GCC economies, businesses must prepare for 'Golden Age' of investments: Shuaa's Jassim Alseddiqi

A Dubai-based investment company – Shuaa Capital - commits a major investment in the Middle East’s leading music streaming portal – Anghami - and is following that up with its listing in June on Nasdaq in New York. It would be the first such by a regional tech company on the US stage.

Up in Bahrain, another investment company – GFH - has been channeling funding into building up a substantial asset portfolio, whether it’s in US hospitality space or logistics interests in Europe.

So, what’s common to these seemingly disparate investments? They all bear the personal stamp of Jassim Alseddiqi, that’s what. In these six years, Alseddiqi has built up his credentials as one astute deal-maker in the Middle East. And with the Anghami listing on Nasdaq, he’s expanding his outlook to markets beyond.

Clearly, he’s in no mood to slow down. “If you look at Anghami, in the past four months after the involvement of Shuaa, their fortunes have turned around,” said Alseddiqi, who has a Masters in Electrical Engineering from Cornell University. “They moved to Abu Dhabi, got a great subsidy from Abu Dhabi Investment Office (ADIO), they are going to be listed on Nasdaq New York, and by which they would have raised a lot of cash for growth.

“Entrepreneurs and owners of companies appreciate what we bring to the table… and, perhaps, even give us preferential valuations for them to get the upside of what we bring to the table.”

Making it happen

Nothing illustrates this than the changes he brought to Shuaa after its merger with ADFG in 2019. When that particular deal was done, Shuaa was combating multiple operational issues, with some of its investments having gone sour and leaving it with cash issues that needed cleaning up. Merging with cash-rich ADFG was just the cure that was needed.

Shuaa now oversees a portfolio valued at around $14 billion, and Alseddiqi has provided a steadying hand at the helm in his role as Group CEO. “We can see Shuaa’s investment banking arm advising on a lot of debt transactions, and advising on equity capital markets in the region,” he said. “These are the fruits of our labour – by working hard amid very difficult conditions.

“The Middle East has passed through different phases and different crises. It started with the Arab Spring and, unfortunately, followed by the oil crisis in 2016, the Yemen war and COVID-19 last year. Nevertheless, our combined platform of ADFG and Shuaa has proven to be robust and resilient - and contributing to the ecosystem.”

Difficult times indeed

Alseddiqi was probably understating it when talking about the constant crisis that was stalking the Gulf markets in recent years. It left investment and asset management companies having to tackle a cash hemorrhaging, and which will take them longer to get a grip on. It saw them overexposed on traditional assets such as real estate… and a little light on digital-focused ventures that could provide the big bang in the future.

Alseddiqi is busy rewriting that particular script. Anghami was only a taster of Shuaa’s aspirations in tech investments. “You will hear about a transaction we are closing soon in the tech sector - this one is venture debt for a startup in the UAE,” he said. “It’s a sizable transaction.

“I have been involved in technology since 2008, as an early investor in Uber, Snapchat, Zoom. I have incubated ventures in the UAE that have succeeded. Of course, I had my failures in tech startups and this is what I'm really proud of. The failures are what really makes you succeed in the future.

“What we – as ADFG - created over the past 10 years is really paying back now into the ecosystem. We have seen that in what we did with Stanford Marine Group – we worked with the banks to stabilize their business. We bought out all the (debt with) banks and now manage the business ourselves.

“From that, we have saved jobs, saved exports and the banks got a good deal. We are launching a tech fund as we mentioned, and everything else will be co-investments for the time being.”

Storm clouds

But it can’t all be hunky-dory, surely? The COVID-19 created situations have proved that no amount for forward planning will help businesses and economies when confronted with the unknown.

The way Alseddiqi sees it, the biggest risk that economies should be worried about is inflation. “When inflation kicks in, then interest rates would go high. So, any early signs of the Fed increasing the rates will be damaging to asset prices. People do not expect any rate increases for the next two years.

“Anything earlier than that would cause some kind of a shock – that could be a ‘Black Swan’ moment. If hyperinflation takes off significantly and rates are raised very high, I think we will have a difficult time maneuvering in this global situation."

Fix the present

But ‘what ifs’ are not going to distract Alseddiqi into a defensive mindset on prospects that are out there right now. “There is pent up demand - we are just waiting for herd immunity globally and everything opening up for people to get back to normality. The next 10 years might be the Golden Age for humanity because of the advancement of healthcare that COVID-19 instigated. There is a lot of health advancement that could work well in the next 10 years.

“I read a poll where they asked whether respondents would mind paying double for a trip than they did pre-COVID? If they were able to go wherever they wanted to travel. A lot of people answered ‘Yes’.

“So, the pent up demand is there globally for tourism, for people going out, for people mingling, for people wanting to rent a car and drive their relatives in different parts of the world.

“So, that's on the very optimistic side - and I like to be optimistic.”