← Value Investing with Legends
Value Investing with Legends
Samer Sarraf - Investing in the GCC: Private Equity Discipline in Public Markets
01:16:05
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- [00:02]
A
Welcome to a new edition of the Value Investing with Legends podcast. My name is Stano Santos and I'm the Robert Hellbron professor of Asset Management and Finance at Columbia Business School and the faculty Director at the Helbron Center. Michael Mabusan is missing in action today, but as usual, he will be back for future episodes. So this is our first podcast of 2026, and the hellbringing year is in full swing. I'm in the middle of my value investing teaching. We just had a very successful SEMA conference and it was fun to see many of you there. And in January, I went with the students to the United Arab Emirates, to Dubai and Abu Dhabi to visit with the asset management community there, the sovereign wealth funds, investment banks and so on. And it was wonderful to get to know that very dynamic region better. It was a fascinating trip. The students were the usual grade and I wanted to bring to the podcast some of the things that we learned during that trip. And I cannot think of anyone better than my guest today to do so. Now, before I introduce him, just to reiterate something that I've said many times before in this podcast, that one of the best things about my job is the opportunity to meet amazing investors. Some very famous, others a little bit less so, though they all deserve to be better known. And one of the things that I learned over the years is that terrific investors are to be found everywhere, across asset classes, markets and geographies. And getting to know these investors gets even better when those investors happen to be Columbia Business School's alums. My guest today is not only a terrific investor, he was a wonderful host to us when we visited him in Dubai. And on top of that, he's an alum. Samir Saraf. Welcome to the Value Investing with Legends podcast.
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B
Thank you Daniel. It's really a pleasure to be here with you. It's an honor to be a part of this podcast as I mentioned to you before. So I'm really excited about it. Thank you for having me.
- [02:00]
A
The pleasure is all ours. So Samer is a founding partner and Senior Executive officer and Chief Operating Officer at Anwal Capital Partners based in Dubai. Prior to co founding Anwal Capital Partners, Samer was a partner and UA country head at and well Alkalis Dubai office. He joined that firm in 2008. Prior to that, Samer was a senior associate at Lehman Brothers based in its London office as part of the investment banking Natural Resources Group M and a team. Earlier in his career at Lehman Summer was part of its global real estate group where he led teams in the origination and analysis of commercial real estate loans, as well as the structuring of commercial backed securities, structuring over US$2 billion of CMBS. And we're going to talk about that and that experiences at Lehman. Prior to joining Lehman, Samer had four years of experience in construction management. So we're going to ask about that experience too. He holds an MBA from Columbia Business School, a degree in civil engineering from McGill University, majoring in structural engineering. So that's the connection to construction. So it's going to be a very broad conversation about his career, investments in the Middle east and the many things that we can expect from that great region. So Samer, welcome again to the podcast and thank you indeed for hosting us in Dubai.
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B
Thank you.
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A
So Samer, we always start these interviews by asking our guests about their background, whether they grow up, family background and so on. So why don't you tell us a bit about yourself, Sam?
- [03:35]
B
So I mean my background, I grew up in Jordan. I was actually born in Germany. I grew up in Jordan most of my life before going off for boarding school. And I'll talk about it in a bit. I'm originally Palestinian. My dad is an obstetrician, gynecologist. My mother currently is a Roman representative at a hotel. And I have one brother who's a orthopedic surgeon working out of London. My dad came from kind of modest background, really humble background. He had six siblings and a father who was basically running a manager of a post office. And unfortunately he got sick at a very young age in his 30s and became paralyzed and he was no longer able to work. And so the dynamics of that family had changed significantly, by which somebody who was basically with meat was something, was a luxury to eat meat once a year or twice a year. The eldest child, the sister, graduated from school at 18 and started teaching and at school to be able to feed the family. So he's coming from that kind of a background and really that background of education and really focusing on education, entrepreneurship and the perseverance is something that my father kind of really instilled in me and really showed me how it's done. The way he led his life, basically from nothing. And same with some of my uncles who basically one of them ended up teaching the entire family and sending them all to university and not just to any university, doesn't matter the cost. Actually recently my dad told me this story where he wanted to go to university in Egypt because that was cheaper for the family, couldn't afford to go for him to go out to Europe. But his older brother said that's not going to happen. You're going to Germany to become a doctor and you're not going to go be a doctor for me in a university in Egypt. And so there is that value in education that is. I mean, you see quite a bit here in this region where it becomes very important. And so this is something that God instilled in me. My father went to Jordan because he wanted to come back to some of the Arab countries, was not technically not allowed to work as a doctor.
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A
He was not allowed to work as a doctor in Jordan.
- [05:32]
B
No, he wasn't. Because he had a Palestinian document. He did not have a nationality. You had to be a Jordanian to be able to work and certified by the Jordanian boards, which he wasn't. By chance. My father was the only person in Jordan who had an ultrasound at the time. This was in 1979, 1980. And so at that time the Queen Noor was pregnant with Prince Hamza of Jordan and they needed somebody to come and check on the child and looked around who has an ultrasound and it just happened to be that my dad is the only person in the country who has an ultrasound.
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A
That's an amazing story, Samer.
- [06:04]
B
So this is where preparation kind of opportunities and timing was spot on by chance. And so His Majesty King Hussain Abdin, kind of at the end of the checkup asked my dad, I mean, is there something I can do for you? And my dad would obviously, yes, a passport would be nice. Thank you very much. We got that passport from it. I mean there was some complications afterwards, but eventually we got it. And this eventually led as well in terms of obviously he was still had modest background, modest means, and yet some other doctors told him to join them and invest in a hospital, a specialized maternity hospital. Him and basically four other partners. He was able to get backing from my uncle in terms of the caps that was needed because he didn't have it and really took all the risk to go in. And that's the entrepreneurship side of the family where he bet his talent and his skill and his knowledge to be able to go and put a significant amount of capital that he did not even have himself to really try to build something and eventually build a life for his family. You know, we were lucky that after that we were came, you know, had a comfortable background, sorry upbringing and really shaped his work ethic, his commitment, his perseverance and entrepreneurship. Really kind of had a very deep impact on me in terms of how we approached me and my brother and how we approached life going forward, especially as we grew up and moved and started becoming, taking our own paths and our careers. And something that he was very keen on was never to push us into certain areas, certain paths. While my brother was very clear that he was going to be a doctor from the age of 4 years old, my father was actually trying to push him away from going into medicine until he was about to go to university. And the reason was he's like, look, you gotta be passionate about your work. If you're not passionate, you're never gonna do well. You gotta be miserable. And especially in a field like medicine. And the same for me. I mean, I know we might talk about this a bit later on, but I've always wanted to go into finance, which was a bit odd because I'm, you know, coming from a typical Arab family where you are. You are either engineers or doctors, and there's nothing in between. And so coming in saying, I want to be in the finance, my father was like, you know, what, is this why you want to be in finance? Where is this coming from? And so before eventually going to doing my undergrad, me and him, we had a discussion and was like, look, why don't you do an engineering degree, get some professional background, get that analytical skills. You can always do your MBA and do your master's in finance and you go into the finance world that you want, so at least just start with that. And I enjoyed engineering, so I wasn't really. It didn't take much for me to be convinced of actually doing that, so.
- [08:38]
A
But that's amazing because you're telling me that you went into engineering just to make your father happy, that he wanted to have a doctor and an engineer as sons. I can see this is a universal thing. You know, we're always trying to make and please our parents. I think it's true.
- [08:54]
B
But actually, also the thing is, I did actually enjoy civil engineering. And I, even at the age of nine, I did travel to see one of my uncles, funnily enough, in Abu Dhabi, who had a contracting company. And I was going all over the, you know, jumping on the cranes and driving the bulldozers and getting a taste of civil engineering. And like I said, my half of my family, half of my uncles are engineers anyway, so I really have that exposure of being what it means to be a contractor. I did have that passion, which was nice. So it allowed me to actually enjoy it. Because engineering is the same thing. I mean, like medicine, it's not exactly a tough. It's a tough field. It's not something easy to go through in university and undergrad. There are easier paths to take in some engineering. But it was something that was valuable for me in many, many ways, plus the fact that I actually did work in IT and enjoyed that experience significantly.
