Khalid M. Ansari, CEO, Al Anwar Holding • Interview

Al Anwar Holding has excelled by simply sticking to its tried-and-tested strategy of using chaotic market conditions as an opportunity to invest in key markets.

“In the manufacturing cluster, we are trying to create an open-ended SPV that will hold all the investment in manufacturing companies and then offload 40% to the international strategic investors.”

How is the current environment impacting Al Anwar Holding, and what opportunities lie in the private equity sector?

Both the GCC and Oman offer plenty of opportunities for private equity investments, as the government is now trying to encourage the private sector to assume a bigger role. This is clear from the PPP Law and the government’s plan to diversify the economy. At present, it is a buyers’ market as valuations are low and the stock market has been going down for the last three years with a lot of foreign investors pulling out of Oman. If we had more funds available, we would buy a number of companies in our chosen clusters. For this reason, we are looking at various other options such as bringing in strategic investors to support this expansion through additional funding. When we look at investments, we prefer those with good corporate governance. This explains why 90% of our investments are in listed companies. Second, we look at leading companies, especially those with an innovative and forward-looking approach. Oman is a small market, so any major project that is set up here will have to focus on exports. At Al Anwar Holding, we are seeking to capitalize on the opportunities in Oman; our strategy is to invest only in the Sultanate for the next three years. We have made direct investments in the manufacturing, financial services, and education sectors, and we are looking to expand into the healthcare sector in the near future.

How can innovation be applied across the business model of your portfolio companies?

Innovation can be applied at four levels: operational, business development, management, and human capital. Companies have to innovate and use technology and new ideas such as automation to go to the next level. AI is just one way to improve the production process. The youth today uses different methods of communications such as social media, so we have to change our marketing approach. It is crucial that CEOs and management get the correct information and are able to quickly decide. Finally, innovation needs to be applied to the human capital aspect of a company, especially because retaining talent has become a challenge.

What are your expectations in the short to medium term and what factors are necessary to increase the depth and performance of the market?

Performance has not been good over the last three years as a number of investors have pulled out of the market, which is not a good sign. Companies are trading below book value today. One of the reasons is the link between the stock market, oil prices, and geopolitical situation. The depth and liquidity in our stock market needs to be increased, as well the pace of decision-making. Most players who enter the market want an option to exit; however, investors such as ours, which are there for a longer period, do not get too affected by the stock market. The Omani market is a highly dividend-oriented market, and not too geared toward capital appreciation.

What are your priorities for 2020?

Our priority is to continue focusing on our four clusters. In the manufacturing cluster, we are trying to create an open-ended SPV that will hold all the investment in manufacturing companies and then offload 40% to the international strategic investors. These investments will not only bring financial returns, but innovation, technology, and new markets. In particular, we are seeking investors who already have a manufacturing appetite. Moreover, we want to diversify the range of products within the same manufacturing companies to offer the customer more choice and gain more market share.