Chairman and Managing Director of Al-Deera Holding Abdulwahab Al-Nakib provides potential investors with advice, guidence and an experienced partner in highlighting recession-proof invesment areas in Kuwait and across the Middle East region
We recently interviewed Mr. Al-Kharafi, Chairman of Americana, and he told us that investment in the Arab world is the safest, the most secure and the most profitable. We have seen the developments of the so-called Arab Spring, and that has obviously affected the stability of foreign direct investment (FDI) in the region. In your view, as an investment expert, is now still the best time to invest in the region?
It all depends on where you are as a company. If you are talking about Americana specifically, Americana has had roots for many years, and they can adapt to changes and opportunities, as well as take risks to make such an investment lucrative. But for someone who wishes to start new in the region, they have to be picky with their investments.
So if you are starting with the investment, you should be more wary or careful?
Absolutely, given that the region has been through so many cycles since the 1940s, since the discovery of oil. We went through the type of oil, and then through the stage of actually building our countries and having nothing. Whether you are Americana or anyone else, you are bringing in new agencies and building the country from scratch, and people are being educated and learning.
People were making money, because there were opportunities and margins there. In the 1970s, Kuwait was at its peak. It was developing, and the stock market was doing extremely well. In the 1980s, the stock market tanked, so Kuwait had to reform at the time. In 1990, Kuwait was invaded, and a lot of people thought it was a bad idea to keep their investments in Kuwait, because they wanted to keep their money in Kuwait, so from 1990, people started moving their funds outside.
Since 2000, we have been through a couple of things, including 9/11, which was a big thing. We went through some of the presidents [changing] around the world, specifically [with] the US shifting to Democrats, whereas Kuwait has always been good with the Republicans. That can affect certain things.
Afghanistan happened and the Iraq war happened, and our region started to become unstable, be it in terms of changes in governments or countries such as Syria, Tunisia, Turkey and Egypt.
Coming back to your original question, I would be extremely cautious right now when doing anything in the region until things stabilise.
What about in investment in Kuwait?
If the world around us sneezes, we get a cold. It is true. I am not a pessimist; I am just a realist.
The Government understands the priority of diversifying away from oil. There are many plans that have not really been executed. In your view, what steps need to be taken in order to achieve diversification away from oil?
Firstly, before we start thinking about reforms or which industry to tap into, I think we should look at the core, which is governance, policy or the legal jurisdiction of a country. We have to look at what was there. A lot of our laws were based on when they were established in 1961, so there have hardly been any changes.
Kuwait has changed and has gone through so many different things, so we have to look at each and every jurisdiction and industry and look at it from a top-down view; and look at the market and countries around us, how they do things and how we can adopt this in our country, maintaining our values and culture.
But at the same time, we have to look at competition and how we can compete. We have to change our by-laws and the core things so we can look at what will work.
After changing, amending or editing that platform, there are so many industries that people can get into from outside of Kuwait. One important factor of Kuwait is its location. When you say in real estate, location, location, location, it is actually Kuwait’s location. If you compare us to Qatar, Dubai etc. our location is impeccable, because we are sitting at the mouth of the Gulf.
From here, you can go into Iraq, Iran and all of these multi-faceted countries, which have an influx of the population and you can grow a lot. You have to start off with what we actually have, and what other people need to build a business plan, in order for you to compete with Dubai, Qatar etc. given the financial resources you have. I would look at shipping and ports. You are sitting in a location where it starts and ends here. So if you have ports, shipping and infrastructure that relates to technology, how do you communicate with the world? Everything can start and end in Kuwait.
Kuwait is actually the bottle that has a neck, where you can control the entire piece.
Which sectors of the economy, not related to oil, would be the most promising to invest in or develop, in your view?
All of them. One thing that Al-Deera has is our network. Our network is impeccable now. It is on a global level. We are not necessarily waiting for the Government to amend things – we as a private sector can help, but we need the chance and the opportunity. We are always pressured with time, and time is money for us. So if we are given the chance to contribute in a way and without just dragging on, then it will work out.
Moving onto bilateral relations, we are going to be publishing in London and the UK. The relations have always been quite strong for over 230 years, at all levels. What value do you see the UK bringing to Kuwait and vice versa, in order to develop or further strengthen relations for both countries?
In the beginning, it has to be government-related. There are multibillion-dollar projects that have been worked on in the past that relate to security, between the UK and the Ministry of Interior for example.