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A
So tell us then a little bit about your education. So you went to McGill to study engineering and then what do you do right after that?
- [09:47]
B
After McGill, we weren't really well prepared at McGill for going out into the real world. We weren't really well prepared to tackle CVs and interviews and how to approach the job market in an effective manner. I actually struggled with it. And then I still. I had an opportunity to go to Paris. It's actually family. My other uncle, so was to say, he's like, I would love you to come work for me. He had an architectural firm in Paris. It was one of the top three when it comes to hospital design. And so even though I barely spoke French, I figured this is a very interesting challenge for me to take on. And so I agreed and I went for it. Trying to learn French and working in architecture. After a year and a half or so, the opportunity came for me. It was to move to Guigue Batimon. So finally kind of moving away from a family, helping me out in terms of businesses, but rather actually getting on a proper job on my own. A little bit of a push, obviously, but still, they're one of the largest contractors. It's a listed company under. There was actually a significant challenge as well. Not only am I going into construction management away from architecture, but. But also I don't have that safety net when it comes to the language safety net, which is at my uncle's firm. Doesn't matter. I couldn't speak French fully. It's fine. People had to figure out a way. I still have. I'm the nephew of the boss, so it was. It was easier, right? Working in a large corporate. That is no longer an option. And I had to really figure things out on my own. And I remember with the first week I was in, I was handled like there was a big atrium part of the project because it was a big five towers project in La Defense, commercial district of Paris. And I had to go to a subcontractors meeting. So I go into the subcontractors meeting meeting with around 15 subcontractors. All of them are not native French speakers. So they're speaking with an accent. And they were speaking using various kind of. Not necessarily just technical words, but slang words for technical terms. And I was Barely speaking French at that point in time. So you can imagine the struggle I had to go through and try to understanding what they're telling me and what am I supposed to do. And I literally had a notebook with me where I was writing what they were saying in Arabic so they don't understand the words I'm writing and what I'm saying. And really it was actually trying to putting the words I didn't understand that I was saying yes to because I had no idea what I was talking about. And I would go back to the office, take out the dictionary and try to figure out what did I just tell these guys to do. And with some of the people there to help me have with time, I was able to figure out, obviously, you know, it's a lot of back and forth with the subcontractors. But also the other aspect of it was I realized that I have to build the relationship with some of these guys to be able to them to allow me to do these mistakes and to learn from it. So really that interpersonal relationships with the guys, being able to talk to them in the same with their lives and with their level of discussion that they want to talk about and really become as friendly as I can so that they can help me out. Because without them I was going to drown very, very quickly. And so it was a very interesting time. And it was probably one of the most enjoyable experiences that I had doing that construction option work because I did that work in Paris. And then I got the chance as well to go with wig to a do a project in Tahiti for a year. And so obviously Tahiti, like everybody when they hear that, they're like, what Tahiti? What are you doing in the middle of the Pacific? Chilling out, surfing. But no, it was good work for a year.
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A
Was there some surfing?
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B
You see, that's the beauty of working with a French company and using French lifestyle, which is you've got two hour lunch breaks, right? So you get to go and do surfing for an hour or so, or learn surfing. In my case, keep going and take advantage of the beauty of Tahiti for a couple hours and mid afternoon.
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A
So you did this for how long? How long were you with this construction company?
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B
I was with them for three years.
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A
And how old were you when you were working? Mid 20s, late 20s or mid 20s?
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B
Mid 20s. So yeah, around 24, 25.
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A
And throughout the goal is still to end up somewhere in finance. So you're doing this. I'm sure you're doing it very well and you're learning A lot. But the goal is to actually end up somewhere in finance. So can you tell us a little bit about that transition in your professional career? How do you end up in finance after that?
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B
The goal was that that never changed. I've always, throughout my childhood, whether I got an exposure to the stock market on my own, when my father would let me dabble with it a little bit, or, and we were talking about this just earlier, the typical gifts of the family was always the Arab bank shares that we all got because that was the biggest bank in the stock market in Jordan. And the safe bet, basically everybody owns shares in the Arab bank or me kind of reading a lot of the finance books like the Barbarians at the Gate or Liars Poker and getting as excited about the world and getting into the fantasy of the world of investment banking. And so I was really very, very much focused on it. And I love the math that comes with it. I love the excitement about deal making. And so when I was in Tahiti, actually with we doing that, we did have a bit more time because of by the nature of it. And that was with the time when I started working and applying for business schools. I had already had with me the three years of work experience at least, or finishing the fourth. And so I had started my application process while I was there and dedicated my time in the evenings to just to work on applications, knowing that it is a bit more challenging being an engineer and telling from outside of the US that this is not tough. Especially, you know, my goal was to go to a top school. So, you know, whether it was, you know, Columbia, Chicago, Harvard or Wharton or Stanford and then I was the ones that I'm targeting bargaining. But I was really very much focused actually on Columbia, given the strength of IT in finance and the New York angle. And I applied to it as early decision. So I was very lucky because I, I mean, I remember this very, very clearly. I probably know the date of August 24th. I got my decision around October 20th or so. And the day before our. The project I was working on in Tahiti just got canceled because of a dispute between the contractor Buig and the government of Tahiti. That day before it, they told us, look, we don't know what's happening. Sit tight for another week and then we'll tell you what's going to happen. Whether you're going to go back to Paris or go to some other project somewhere around the world, we don't know where we're going to send you off to. Next morning I walk into the office I open my Hotmail time and I see the change of status from Colombia and I remember I was like shaking while I was opening that up. Reddit got the acceptance. I'm like, okay, I'm done. I get to relax now.
- [16:07]
A
I can tell you we arranged for the cancellation of that project in Tahiti so you could come to us. So what year was this? When did you come to CBS?
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B
This happened 2002. So I started CBS in 2003.
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A
Oh, wow. So this is when I arrived at Columbia Business School. That was my first year at Columbia Business School. Yeah. Because I was coming from the University of Chicago. I came. I was not involved at the time with value investing or the Hellbron Center. I was teaching the derivatives class and fixed income derivatives and stuff like that. So we arrived at Columbia the same year. So you had a good experience hopefully at cbs and it achieved the goal of facilitating that career change and switch that you were hoping for. So you get hired by Lehman directly from cbs?
- [16:57]
B
Yes, I was very lucky. I was managed to block in a bunch of interviews because it was a very tough time for recruiting. In 2003 I got internship with Lehman in London to the London office. I entered with them and then got the full time offer and then went straight to Lehman afterwards. And this was me and a few, several of my friends as well. A lot of us wanted to go to Lehman and I was very excited that I actually managed to get to Lehman. It was my top choice. And I was super excited about the opportunity to go and go into real estate finance. So something that I discovered while at Columbia, I didn't realize that that field actually existed, which was for me a great match between finance and engineering, civil engineering, kind of matching up both those worlds between real estate and finance.
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A
Yeah, this is one of the great things about cbs and it has gotten only better over the years. We have one of the best in my view, the best. But I'm sure many colleagues in the profession would disagree. Best real estate groups in the country. By far. A great resource. And why Lehman? Why do you want to go specifically to Lehman?
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B
I connected with the people there. I liked the culture that they had. That real estate program really kind of spoke to me and at that time was potentially going into either the M and A of real estate or even on the loan origination and the structuring. So CMBS was also a new thing that I never heard of it until I got to Columbia and so started exploring that and did some of the classes when it comes to fixed income and really that talked to me. And then the managing director at Lehman at the time was, you know, I'd spoken to him a few times who was head of the real estate department. And I'm like, you know, this is a great opportunity.
