20 Sep Interview with Osama Shaker, CEO, GIB Capital, Kingdom of Saudi Arabia
GIB Capital offers a wide range of financial services. Could you provide an overview of GIB Capital’s key services and its position in the Saudi Arabian financial market?
As far as GIB Capital was operating in the space of investment banking, doing monumental deals in the Saudi market in the 90s and early 2000s before the existence of the capital market authority. It was in 2008, following the establishment of the capital market authority, where the investment businesses were separated from the commercial banking businesses; such companies came under capital market authority. Part of the DNA of GIB Capital is investment banking. It has always been a major player in the equity capital market space, mergers and acquisitions and project financing. All of these were key features, business areas and revenue streams of GIB capital, whatever the name was, before that time. Initially, it was under the GIB Group, before establishing GIB capital.
In 2015, the board was looking to diversify its business into other areas and then decided to build the asset management business. We started offering asset management businesses at the beginning of 2017. The focus is on regional equity in the Middle East and North Africa region. Recently, we developed our alternative investment business, focusing on private equity and real estate funds and development funds. Also, we have developed the brokerage business, providing brokerage services as the only entity within the GIB group to offer these services to retail as well as institutional clients.
In a nutshell, we are big and old in the investment banking space on all three fronts, which are the equity capital market, mergers and acquisitions; also, in the debt capital markets, as well as in debt advisory. We have always been doing this and we continue to beef up our capability in that space. Regarding the new areas, which are the flow business, particularly the asset management business and the brokerage business, we started doing this at the very beginning of 2017 and we are expanding our capabilities year after year. We’re also expanding our coverage, year after year, in the asset management and brokerage business.
How do you address the unique needs of each client segment, especially considering your decade-long presence in not only the Kingdom but countries such as Bahrain and the UAE?
We are a boutique investment bank and with that, there are advantages, where we can focus on certain areas where we have really good expertise and track record and very experienced people. We cannot be a service provider for everyone, we choose our clients and our services quite carefully.
Our approach is to be a preferred financial partner for our clients. That is measured by the number of repeat clients that we have. We are a boutique investment company, but in terms of staffing capability, we have one of the largest investment banking teams in the Kingdom and probably one of the most experienced ones.
When we approach our clients, we try to understand exactly what their specific needs are to address them. We are not shy and we are not stingy when it comes to investing our time in understanding the actual requirements of the clients and what we can do. We have been doing this with family businesses and we have been doing it with very large institutional investors or institutional clients for that matter, being private or being semi-government. That enables us to establish this level of mutual trust between us and our clients. That differentiates us from others because we don’t have the largest balance sheet — there are other players with much larger balance sheets — but we probably have the largest pool of intellectual minds under one roof and they’re all based out in Riyadh. What you see is what you get; everybody is here under one roof. That’s how we tackle our business and offer our services.
In the initial stages, we don’t charge people anything. We visit and understand what the requirements are, really think about it and then come back to them with suggested options or solutions. If they like it, we will go with them; if they don’t like it and they want to go with something else, we can look into that. We’re very inviting to our clients. We tell them we’re in it to support you, we’re not in it just to charge you a consultancy by the hour or anything like that.
This has been going very well with our clients. The quality of services here is the quality of advice. We are not afraid to go into uncharted territories. We were the very first financial advisor, service provider, or advice provider, on many projects for the very first time in the Kingdom and we always strive to do that — go to challenging territories, think about it from all angles, what are the challenges from a regulatory requirement point of view, from a financial point of view and come up with solutions. In many cases, we end up with discussions with the regulator, on how to work out solutions around these obstacles or new areas that we’re coming across for the very first time.
Could you elaborate on your strategies to further encourage international visitors to participate in the Kingdom’s burgeoning investment landscape?
This is an effort countrywide, it’s not company-specific. The purpose is to educate international investors more about the Saudi market and the Saudi economy, the opportunities that are presented here in the country and most importantly the changes that have been taking place in the entire country over the past several years and that are going to continue for many years to come. All the collective efforts are to show the growth potential that is there, the US investors being probably the largest investors and the largest pool of investments in the world.
