jordanian company."

Essentially, DIC's new investment vehicle will target a growing number of opportunities in the Jordanian economy. The overall strategy of JD Capital is supported by three main investment areas: privatization, development capital, and buy-outs. Company representatives said that, for now, investments are being considered on a case-by-case basis while the company polishes and fine tunes its focus areas.

Privatization is clearly a high priority for JD Capital's investments at this point, given an aggressive government stance towards offloading its shares in various corporations which have burdened the budget for years. Mr. Al-Rifai feels that, while the correct mentality is now in place, the challenge lies transforming government from an employer of a whopping 30% of the workforce to more acceptable levels of 5-7%.

"Change has to take place in a way that does not hurt people, is beneficial to shareholders, and helps employees by bringing in revenues," he said. This mix requires a lot of public-private coordination, and this is what Mr. Al-Rifai sees as his strength.

JD Capital is trying to position itself as the only Jordanian company with the monetary and technical abilities to purchase and manage remaining public corporations in the way that has been envisioned by the government. In terms of development capital, it will be able to provide significant seed money for nascent sectors and large-scale industries that have previously been impossible to achieve in Jordan.

With its buy-out strategy, the company is clear about its objectives. JD Capital does not want to be another investment fund that is investing money across different sectors to see what will work. It will aim instead for a controlling stake in practically each investment it makes, looking for untapped potential in target firms that can be realized with its involvement. Passive investments are not a company objective; JD Capital wants to use and leverage the expertise available to it in order to develop and grow innovative companies.

Mr. Al-Rifai expressed his confidence in Dubai Holding's choice of the Jordanian market. "There is a vision in Jordan. His Majesty the King wants to move forward very quickly, and the government understands what is to be done," he said. "Add to this the liquidity resulting from the boom in the Gulf and the stability that Jordan offers. I think it's a very shrewd business decision to invest here."

Alongside its board of directors, JD Capital has assembled an advisory committee that consists of several prominent Jordanian businessmen. This distinctive group will assist the board of directors with its investment decisions. The advisors who represent over 150 years of business experience between them meet on a regular basis to discuss economic developments in general, exchange ideas about new opportunities, and share their intimate knowledge of what makes the Jordanian economy tick.

The idea, according to a company analyst, is to tap into specialized resources that can provide expert input on the company's investment decisions. "We have a great knowledge-base within the company, within Dubai Holding, and within our investors, so we hope our advisory committee will help us target new opportunities and be a sounding board for our very active deal flow," said Mr. Al-Rifai. "We want as much consensus as possible that we are doing the right thing with our shareholders' money."

Meanwhile, the investment management structure of JD Capital does not follow the typical division of labor between specializations. Two vice presidents, well-versed in corporate finance and investment management and to be announced soon, will head up the company's portfolio of projects, with an investment team consisting of fewer than 10 people divided between projects. Each analyst will tackle different roles for different projects, rather than being dedicated to, say, financials or strategy.

As 2006 kicks off with an economy that showed signs of correction and realignment towards value, Mr. Al-Rifai expressed an upbeat tone regarding the economy in 2006 but  stressed that JD Capital was in Jordan for the long term and was nonetheless "bullish" for the year ahead and beyond.

In spite of Mr. Al-Rifai's long years of experience in the public sector, and his involvement in strategic issues surrounding Jordan, there have been some skeptics. A few analysts and observers have questioned whether the Harvard-Cambridge-educated veteran of the Royal Hashemite Court has the experience and know-how to lead such a massive corporation. He has not had any significant experience in corporate management, although he has a realistic approach to his newfound responsibilities.

"It's a point well taken, and something that I thought about when I was approached," he confessed, "but with the new synergies taking place, there is no public or private sector argument anymore, but rather a partnership to work together. We have many businessmen from the private sector who have moved to the public sector and have done superbly, and vice versa." Calm, refined, and friendly, he added that his experience in the public sector and his knowledge of how it functions would be of great benefit to JD Capital.

To his credit, Mr. Al-Rifai headed up an aggressive administrative and financial restructuring program of the Royal Court over five years ago. He also served as the chairman of the Royal Committee for Investment Promotion, and his role as minister of the Royal Court required extensive liaison between the government and the private sector.

Mr. Al-Rifai's approach to leading his team is participatory, flexible and motivational at its core, according to a senior analyst at JD Capital. "He really believes in instilling ambition in every person on the team and getting the best out of people," he said. "And his down-to-earth nature brings a very positive vibe into the room."

JD Capital's young age means it is still too early to evaluate its achievements. Although it is keeping much of its strategy close to its chest, its investment philosophy paints a picture of a company that differs from the mix of developers, funds, and overseas investors that we have seen lately. More importantly, it does have full access to the resources, assets, and expertise of DIC, including its investment and managerial staff. JD Capital is promising a lot, and the expectations for it to deliver are very high given the size of its involvement in the Jordanian economy. Will it become the Jordanian incarnation of Dubai Holding, as Samir Al-Rifai wants it to be? Looking in from the outside, such a scenario is quite likely.

© Jordan Business 2006

 

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