- [18:28]
A
And you connected.
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B
Yeah, I connected. And it was in London and I was, I mean, I wanted to stay in New York, but I was also happy to go to London. I was not going to be too picky about this. As long as I had a good offer, a good firm, that there was a good cultural fit for me. And it did.
- [18:42]
A
Tell us a little bit about what you did while at Lehman and tell us a little bit. You had a front row seat with one of the great financial collapses in history. So how did you leave that? How long were you at Lehman, by the way? Samer?
- [18:55]
B
Three years.
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A
Tell us a little bit about those three years. This is an interesting episode in your biography, the Lehman. And before we jump into your career at World Capital, I wanted to explore this a little bit.
- [19:07]
B
Yeah, certainly. I mean, I was in Lehman from 2005 to 2008. So between 2005 and 2007, I was with the real estate group. For me, that was a phenomenal experience, I believe for me. I was also very lucky that I actually landed that group specifically more than any other group outside of it. Despite the reasoning and which I'll talk about why I did the change afterwards to go into M and A. The reason why I say I was lucky is obviously the people there, but also One of the MDs that we had there, Peter Hansel, was somebody who was really gave you as much rope as you wanted to take and literally was able to do and would give you the full trust that you are. If he feels that you are able to do it, it would give you the trust to go ahead and do it. So I was second year associate or actually even from the first year, first year associate and he was letting me run a full CNBC transaction deal pretty much and even go out to meeting investors. And the second year I was negotiating with the rating agencies, I would go out to meet investors and talk to them and he would let me do it on my own. And so within a bank usually there is a relative amount of hierarchy that is built in. But within this group, he was really somebody who allowed that Metro torture to kind of kick in and allow us, me and my other, you know, my colleagues to actually, whoever, have that good, go ahead and just get it done. As long as you're doing the work, you're doing it right. That's all he cared about and he was happy to even reward us in terms of our compensation was significantly higher than outside and other groups within the firm. And so that was a phenomenal experience. Plus I also got to see the different elements within real estate, whether it was the loan origination component, whether it was the equity side as well, because we had some equity debt restructuring on real estate. See MBS structuring itself and how do you package these loans as well as a little bit on that. You have kind of worked a little bit with the M and A team and so really seeing the full spectrum of what an investment banker can do and what do they do and really understanding the different components and how they kind of fit in together to really give you a much more broader picture. As I later on, obviously I didn't dig deep into any of them besides the CMBS structuring, but it was still really a great opportunity to allow me to see some of these things and how they worked. But by coming up to close to 2007, I started realizing one thing which is being a CMBS structure was the skillset is not transferable. You're doing that, you're pretty much that's it that you're going to be doing. You cannot really do something else with it. And being an entrepreneur by nature, I wanted to have a skill set that would be able to transfer to do something else eventually. I was never going to be a long time banker. It was a stepping stone. When was a jump going to take place? I didn't know. I was happy to write it and go as far as I can, but it was always that stepping stone was going to be there. And so when I came to that realization, I'm like, okay, I need to move into M and A because that gives you a much wider skill set and that's something I can transfer to something else. And the initial thought was, you know, let me explore what's happening in the Middle East. I am from the region. I want to be closer to the family who are in Jordan. And so I wanted to see what's going on. We started hearing about, you know, Dubai and some of the stocks in Dubai, what they're doing. And so I'm like, okay, this is something that let me explore a bit more. I hesitated. I wasn't too comfortable. Dubai in 2007 or mid 2006 was still going through a massive boom, but it didn't feel real yet to me. But I was able to negotiate with the Middle east team that I would actually sit in London, work with the natural resources team because they do a lot of work within the Middle east and the Gulf region. Work with them on M and A, learn investment banking and get trained up with the group. And then after a year I'll move down to Dubai office and then work with the rest of the team. And so that transition was perfect for me. The thing is, after one year of working with the team there, I decided, I'm like, no, I don't want to move to Dubai. I'm very happy staying in London and working with the natural resources team. And then we started hearing about the rumbles that are starting to happen in the markets early 2008. Well, end of 2007, you had, you
- [23:05]
A
know, you were in the real estate group there, you were structuring cmbs. There are real estate cycles taking place everywhere, right in the UK itself, in Ireland, Spain, in the United States, in Dubai. How aware were you of kind of the risks that were building in this space and in the financial system role and in Lehman in particular?
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B
I don't think we realized what was happening inside of Lehman. The real estate group was a money making machine. I mean, we were turning over each doll nine or ten times in a year and that's how profitable the group was. But what we started seeing is, we noticed is when people were bidding on the bonds when we were going out to market was very, very tight spreads. And sometimes we're just, we couldn't understand how did that make any sense? I remember Citi c were bidding 13 bips over Libor for the super senior triple H tranches. We're like, okay, it's a super senior tranche. I give it, I understand, but it can't justify that small of a spread. Obviously they were levering the hell out of it and that's how they were making some money. And so at the end of the day for us, it's like, look, they want to buy it. I'm not going to tell them, no, you can't buy it at 13 basis point. He wants to buy a 13. Great, I'm making more money as a Lehman banker. We were happy to supply the product as long as they wanted it, but it just didn't make sense that the bidding that was coming in was super, super tight and it was just getting tighter and tighter. That's where we would question it. We would just question why this is happening. We didn't realize what was really underlying this and what the implications was going after. You know, it's going to happen. Afterwards. We started sensing it towards end of 2007, when I was already with the Natural Resources Group at that point in time. But I was still catching up with my buddies from the real estate group and they were telling me, look, we're seeing spreads widen. We're not able to sell the bonds completely. We have to convert it in a slowly slowdown after coffee, after coffee. Then basically the loans that they had on their books, they had to convert them to bonds just to minimize the impact from a risk rating on the business, hoping that eventually they'll be able to sell them. And so this is when things were starting to deteriorate within the real estate group. Obviously this was still not as bad as what was happening in the ABS Group. So the ABS Group asset BAS Securities Group, they were the ones who were dealing with the subprime mortgages because the dynamics of mortgages is very different from the big loans, the jumbo loans that we were dealing with on the commercial side. So the residential was more with ABS Group and that was the different dynamics and that was probably accelerating in terms of the default risk and the default works taking place and all the issues that we've eventually all of us heard about and lived through, we heard about these, but we didn't see what the impact was going to be until it was kind of a rude awakening that happened September.
- [25:47]
A
Yeah. So we're fast approaching the 20 year anniversary of these in a couple of years. And it's just remarkable the enormity of what happened. And even though you could go back and read the newspapers in 2006 and 2007, there are plenty of articles talking about kind of dynamics that were taking place. I think the enormity of what went on and the crisis was a surprise to everyone. I mean it's just even to that famous line by Chairman Bernanke who was a brilliant chairman of the Federal Reserve, but he himself was surprised when he was told of the size of the supreme market that that was going to have such a large effect on U.S. financial markets. I think these, how risks were distributed across different markets made for a catastrophic financial correction. So Lehman, I guess when do you move then? When do you make the jump to, am I pronouncing it correctly?