This could be a nucleus for the private sector to get involved in for instance. If it is something big, which relates to infrastructure or well being or security, it can start with that. The private sector has a fair chance in entering into that segment. I also think that the UK brings a lot of experience, because once upon a time, Kuwait was a protectorate of the Brits. The UK and Kuwait do have something in common. The relationship has been good for quite some time. The culture between Kuwait and Britain has always been there, and so has the relationship. We can always use it to our benefit.
Kuwaitis call London their second home.
I was born in London. My father was an ambassador in London for Kuwait back in the 1970s.
In the real estate sector, Kuwait has the highest number of real estate investments in London from the region.
I would easily and comfortably say that since the 1970s, Kuwaitis have owned second homes in London. If it was not good enough, we would not be there still. Even when Kuwait was invaded, a lot of Kuwaitis were living in London at the time, or residing in their own homes. Unfortunately, taxes have increased and laws are increasing in terms of real estate. For example, as the second generation to my father, if I wanted to own a piece of property in London, I would actually think twice about it, because of taxation reasons, penalties etc.
Do you have any international investment plans at the moment specifically with the UK or Europe?
Good question. Not really. Exploring is always a probability or a possibility – we never say no. It depends on if the right opportunity arises.
We want to portray a leader success story in the report. Please tell me a little more about this.
When we look at a particular business, be it in London or the US, we definitely like businesses that give you continuous cash flow, where it almost becomes like a piece of real estate – almost perpetual. We like to invest in businesses in the UK and opening up relationships for them in the region. Because we have access to funds, I would like to start up those businesses, be it in the UK or elsewhere, grow them to a stage where they become income generating, and then help those UK-based companies to come here to the region and open up, and create joint ventures (JVs) and employment.
We have used our innovation and contacts to open up the knowledge of the market. It is the flipside of the previous two generations.
I believe it is a win-win situation.
Al-Deera Holding is a success story, and you have a presence in many different sectors of the economy, including financial services, telecoms, communications in general, retail services and so on. What would you say is the competitive advantage that makes Al-Deera Holding different or unique from other holding companies in Kuwait?
First of all, we are a big group. We come with breadth, expertise and knowledge, as well as networks, synergies, contacts and connections – and more importantly, we come with the financial strength.
The competitive advantage is that you really have a one-stop shop that can complete the entire cycle of such a transition or opportunity. I know that we have that expertise or breadth to have any project, by helping them grow. That is the name of the game. People want to grow. It is about scale.
You mentioned before that a strategy of a leader is globalisation or diversification. In this globalised era that we are living in, the world has become a global or multinational village. That of course can make almost any business grow, but also increases risk, competition and so on. You also mentioned that as a leader, you like to identify potential market leaders and then invest in them and help them grow. How do you identify these market leaders and invest in them, against the competition and risk?
That is a very good question. It starts with our network. As I said, we come from a very diversified base, and we are investing in five, eight or 10 industries. We are all connected to one group. Each and every group has multinational people who are experts who have got exposed to different countries or different contacts and connections, from a managerial level.
From a shareholder and board level and executive team point of view, we also have contacts and connections with business owners and people who are influential in other countries. In essence, the executive management acts in a way like a broker. In one sense, you have contacts and connections with those who are around you in the group, and you also have a network with shareholders who are with you in the businesses that you own. You are constantly talking, so conversations go back and forth, and you open up new horizons and businesses to expand.
How do you evaluate which opportunities will be profitable, and you can mitigate risk, so you can invest in these companies to enable them to grow and so you can ultimately earn a profit?
I would split that question into two – one is pre-2008 and the other is post-2008. Pre-2008, we at Al-Deera were at a stage where we were investing, so we had to diversify our portfolio. 2008 came and the market was a little shaky, so we had to take certain measures to ensure that the companies that we invested in would survive.
We are OK now luckily, and we have been for the past couple of years, because we have diversified our risk in many different industries and industries that are in multiple stages of their lifetime. We have done joint ventures, start-ups, mid-stage and late-stage [projects]. We have diversified in those areas, as well as in three different continents, and three different timeframes. We were able to put certain mechanisms in place, which got us out of these problems that were around post-2008.
Post-2008, we started thinking about what we needed to do in order to make a difference, and to mitigate risk. So we said that one of the things we need to concentrate on is investing in anti-recession businesses. What could an anti-recession business be? Something where when the market is in decline, you make money, and when the market is booming, you also make money. We started thinking that commodities could be one of them, but commodities not in the sense of buying and selling coffee, but rather food. We got into food by opening up the equivalent of a Carrefour (-it is our own brand, but does wholesale). We are in the process of expanding to other countries.
