Money master offers some private advice

Belhoul, who was a 22-yearold green recruit fresh from Boston University at the time, led the transformation of the group from a holding company with interests predominantly in the healthcare sector into a "regional asset management company" by 2001.

"Family businesses have to evolve. Today, success is all about bringing the best talent to the table. You have to create an environment that makes top practitioners in their spheres feel the business is managed in a way that is conducive to their growth along with that of the business," he says.

With this view, he created Ithmar Capital in 2002 as a regional private equity firm focused on investment activities within the GCC or international companies with substantial growth potential in the GCC . The size of its Fund I portfolio was $70 million (Dh257m).

"Private equity is one of the fastest growing industries in the GCC . It is growing both in terms of investment opportunities and investor appetite," he says.

Ithmar announced earlier this week that it will invest Dh1 billion in the healthcare sector in the next three years as part of its Fund II portfolio. "Our investment strategy is to target expansion capital and buyout opportunities in high growth sectors that have a GCC focus." Ithmar , which has made $500 million (Dh1.8bn) investments in the oil and gas, construction, healthcare and education sectors with its previous two funds, will more than double the size of investments with its $1bn (Dh3.75bn) Fund III portfolio to be launched next year.

"In some parts of the world, private equity has too much money pursuing too few opportunities. Here in the Gulf, it is the other way around." In September, Ithmar successfully completed the acquisition of the entire new share issue of Kuwait's Mushrif Trading & Contracting Company (MTCC) , at a cost of around $97m (Dh356m).

Defining traits
The 31 year old, who lists "perseverance", "ambition" and "value-drive" as his most defining traits, believes there is value in selling your company to a private equity firm.

"The involvement of an institutional partner brings better corporate governance and the reorganisation into an institutional form that will improve the business and its value. It also assists companies in geographical growth across the GCC .

"Of course, the other value of a private equity concern is its ability to help owners exit their business and realise more value; either through a trade sale or a public floatation." The firm initially focused on the healthcare and education sectors for its investments. But, it is now looking to diversify its portfolio.

"The way our fund works is that we draw down funds over an investment period with not more than 35 per cent of the investor's committed capital to be invested in a single year, which plays an important role from a 'year of investment' diversification.

"We invested in non-specific sectors besides healthcare and education in the second fund, including construction and oil and gas. The British private equity giant 3i was our strategic partner in the second fund. We are looking at telecoms as another target sector for our third fund." Going forward, regional family companies, multinational asset sales and expatriate-owned businesses remain Ithmar 's conventional candidates for private equity investment. "The aim is to deliver a minimum IRR [internal rate of return] the interest rate at which a certain amount of capital today would have to be invested in order to grow to a specific value at a time in the future of 25 per cent to investors." Although with regional growth rates so strong, Belhoul thinks Ithmar can do better than that.

Belhoul, who considers the creation of Ithmar as one of his greatest successes, goes on to present the case for private equity investment within the GCC . "The GCC countries now offer the opportunity of high potential returns. The opportunities within the GCC lie in four key areas family businesses, international companies, privatisation projects and expatriate-owned businesses." He stresses, however, that Ithmar focuses on the highest potential areas of family businesses and international companies.

His leadership flair is evident as he talks of the need for family businesses in the region to evolve. "Evolution is a critical component of growth. But evolution does not always have to mean change. It implies you retain what is good and you develop what is not in the best longterm interest of the business.