- [26:46]
B
Amwan AL KHALID yeah, it was in the early 2008 that the first layoff started taking off, taking place. And I wasn't worried about. Getting laid off first in the bank is probably a blessing because then you still have a time to find a new job. Getting laid off at the last is your detriment. And that's what I Was getting worried about a close friend of mine and who is my partner now, Fadi Arbit was in London at the time. And I'm like, you know what's happening in Dubai and the region, Just want to check it out, what's going on? And he was already with Amwan Khalif, the private equity fund. And then the next day he called me up and he's like, look, the founding partner and the chairman of the business is with me in London. Come and see him Friday, 5:00 o'clock or 6:00pm I'm like, I'm a Lehman M and a banker working on the largest transaction between Xstrata and cbrd. How in the world am I going to leave my office on Friday at 5pm? This is just not possible. He's like, figure it out, man. If you want to come, just figure it out. I was lucky that my senior VP at the time was somebody who was a good guy. And I told him, I have something to do. He's like, go ahead, no problem. If we need you, we'll call you. And I met with them and they eventually, you know, came down to Dubai, met the team, came with Riyadh, met the full team there because the base of the fund was Zen Riyadh. And they made me an offer and I thought it was a good time to make that risk and jump into the other side of moving to more on the buy side and then be in the private equity world. Dubai was still booming in Saudi was too, and there was a lot of opportunities. And a bunch of private equity funds have already sprung up during that year in the region, focusing on the markets, the regional markets, and they were still very ripe in the sense of a lot of family businesses. They all want to try to monetize some of those businesses. They all want to kind of find an exit a little bit for them. And so the concept of real private equity made a lot of sense. And it was always the, you know, obviously for, for me, who was a banker before, it was always the key thing that you're kind of looking forward to go to was from a bank, was moved to a private equity go to the KKRS and the Blackstones. And this opportunity came with a local firm, which I thought was worth the risk. And it was a good time to make that jump.
- [28:44]
A
So you moved to Riyadh or to Dubai?
- [28:46]
B
I moved to Dubai. That was my only thing. I was not ready to go to Saudi, to Riyadh. My partner Fadi did that. He lived there for 15 years. It's not an easy one. There is a lot of benefits from doing that. For me. I was not ready for it and I was more comfortable with Dubai.
- [29:02]
A
I remember I went to Dubai, I think it was in 2012, 2013, to teach a course. I remember the school sent me there and it was wonderful. I mean, you could see the entire thing coming out of the crisis already because the collapse of the real estate market in Dubai is one of the great collapses too of that period, perhaps the most underreported one, because obviously the focus is in the United States and perhaps some European markets that saw a big collapse too. But the one in Dubai was really remarkable too. But you could see already kind of the uptake taking place. It was an exciting time to be there and the changes that were already taking place. So you go into what does Amwal mean, by the way?
- [29:48]
B
So Amwal is capital, Al Khalij is Gulf. And now our name is Amwal Capital Partners. So technically it's Capital Capital Partners. The reason why we've kept we used Amoul because we wanted to maintain a bit of that touch with the legacy of Amwal Khalid, given what we've done. And we had a very good reputation that we want to maintain linkage. We're probably slowly kind of moving towards our naming becoming ACP being the initials as opposed to Amwell Capital Partners.
- [30:13]
A
So then let's jump then a little bit into Amwell Capital Partners. And you are spending a few years actually with Amwell Al Khalis doing private equity. I'm sure you learn a lot about how to approach investments, valuation, developing businesses and so on and so forth. I'm sure it was a very formative experience and I'm sure you had a wonderful career there. But just simply to start getting to know your current vehicle, I always ask my guests this question, which is why is that you wanted to do when you went and founded Amwal Capital Partners that you felt you couldn't do in Amwal Al Khalish, what is that you wanted to do professionally, personally, that took
- [31:01]
B
you there in my case, and the situation was as follows. Two of my other partners, Ammar Khoudairi, who was the founder of OMU Al Khalid and he is one of the founders of Omoa Capital Partners and the chairman of the firm. And Fadi Arbid, who's my other partner, he used to be the CEO of the private equity fund and now is the current CIO of the firm. So with them, we're the ones who set up this and with a much brother partner now, the way what happened was when we were in AM Khalid, none of us really had any equity in the business. So except for Ammar had a very, very small equity. The business was. And the GP was mostly owned by two of the LPs so two big family offices out of Saudi. And so we really had no control over our destiny. We had obviously some of the carry that we were allocated to us, but given that the fund one was already done and slowly was start coming to exit mode. And most of the employees including myself came in either at the end of fund two or. And so we're all waiting for fund three to launch to get some carry and start building some carry going Forward. And Fund 2 was launched in 2007, so the 2007, 2008 vintage, which you can imagine what the impact of. Well, even though actually return wise was not too bad given the vintage. But there was no carry out. And so a lot of the employees were there as well, were saying why am I sticking around? I mean if there's another opportunity they will easily quickly jump ship. And many of them did and they've had phenomenal careers right now, some of them leading some of key in financial institutions throughout Saudi. And so for me as well was that was what's happening was that this was already slowing down. Where is the next opportunity? Where do we go? What happened was, you know, Ammar were getting quite a bit of inbound requests from hedge funds outside from the US who wanted to understand what's going on in the marketplace in Saudi to be able to trade some of the local stocks wanted to understand, to get a better view about, you know, the high level view about what's going on from a regulatory perspective and what's going on on the marketplace. And really that kind of provide them a bit of ears to the ground of the market and where they could exponentially get an edge. So this is when they suggested and value was like saying why? Why are we doing this? Let's just pretty much die out. We're sticking around because of out of ethical duty to our LPs that we still gotta manage these businesses. We're not gonna let go and just all of us leave the firm and leave it the LP's dry with the positions and so but why don't we launch our own thing which is in the public space and really start applying something to the public space. There wasn't really that many institutional investors in the public space. There were a few, but not many regionally based investors. And that's how the idea was started to build up with them. They asked me to join them. And then we started kind of testing that idea on a very, very high level, just basically on Excel. Ayman Shukrona, who came and interviewed with us before, he's a Wharton grad, same as Fadi. And so we called him if he wanted to come back and join us to launch this new business. And so the four of us took that risk and said, okay, let's try to see how this works out. Pulled the thesis and then test it out with our own money. We put in $2 million or 2 or $3 million in a brokerage account and we ran it as if we were running a $100 million fund to see what kind of returns we were going to get. We had 20% alpha generation to the market at that, at the end of 20, 20, 14. And that really kind of gave us the confidence and the ability to sell, to rationally launch and then go forward. Going back to your question, it's really a big part of it was the lack of we didn't control our own destiny. We were not equity holders in the business. So you don't have that ownership, which was a key thing. And the second thing was also that private equity was really not working out in the region as a business model. It wasn't working.
- [34:47]
A
Was it difficult to launch it then?
- [34:50]
B
It was difficult. I mean, even though we did launch two different funds, nearly $500 million of AUMs between both of them. And then we had some side pockets. But the problem was that you've got still most of the businesses are family controlled. The families that do not want to give up their control. So while we, as Amwal Khalid tried the model of buying minority stakes, that was very ineffective because you don't have the full control besides the veto rights, others have tried to do the full 100% ownership. That doesn't work because you lose a lot of the relationships and the family that was there that was helping supporting in getting the deals or the contracts or what have you. So both of those models were very tricky to get done. And what you end up finding was that a lot of businesses that were bought by private equity was being sold secondary to other private equity. But we were nascent markets. We were not there where we are at the level where we should be buying businesses from each other, yet the market is wide open. And so this lack of the big valuation gap also there was between public and private markets and investor appetite for blind pools of capital that are locked up for 10 years was basically disappearing very, very quickly. Given that we had the financial crisis in 2008, we've got the Arab Spring in 11, and you had the Greek debt crisis and every other crisis after that between the entire region or globally that happened that had an impact on our region. And so international investors didn't understand the region yet and they were not going to come and test it with 10 year money. They wanted liquidity to test the market, to understand how it is, to really explore it. That was one of the reasons why we couldn't raise fund three. And it became we realized that look, raising fund three is not going to happen. You look at it actually in hindsight now it was, and this was around 2013, 2014. I mean the next fund that was actually raised probably was 2018, 19 before another fund in the region that was raised for private equity.
- [36:43]
A
So then you make the transition to the public equity market with Amworld Capital Partners. So before we talk about the investment philosophy and kind of your approach to investing, tell us a little bit about the public equity market in the MENA region. Walk us a little bit about the investable space there to set up the background for our listeners. And then we dwell back in into World Capital Partners.