Due to the geography and the long distance between Saudi and the US and due to probably the previous restrictions on tourism travel, not many US citizens choose to come to Saudi. One of the first things for a common person, an investor, a politician, or working in the media, or wherever his field of work, is to come to Saudi and see for himself, or herself, what is going on the ground. That is key. The first thing that we’re doing collectively is to facilitate that: for people to come, see and learn about Saudi Arabia, especially with the stereotype that has been surrounding Saudi Arabia for quite a long period.
We are a youth population. That does represent challenges, but it also represents a great deal of opportunities with it. We have huge underground resources and that is not limited to oil. We have many other resources; probably some resources are untapped yet and some resources have started to get tapped just in recent years. Also, geographically, connecting East with West, with different sea fronts that we have, is a big advantage. We have the size of the Kingdom and with that comes two things: during summertime, you have areas that could be cold in the southern part of Saudi and you have the seafront and the coastal cities and the coral reef. You’ve got attractive features for all people around the world.
This represents huge opportunities because we are tapping into these attractions for the very first time. We’re starting from where everybody ended. We’re not starting from scratch; we’re not trying to reinvent the wheel. We are analyzing all the best practices that have taken place in the world over many years and we are starting from there. We’re bringing the best of the best to develop these areas.
We have the two holiest sites for Muslims, the capacity of which is being increased drastically and continuously to improve our intake of pilgrims and Umrah visitors on an annual basis. That would be a dream for probably a couple of billion people around the world to come to these sites at least once in their lifetime.
These all represent huge opportunities for us, with the youth population opening up and major restructuring, the sky’s the limit as far as the opportunities are concerned. Before anybody makes any financial commitment, for them to assess the potential of this country, a visit would probably help a lot. We have always been thought of as the most conservative or difficult to visit. Now, it is quite probably one of the easiest countries to get a visit visa to come and visit. I have experienced that myself with some friends I know and from feedback from visitors who have gone through this experience.
Could you elaborate on the specific initiatives GIB Capital employs to attract, nurture and retain skilled individuals, particularly in specialized domains such as investment banking and asset management?
We have a development program called Jammaz Al-Suhaimi, for juniors. We always interview and recruit fresh graduates who have the highest potential and put them into this program.
Over and above that, we have a special program called GIB Capital specifically for investment banking or asset management. The process is the same; we interview fresh graduates and recruit them as trainees for one year. We provide all the class training and on-the-job training for them. At the end of the year, depending on the assessment of this, they will be then appointed as permanent staff of GIB Capital.
This has helped us a lot in identifying talent. By doing so, we increase our intake of fresh graduates. We’re able to do that and the workforce in the market is quite positive in terms of the availability of qualified or smart, young people. We have a large pool of smart young people to choose from and they compete for opportunities, which is a very healthy situation. The outcome of the education system is better than what we have had in the past and that is improving quite significantly. It’s not the product of only the Saudi education system. The government has embarked on a very large program to sponsor students for their postgraduate degrees, in countries all over the world. Human capital is the most important capital that there is. The good thing in Saudi Arabia is that we have a good supply of quality human capital. At GIB Group we have the Rowad Awards, to recognize the tremendous individual and collective efforts that are truly driving our success. This is also important for our graduates.
What strategic initiatives do you plan to implement to sustain GIB Capital’s success over the next three years?
As part of Vision 2030, there are huge ambitions and there are huge investments and huge projects in the infrastructure space. We’re trying to bridge the gap between international investors and local demand to finance these infrastructure projects and come up with a vehicle that would present an opportunity for international investors to take part in this huge growth potential and for the sponsors of these projects to get access to financing that is coming from international investors. Connecting these two parties is a no-brainer. The path is very clear as to the number of investments that are needed in the infrastructure and the economic viability of that. It’s just coming up with the right opportunities, the right vehicle, to attract investors and meet the requirements of the project sponsors. This is one area of huge focus for us.
General consultancy now is an area in which many organizations, semi-government or even sometimes government, need support when it comes to consultancy as to what would be the best approach to tackle certain issues. They would have requirements, for example for privatizing companies. This is an area that would require people with experience in this field and we do have that experience. We are increasing our capacity and capability to provide such advice.
On the asset management side, the country is looking at promoting, further and further, fixed-income investments. We have beefed up our capability in fixed income. In the international markets, this is a big asset class. Here in the Kingdom, it’s still growing because not many individuals are investing in it. Institutional investors yes, but not retail investors or private banking investors. This is something that we are developing and focusing on for the next two to three years.