The other thing is that [the businesses] are also owning and operating a stock exchange, so when the markets are going up, they are making money, and when the markets go down, they make money. This is where the direction of mitigating risk came through. This is what we have done, and thankfully, it has been a successful model so far.
What kind of investment is the most important or recent for you at the moment? What are the main investments you are working on?
The Miami Stock Exchange. This has been very close to our hearts. Anything that goes on in the region means more volatility, which means more volume in the stock exchange. This means more transactions and more transactions means more money.
Tell me a bit more about FASTtelco. What is the situation at the moment?
It is one of the largest internet service providers (ISPs). It basically provides internet services and data for disaster recovery to businesses as well as individuals. We have home users and corporate clients, such as government and semi-government, where we provide data and connectivity etc.
How do you remain one of the leaders in the telecom industry in such a competitive market at the moment?
Staying positive, thinking out of the box, and being ambitious.
One of the main angles of our report is the youth. How would you describe the Kuwaiti youth at the moment?
I would say that they are very ambitious and very hungry. If they want something, they will always do it, with a minimum amount of resources. They are very creative. I do not think it is related to education – it is about how Kuwaitis have been brought up. If they are given the chance, they will make something out of it, or out of themselves.
I do believe that they are extremely driven and creative, but sometimes they do not have the resources to thrive. Education for instance could be improved in order to give young people more leadership skills and so on. Would you agree with this?
Absolutely. For now, encouragement is required, which comes through sponsoring them, and educating them. If you have those two skill sets, they can be done on a very high scale. If companies can come up with those sorts of things, we as a private sector welcome these things. A lot of private companies force you to have a particular percentage of kuwiatis (Kuwaitization). We would love to have this to help us out.
Is Al-Deera Holding supporting any youth support programs or are you hiring the Kuwaiti youth?
Not at the Holding level but from the subsidiary levels, definitely. We social responsibility programs, such as one called My Wish. It is for children who we know are dying. We have them pick three wishes, and then we try to meet those wishes. One of them wanted to meet Kim Kardashian for example, and we gave her that wish. Some of them are kind of heartbreaking. Some of them want to have a proper bathroom, and others want an iPad. Or someone wants to have an elevator, because they cannot walk around their house. Due diligence is done to make sure that no one who wants to have an iPad actually has an iPad for instance.
You could be a role model for the youth movement and the new generation of change that is already taking over the private and public sector. What would be your message to these young people to motivate them or invite them to become more active in Kuwait’s development?
I would tell them to definitely be ambitious, and to not think local – think global. I would say ‘think glocal’. Never say never, never say it is too late, and never say no.
Have you had any kind of interaction with young entrepreneurs?
I will tell you something which also relates to me. Sometimes I see them in me. From a family situation, we are well to do and we are comfortable and all that. I am actually self-made. I did not rely on my parents. I literally started from zero.
I did not want to rely on my family. I liked independence and to make mistakes so I could learn. Also, the way things went in my life put me in those situations, which made me learn. When I came back after graduating in the US, I came back and worked at NBK for a year, and I created some ideas, which are still making money for them from a creativity standpoint. But it was not good enough, because I wanted to achieve more, and NBK was the school that teaches you everything. I did not like it, so I decided to move to Boston. I finished a postgraduate degree in Harvard and learnt private equity.
I had nothing to do with anyone. I was an employee, and I kept learning, until I said that this was enough and I decided to do it for myself, because I had the experience and the know-how. I started my own company, Univest. It was a one-man show at the beginning, and then it increase to two, and then three, and then 20 I think. I had a couple of companies that actually wanted to acquire my company, and that was when my family said not to go to others, and they would buy me out and come and work for us.
So when I see entrepreneurs who want to start businesses, I can relate to them exactly, because I had my own cubicle in the middle of an office. I did my own thing and crunched my own numbers. Unless you do it yourself, you can never succeed.
What achievement or development are you most proud of in your professional career?
I am self-made; I did it on my own. I take pride in this – doing something different. It drives you to do more, because you end up seeing the fruits of your investment. Your investment is not always money – it is self-respect, and seeing people where you are actually making a difference in their lives. It is about building relationships. It is different. It has more of a human touch than just money driven.
What do you think drives and motivates you today?
Two things. The passion to make a difference and wake up in the morning and say that I want to do it again and again and again. If do not have the passion and wake up in the morning with a smile on your face wanting to come to work, then you have no objective in life. Secondly, result driven. If you achieve the results you aspire to, it actually even makes you more passionate, and the wheels move and you become more confident, and you make others want to become part of your group, success and your passion.