- [37:13]
B
For us, we consider ourselves as MENA investors. So we would look at anything within the mena, so North Africa and the Middle East. The reality becomes is when you dig deeper into it, it's really the focus is going to be mostly GCC and potentially Egypt. And the reason for that is just purely liquidity.
- [37:28]
A
So that means Saudi Arabia, uae, perhaps Bahrain and Egypt within that.
- [37:34]
B
I mean Saudi Arabia and UAE are the largest markets and Saudi obviously being a much more bigger market than the uae. But these are the two main market that we focus on. And then you've got the third one would be Qatar, I would say in terms of order after Qatar, then you would probably have Kuwait, then maybe Bahrain. Really Bahrain is only like one or two stocks that you would look at very few. I mean in general in the MENA market or within the, especially within. If you look at Saudi and the UAE between them they've got 500 stocks I would look at. So if you want to expand the rest of the mena, I mean technically we'll go up to, you know, maybe over a thousand. But reality between the 500, you've got maybe 300, 400 stops that you would consider investing in, that will be formed part of your investable universe. So the market has been changing significantly from when we initially started in 2014 to today. The liquidity of the market has been Expanding especially as Saudi Arabia joined the MSCI Emerging Market Index and really started bringing in a lot of the passive investors. The UAE was already in it, so was Qatar, so was Egypt. And so the depth and the liquidity of the market has been growing, increasing with time and becoming much more interesting for investors both locally and internationally. Especially given the weighting that we're getting out of the MCI am. But these are the main markets that we'd look at. Products wise is you're still limited in terms of products so you obviously you have your plain vanilla equities options. There are some OTC options that you might trade. Pricing, there's lack of transparency in the pricing. So you're a price taker, whatever the broker gives you. And futures market, there is an attempt by the Saudi authorities and the capital markets there to launch a futures market. They have a few around 10 single name futures and then one on the index. But there is no liquidity there. There's not many people trading it. But there is a drive by the regulators and the market participants in the region here to create more products and really to help these markets to become, to mature and to become closer to kind of mature and developed markets in terms of accessibility as well as products offering. There are things that you can do synthetically here which is helpful, but still you don't have the full breadth of things and same.
- [39:41]
A
I think I've asked you this question before. Turkey, is it part of your market space or not?
- [39:47]
B
No, not for us. That's kind of maybe part of our philosophy is that we focus on the countries and in geographies where we have an edge, where we know best, where we have access, we have our networks we can actually understand, we understand the markets and the dynamics of it. A place like Turkey, while I'm sure there's a lot of opportunities there, but I have no advantage trying to get there. There are other more capable managers who are embedded within the fabric of society and the network and the business community that will do a much better job in generating alpha versus me. So for that reason we decided that why go venture? There's let's focus on our background. Yes, it was nascent in 2014 and 2015, but we saw the opportunity and so we wanted to focus on what we have and really build something unique in this region, which I believe we actually managed to do.
- [40:36]
A
I'll come back one second to One World Capital Partners, but it's a very quick question. Is there any drive towards consolidation of the different exchanges in the Gulf area or are they in your opinion going to remain each competing against each other for a while? Or do you think there's going to be a merger of these exchanges at some point to create more liquidity?
- [40:58]
B
Unfortunately, I don't think there'll be a merger, realistically speaking. These are still governmental entities. Yes, some of them are publicly listed, or one of them at least. So Saudi Tadawan is listed, but they're owned by the governments and these are kind of part of the national fabric and local champions. So I can't see any government letting go of their own exchanges, unlike what you saw eventually in Europe and in the US because those become really purely privately owned businesses that are listed. And so the dynamics become very, very different from there. While that is said, you know, liquidity is coming. You know, look at Saudi. I mean, Saudi does trade well, we've gone through a cycle, but we've went from a few hundred million dollars of daily trades to over two and a half to $3 billion a day. We've dropped on the past 12 months. We're probably around 1.6, 1.7, but still a significant amount of volume that you can actually come in comfortably and trade in size, especially the big caps that you can actually access. One thing I did not mention before was the interest of these markets is becoming is because we're seeing some major economic transitioning taking place here in this region over these past. Especially when you look at from 2015 to today, the changes that have happened. And if you look at each country separately, there are significant. And all of this have led to the public market becoming even more interesting for people to dive into and to invest in.
- [42:13]
A
So let's turn a little bit more then to amworld Capital Partners and why don't you tell us a little bit about the basic principles that inform your practice and a little bit about the process, how you go about sourcing, valuation, position sizing. How do you think about that space? So philosophy and then process. Walk us a little bit through that. By the way, can I ask you, how many analysts do you have and how big is your team now?
- [42:40]
B
We're not a very big team. We've got around on the equity side we've got Ahmad, like I mentioned, who's a partner. He is the PM for the equity business and with him he's got three
- [42:51]
A
analysts and the AUM. Right now the fund is about 3 billion.
- [42:55]
B
On the equity side, we're just around just shy of $3 billion because the mandates are being deployed.
- [43:02]
A
So tell us about the investment philosophy that informs your practice to Start off
- [43:07]
B
with kind of looking at the core values that we have. And I think that's really a big part of what drives us is really, you know, we've got four main ones that we look at which is trust, integrity and ethics, drive and diligence as well as alignment of interest. These four values that we have really are, they shape our philosophy eventually and how we approach things, especially with investors and within our investment. Because I think without these, you will not be able to succeed, especially in this region. Whether the trust of your investors, integrity and ethics, that talks about your reputation. And here at the end of the day, the only thing you have is reputation. If you don't have your reputation, their businesses will shut down immediately. The drive and diligence is really where we kind of really help and do continuous self assessment and self improvement individually and as a firm to try to find what can we do or what should we do, Whether it's processes, whether it's the approach to the investment philosophy or the thesis that we look at. How do we question these thesis? What do we can we do to change it to become better at what we do to really deliver better results? And then the alignment of interest. And that really comes in from the fact that we are one of the few asset managers in the region that are fully owned by the team. So as of today, the owners are the four founding partners plus one of the analysts. And everybody has a path to equity partnerships and everybody buys into the equity partnership. It's not granted shares. This really aligns the interests of everybody in the team. And then when I'm talking about everybody, I'm talking about from the back office all the way to the front office. So there's no distinguishing between them. Obviously the amount of equity that will be gained will depend on what kind of the value that's being on the performance of each of individuals. So those are really important factors and that have played very strongly to our benefit and really has helped us drive the philosophy and the way we approach things. But in terms of the actual philosophy of the business and how we are investing, it's really. We do have a fundamental belief that having concentrated positions in this region that is composed from fundamentally attractive stocks and really using both a top down and a bottoms up approach, as well as leveraging our approach and our analysis from our private equity days. So what we call kind of the private equity DNA, applying that to the public markets would really deliver consistent long term performance in these markets. And the way I distinguish this with this private equity DNA, we want to go beyond the desktop research. So some companies you're going to have to rely on that desktop research. You cannot go beyond that too much. But as much as possible, especially when we're dealing and where we'd like to focus is in the small and mid caps. This is where you try to go beyond that desktop research and really dive deep in the same manner, I would say some of the short shops that you hear in the US where the diligence that they do in order to validate their short thesis, where they do kind of investigative work on the company, where they try to become the customer and the supplier of that business if they can, to understand and really validate what management is saying versus what's happening on the ground. These are the kind of things that we try to apply and try to do as much as we can to really have a better understanding of the business. And one additional layer which is the regulatory framework as well as the macro and this is where the top down comes in is really you need to understand the policy changes that might be coming or the regulatory changes in each of the countries that we're dealing with. Where is the government, what's the approach or where is the trajectory of that government is going? Understanding these would be able to allow you to. They move a lot of the noise from the rumors that you hear in the marketplace and really know where to hone in and what is going to make a big difference or an impact on the investment that you have or not and how to approach that in terms of sizing the thesis or exiting a position or adding it to position. We're not talking about insider trading here. It's just having the insights of what's going on and really be able to understand, you know, whether the government in Saudi, are they going to take away the VAT that they had just implemented or not the market at one point believed they will take it away. We did not believe that was the case just from understanding the government in a good manner and the approach of the government for it. And we were right. So that had a very big implication about people diving into retail stocks because they thought VAT is going to go away. When they realized and it was announced that it's not going to happen. The rise of the market kind of dropped quickly after that. So we were able to avoid these pitfalls. So that's from a philosophy kind of approach that we have.
- [47:34]
A
Let me just explore a couple of things a little bit. I like very much this P DNA type of approach of particularly if you are in the small mid Size cap space. You really have to visit those companies. You really need to get to know management. You really need to get to know the customers and suppliers of that company. I think the value of these is simply enormous when you are operating this space. And I'm reminded of actually we interview Beth Lilly here at the podcast now at the Pollard family office and trying to how do you actually approach investing in this space? And you have this enormous advantage that you're willing to do that b like job of getting to know the business inside out. That gives you an enormous advantage. But I want to ask you about this issue of regulatory changes because I think one of the things that is perhaps underappreciated by outsiders of what is going on in the Gulf region is there's this phenomenal policy and regulatory dynamism on trying to get things right, so to speak. And there's going to be changes as a result. And the type of opportunities this is opening for investors. And here is where you guys, because you are in the region, you understand the area, you have kind of the sensibility to understand what is going on gives you a wonderful entry point into these investment opportunities. Do Agatha is right. That is kind of these regulatory changes that are taking place in the region as it's becoming like any other big financial center, so to speak, and the amount of experimentation in the context of competition between the different countries that is giving you these opportunities. Do I get this right? Yeah, no.
- [49:18]
B
100%. On top of that, you also have that it's part of the asymmetry of information that you have here in this region and inefficiencies in our marketplace where you're having access to the regulator and being able to go to speak to a regulator, for example, the insurance regulator, and understanding what's going on, what their intentions are, these are the key things that will make a difference. There's a discrepancy between what the regulatory framework is and the decision taken on the regulatory front versus what's actually happening on the ground. Because there could be a delay in timing between those two. A decision by the regulator might take place, but it might take you three to four years before they actually do an enforcement or an implementation of it. So being able to understand both is going to be a key thing. So like an example for that motor insurance in Saudi, in most countries or pretty much every country is you have motor insurance is done annually alongside registration of your car. A vehicle in Saudi, you register the car for three years. It's a three year registration once every three years. But Motor insurance is every one, once every year. So after the policy expires, people don't renew. There was a big problem and it caught a lot of obviously the insurance companies in terms of loss ratios and what have you because a lot of accidents and then the other side is not insured and what have you. And the result was the realization that we need to actually do something about it and we need to align this together. So there was an intention by the regulator to do that and we played that role because you basically have nearly 50% of vehicles were not insured. And so there was a great opportunity for motor insurance companies. The problem was that the implementation of it was taking a long time. And so do we want to be more heavy on the motor insurance companies or do we want to start to kind of pull back or do we just sit and hold? And we're happy to hold for three years until thesis monetizes. The key thing that we have in our region is related party transactions that could have a very detrimental impact on you. And we were in the unfortunate seat of being an investor in a company that was UAE company NMC Hospitals that was listed. It was actually part of the FTSE 100 at one point that basically turned out to be a big fraud going bankrupt. While we did make money on that business because we wrote it from early on, the discovery of this was came from muddy waters over here. Us as well as other peers, all of us were trying to figure out is this true or not. And we were checking and everything seemed to be fine from our side. What we decided was okay, how do we avoid the spitfall that we fell in? Are there related party transactions going on? Is there anything reputationally that we need to worry about? Anybody who's related to the management or the board. The name check is something that we've always done and we've always, you know, from 2014, 2015. I mean I remember in 2015 there was one company that we really liked that was listed in Saudi. And then Ammar, our partner was no, this guy is a crooked, I know him who's sitting on the board. And you are not going to be able don't come near this company no matter what, no matter how attractive it is. We didn't invest in that company. So this one we did that change checks. But here we had to dig deeper into it because of the opaqueness about related party transactions. Sometimes it's not fully reported, sometimes things are grayish and it doesn't mean that we're going to take any action about it. But sometimes there was a case where one company that we were invested in, it had a subsidiary that's outside of the region and it turned out that their partner there has been known to take bribes and there were some issues there. And we decided, you know what, no need to be in this company. We exit at that company for that reason only.
- [52:42]
A
Can you tell us a little bit about your client base? So it's mostly capital from the area or are you serving as a vehicle as an entry point to outside investors in the area too?
- [52:54]
B
We do have investors from the area but we do have a lot of international investors, so institutions and sovereign wealth funds, whether European sovereign wealth funds or endowments and funded funds out of the US and then we do have sovereign wealth funds from the region as well as family offices. So it's a bit of a mix of both. I think we are probably now internationally probably worth 60, 70% is international money right now.
- [53:14]
A
And Samara, can I just to close this you mentioned concentrate portfolio. So can you tell us a little bit about portfolio sizing in that area, how you see your own portfolio and how you structure it?
- [53:26]
B
Yeah, we used to be initially when we were smaller it was easier to be very, very concentrated by which we would have 10 to 15 names as we grew in terms of just the liquidity of the market itself while it did expand, we're still kind of limited about how much the sizing that we can take out of each company, especially in the mid caps that we like, like I mentioned, where we see the significant alpha generation. And so now we're probably around the 28, 26, 28 names but within that there's quite a few usually around the top five positions will probably be around between 40 to 50% of the portfolio. So there are. That's where the concentration kicks in and then the rest will be much more positions. Some of them are preliminary positions where we're trying to build the position and try and understand the company. Some of them will be just capped at a 2% holding just because of the liquidity of that company. But we still see a multi bagger potential out of it. And so we would happy to hold a 2% position if we can see that this is going and generate 2.3x in it.
- [54:22]
A
Let's talk then about the poster boy, so to speak of an Amualpa Capital Partners play. So why don't you walk us through a little bit of a case and have a bit of fun with learning about that company and that position.
- [54:36]
B
I thought about this. I mean this is a Position that we like a lot today. We've been holding it for the last, well, nearly four years now actually. And that's why I'm bringing on Wild. It's starting to monetize now. And we believe that this is going to monetize significantly going forward. And this is why I liked it. It doesn't give us the full perspective of what we do, but it gives you a big part of it. And this is Abu Dhabi Ports. This company was listed in 2022. It was done through a direct listing. So it was not your traditional book build. We were able to get a very small allocation at the time. But we really believe that this is a company that was super interesting that we were winning the next day, even though it went up by 15%. We started, we continue to accum position to build the size that we want. And today it's one of our top five positions. Now this kind of walking into 2022, one of the things that we usually do on an annual basis is trying to see what are the themes, what do we like kind of potentially for the coming year. And one of the key ones was logistics. The rationale being is that, you know, we're probably kind of, we're coming out of COVID Demand is starting to start to pick up, consumption is picking up. And so the logistics sector should start seeing some significant benefits to recover from the lows of the COVID markets and going forward. And secondly, Abu Dhabi has been moving and really focusing back into investments internally and focusing on the industrialization of Abu Dhabi and where that one obviously automatically you are going to need the ports to be. You don't expect Abu Dhabi to rely on the Dubai ports, but rather really kind of focus on their own ports Abu Dhabi and really build them out and focus on them. This is where the story of Abu Dhabi Ports comes in, where the attractiveness of this comes in. Now, the company has multiple verticals in it ranging from the ports itself, but they also own and develop the free zone around it. So that's a big parcel of land behind the port usually provided for companies to come in. They get 100% ownership in Abu Dhabi itself. The zone is called Kzad. And that one, they get a lot of advantages from being there, including very cheap electricity or very cheap gas if you need for production. And so that one is really a real estate play on the land specifically, but really feeding into the ports and benefiting the ports. They do have a maritime business, logistics and they had a small one, digital, which was basically now has been embedded into the others. This business had all of these in it and they also had some additional stakes and a couple of public user companies. When we're looking at these businesses, this is where we saw that opportunity for it. And taking kind of also we're really taking a read through from or read across from what Dubai Ports did and how it grew. And it was listed for a while before it became private again. And we were investors in Dubai Ports previously on the equity side before it went private. And so we've seen how the implications of it and how the. The economic zones behind the port feed into the port and where. When you see the economic growth being driven by the government and focusing on the certain sector where this really can drive the growth in demand for the terminal going forward. That story was fairly well established for us and it was really a much smaller scale story but with deeper pockets behind it. And being Abu Dhabi really, we knew that Abu Dhabi was not going to sit down and let this port be a small port. It had to become a significant player globally. And this company, I mean during the IPO they had also announced that they are planning to invest heavily into CapEx and really grow that CapEx. The plan was to invest around 15 billion in CapEx throughout up to 2026. By the way, sorry, my numbers are all in dirhams as opposed to in dollars.
- [58:22]
A
So it's okay, we can handle the exchange rate.
- [58:25]
B
The Exchange is around 3.67 or nearly Dh4 a dollar. So how do we approach this now? Like when I mentioned in terms of the private equity DNA now this is. Was an IPO initially. But how did we approach this? And given that this is also a government entity, we had actually extensive meetings with management, try to met some of the board members. But we also have a good understanding of the people who are. I've got friends who have significant presence in KZAD in the economic zones. I understood exactly what was going on. How they were benefiting as a company from KZAD itself, what were the leases, how this was coming through, how was he benefiting from the ports and how that was filtering through. The digitization of the ports itself was a key part of it. And how they were benefiting. And why was my friend who has this significant carbonate plant, why was he working in Abu Dhabi when his main plant, his initial plant was actually in another Emirates in the uae using that. And the same thing with my partners in front of kind of all of us. I mean this is also. We have a team effort. I mean anybody who has Any contacts, we try to leverage all of our networking to be able to get all of the details and all the facts about these companies. This is where we're trying to really kind of fit into the story where we have already the initial story. So by doing what I did or my colleagues did the same thing, they really kind of established that the story here is a valid story. And it's something that actually does have a lot of legs and has a lot of potential going forward in terms of the growth where they can really achieve. But we also understood that this is also a capex story. Capex are a growth story. So they, while we might not see the monetization of it immediately or the growth in terms of the revenues or the earnings right away, but it's, this is a long term story that we're going to be willing, have to be willing to hold. This is not a three month story. And for us this is completely fine. I mean we're happy to take a position and sit on it for three, four, five years as long as the thesis still is valid and continues to be validated by the management team. And really kind of we're seeing it through, come through. And so in this case this company, where the economic zones initially were probably generating around 11% of revenue and now they're becoming around 37%, the ports are 25%. The maritime business has actually grown quite a bit. So these are starting to see quite a bit of benefits coming from these sides, including on the EBITDA level where we're seeing significant contribution from them now. Their growth has been their meeting guidance. They are growing significantly. Their revenues in 2025 were just recently announced. They hit Dh20 billion. So you're talking about nearly $6 billion of revenues. There's a 20% year on year growth. EBITDA has gone up by 12% year on year reaching Dh5 billion or one and a half billion dollars carrying around 24% EBITDA margins. Net income also kind of reaching Dh2 billion or around $700 million. $700 million. So also 17% increase free cash flow has becoming positive. So over the past three, four years, while the company has always been guiding to significant capex, what they have been doing was twofold. They've been actually on the maritime business. They have been buying out quite a bit of companies there and they grew it significantly. So now we're starting to see the impact of those acquisitions that they've done. And they've also been buying some of the ports so really expanding their port network for their shipments to be able to have better connectivity globally for the Abu Dhabi ports itself. Again looking at that Dubai ports model, but really applying it for Abu Dhabi itself and focusing on the Africa, Southeast Asia and Europe region. They have gone on a, like I mentioned, like acquisition spree that they've done and they've actually levered up. So while at IPO they were at 0.3 times EV EBITDA. Now they have reached around 4.4 times EV EBITDA. So there's significant leverage which is what they've used for that acquisitions. Now they've kind of got, they've reached the plateau of their capex and acquisition cycle. So now you're starting to see the free cash flow turning positive and now they're starting to de lever. So while a lot of investors and here for this region, dividends are very important. So people investors in the region, even from a growth company, while in the US you don't want to get dividends. If a company is growing here, they want to see dividend. Regardless whether growth or not, they want to see dividends. And so Abu Dhabi Portsmouth has not been paying dividends in their guidance. They have not talked about whether they're going to be paying dividends. They're going to explore options of potentially delivering. We probably believe that they're probably more likely to deliver further before they start coming out with dividends. But the dividend story now has started just to crystallize and so this will probably see more investor appetite for that story for the company and should unlock some of the value that we're seeing in it. Another thing that we're seeing in terms of unlocking value, which is this is what this year actually in 2025 was really significant and a really big change in the approach of the company. So in the previous years there was a lot in acquisitions. Now they're starting to kind of monetization and focusing on core assets. So where they are potentially, like I mentioned, they have a significant land bank behind the port. Now they've started monetizing and selling some of the land to developers. So they don't need this full land. So now with these sales, you're starting to see some good income stream coming in. They're trying to monetize it, they're trying to monetize some of these non core shareholdings that they have and potentially looking at selling them down. So the management team is becoming much more focused on the key growth drivers and the key verticals that they have again which Is the free zones or the economic zones, the ports, maritimes and logistics. This is going to be critical for the company because really that's where you're going to start seeing more enhancement of the free cash flow coming in which should allow the company to really start delevering a lot more and potentially surprise in terms of a dividend policy that would kick in, you know, sometime in 2026 or start paying up in 2027.
- [64:14]
A
So I love this story. Something for our listeners, right that if you, you are going to invest in a company like Abu Dhabi Port then this Capex, given the phenomenal effort to make the area into a major logistical hub, is going to be part of the story that that Capex is going to be reducing free cash flows for a while. Can I ask you something that you mentioned at the beginning in terms of competition with Dubai Ports and with other ports that may want to compete for that business for these clearly the area is going to be a major logistical hub. Is your thesis also that they're the best position to win that race, so to speak?
- [64:57]
B
I think the market here has. But these players have shown that there is a lot of room for all of them to succeed. And so I don't think there is a reason why one would succeed and not the other. I think they're providing different kind of offerings. The competition is increasing significantly. The approach by some other ports and I'm like talking about some of the other countries around, like Qatar Sport, they're really focusing differently and becoming more localized. Abu Dhabi is having much more of a regional focus kind of. Dubai is much more global. But Abu Dhabi I think will definitely succeed and I actually have no doubt in it because they have a different offering which is more kind of catering to the industrial segment, especially in the economic zones there. Because of what they provide you, it is a lot cheaper electricity wise. So if you're electricity intensive, you want to be in Abu Dhabi. The business cannot afford to be in Dubai. Dubai electricity is super expensive, whereas Abu Dhabi isn't.
- [65:53]
A
It's this kind of interaction between the economic zone, cheap energy to Abu Dhabi port that is creating that positive synergy that is going to be the driver of long term value for this Play.
- [66:05]
B
Yeah, it's 100% and this is a big part of it. But it's not the only part because there is the growth of Abu Dhabi itself as an emirate, a significant and that's playing a big role for the other stuff. So yes, Dubai Port is there and Dubai's growth is there, but Abu Dhabi itself is doing that. And Abu Dhabi is looking as well at enhancing, like I mentioned, its network today. They're in the process of acquiring the Alexandria port in Egypt. They have some ports in Africa. So they're really benefit or kind of opening up the network that they have,
- [66:32]
A
that network in a way that they're building.
- [66:34]
B
Exactly. To really benefit from it. And the reality is the distance between Abu Dhabi ports and Dubai world ports, you're talking about, I don't know, 30, 40 km distance between each other. There's not much of a distance between them, by the way. So for all purposes, they could be one port combined and there'll be a significant port. But for whatever reason, it's less likely that they're going to merge together, but they're going to remain separate and they have their own benefits and how they're tackling it for the different markets that they do.
- [67:03]
A
This is fascinating. That was a wonderful case and I encourage your listeners to really look into it.
- [67:08]
B
The long term play here is actually some of the parts. Right. And how this is the valuation. Sorry, and where it comes from. From the sum of the parts. While it is today the company is trading at pe of around 16, 17 times. But going forward, this company is growing at 15% annually. So if you're looking at 2030, this is going to be nearly a 7x pe. Whereas if you look at the sum of parts between, especially between the ports and the maritime and the economic free zone, this probably should be trading at a 15 times PE. There is significant multiple expansion that we can see. That's on top of the actual embedded return on invested capital growth that you're going to see from this company, which is probably running around 10% or so valuation wise. It's also attractive and that's why we like and we sit with it.
- [67:52]
A
That's terrific. Thank you so much for that. So, Samer, we're getting at the end of our conversation, but I want to ask you, you are based in Dubai, you have an enormous amount of experience, you've worked in London. I want to ask you a funny question. Sometimes those of us who are in New York, we think that, you know, it's a great financial center, obviously that we are the center of the world. I want to ask you a sort of a different question because of your practice in Dubai and it's a little bit how you see it from the outside in what is that you see in London, in New York, how does it look like to you from the outside? I'm curious about your perspective. You know Let me tell you where I'm coming from. Okay. Just to be clear, you know, we were there last January with the students, my third trip to the area. I love it. I love meeting everyone there. What was interesting is when you talk with people in the financial service industry in Abu Dhabi, in Dubai, one feels how removed to some extent everyone is from everything that is going on in the United States, whether it be economic policy, tariffs, politics, and so on and so forth. And I'm curious about your views about that. You are someone who has been here, who has lived in New York, has lived in London. How does it look to you from outside? What is that you can tell us about that different perspective that I'm sure you bring to all this.
- [69:21]
B
Overall, Dubai has. And being here has been, like you said, it's like dynamic and exciting. The rate of change that we're seeing here has been phenomenal and really driven by a vision that is where they're able to execute quickly. And that's as a function of how you have the setup here, the governance here, is that you have the Sheikh who has a vision about what he wants to do. And you see immediate and flawless execution. You don't see it anywhere else. At the beginning, you might think this is a fluke. But then after 20 years of being here or 18 years now, this is not a fluke. This is very well thought out and well executed beyond anything that you can see in the US or in Europe. We are always looking at it. We always are concerned about what's going on today in terms of some of these announcements of tariffs or the lack of, I would say, consistency in policies that we're seeing. And I'm not. This goes both to Europe and the US to be honest. And so this has potential implications on us. Dubai is probably, yes, it has become a global hub, but this region is still. There are certain dependencies on the global markets. And so we do are impacted by these tariff actions, even though they might not be tariffs on the UAE or Saudi itself, but it will have an implication on it. It will impact the demand for oil. That demand for oil will have an impact on government spending and whether it's going to be in a deficit or surplus. The global market is super interrelated. And so we are concerned about these. We are always taking a look at what's going to happen. The implications of geopolitical impact or aspects of it are also critical for us because they have the immediate effect on us. What is today the biggest question that we have here within the firm and we've had it from the beginning of the year. Is, is Iran going to be hit or not? And if it's going to be hit, is it going to be what I might call just some theatrics or is it going to be a big significant bombing of Iran? Each of these have very different dynamics and resultant implications to it. And so this is what worries us, this is what concerns us purely financial markets at the end of the day. I mean Dubai and Saudi specifically, obviously, I mean especially Saudi actually they've been trying to really modernize their financial markets and develop them and try to become much more open to and foreign investors. They just recently lifted any requirements from foreign ownership to come in and are sorry for foreigners to invest. You don't need to be a qualified investor. So we are advancing, we're not advancing at the rate that the developed markets, whether us or London are developing at. And then we still looking at what does the interesting There you see a lot more creative products that are coming in, imaginative products that are useful and have their own benefits. We're still catching up there. I think we still have more to go, but we are going in the right direction, which is a big positive for us.
- [72:05]
A
We always finish these interviews with two questions. Michael is not around today, so I'll ask it for him. So the first question is what keeps you up at night with fear of excitement? What makes Summer Sarah tick these days?
- [72:18]
B
We've talked about a lot on the equity side. We recently launched fixed income. We have a private credit fund. So the excitement goes in really making sure that really launching this and establishing our fixed income presence in the region in the same way that we've done with equities, cementing our reputation and our presence as the asset manager of the region. And that's what I hope for. This is going to be the asset manager of choice. We are in total of AMS, we're around nearly 3 1/2 billion. Can we become a 5 to 10 billion manager? 5 billion for sure. I think there's no doubt whether it's fixed income. 10 billion potentially depending on how liquidity and capacity kicks in. We'll see how that plays out. But what worries me is like I mentioned at the beginning, with values is is there something that can happen or that can go wrong in the business that can impact our reputation? And that is the most important thing that we always think about. And how does that impact our reputation? We're the type of managers who really value the ethics above all and maintain that maybe we're being holy on Thou in some of the approaches that we do when it comes to our funds where we don't charge investors for transaction fees and monitoring fees and all of these additional fees that a lot of funds do, we believe management fees should cover everything that you do. Right. So we only have one item from our fund. It's management fees. And that's a testament to the way we think about transparency and ethics and integrity vis a vis our investors.
- [73:46]
A
What are you reading these days? What are the books that you would like our listeners to check out? And what are you listening to if you're listening to a podcast that you find other than, of course, Value Investing Legends?
- [73:58]
B
Yeah, other than that, I do listen to a podcast. My favorite has always been acquired.
- [74:04]
A
Oh yeah, What a great podcast.
- [74:06]
B
Absolutely. I'm a runner, so it's very nice on my long runs. I also like how I built this. That's another one I listen to. Again, it's more about the entrepreneurship journey. In terms of books, I've actually generally been. I used to read a lot more financial books, so things like, you know, the Outsiders or the Forged or like one up on Wall Street. But I've been over the past two to three years, I've been kind of moving more to more politics, our history. So my favorite right now, recently finished, is Prisoners of Geography. Reading that book and seeing what's happening now in the different wars or conflicts that you're seeing, and it really has a very interesting way of explaining a lot of these conflicts. The other one is It Can't Hurt Me, and that's more about how to challenge yourself, how to fight your way through the mental blocks that you might have and how you push through another third book. I think it'll be the 100 Year Life.
- [74:57]
A
Oh, yeah, absolutely. What a fascinating conversation. Thank you so much for coming to the Value Investing with Lanes podcast. Thank you so much again for hosting us in Dubai. And I very much hope to see you again when we go back next year.
- [75:13]
B
Well, thank you so much for having me. This has been a real honor and a privilege and a pleasure to be on this podcast. I really appreciate it. Definitely looking forward to hosting you again next year. Unless hopefully I'll be able to come over a platform visits. I still need to visit the new campus, which I haven't seen yet, so.
- [75:29]
A
Oh, that would be great. Well, we're waiting for you here, Summer. Thank you so much.
- [75:33]
B
Thank you.
- [75:34]
A
And to all of you, I hope to see you in the next episode of our Value Investing With Legends podcast. Thank you very much.
- [75:42]
B
Thank you for listening to this episode of the Value Investing with Legends podcast. To subscribe to the show or learn more about the Halbron center for Graham and Dodd Investing at Columbia Business school, please visit grahamanddodd.com Thank.
- [76:05]
A
You.