GET BUSY BUYING

Mohammed Al Sharaf, divisional CEO of IFM Holdings, talks about Eltizam’s growth and its acquisitions

WE’VE SEEN THAT THERE HAS BEEN A CORPORATE RESTRUCTURE AND YOU’RE NOW THE DIVISIONAL CEO OF IFM HOLDINGS – WHAT WAS BEHIND THIS?

Yes, Eltizam as a group has grown significantly over the last 12 months, now having 15 entities. We restructured the group into 4 subsidiary holding companies. The core facilities management companies now sit under IFM Holdings with executive directors being responsible for the individual entities.

WE’VE ALSO SEEN VARIOUS ANNOUNCEMENTS ABOUT ACQUISITIONS THROUGHOUT THE YEAR. PLEASE ELABORATE ON THAT.

We’re always looking for opportunities. 2020 and 2021 have been turbulent years throughout the world. Whilst we had to be extremely flexible and innovative with our operational approaches to combat the challenges brought by the pandemic, we were also looking up and across the market for expansion opportunities. Eltizam and IFM Holdings have been building a strong foundation for the past 7 years, in terms of operational effectiveness, team dynamics, client base and our financial position. Unfortunately, many companies suffered during this time or decided to restructure and exit some of their businesses. With the support of our shareholder, IHC, we actively sourced opportunities within the market that would complement our existing portfolio and support our growth strategy. In all, there was about 15 companies that we had some sort of engagement with, leading to 2 acquisitions by IFM. Fixis Facilities Management was acquired in January and then Inspire Integrated was acquired in July.

With the recent announcement that ADQ has also become a shareholder in our parent company Eltizam, we are confident that we can continue to achieve our ambitious plan of both organic and inorganic growth.

WHY DID YOU CHOOSE THESE TWO COMPANIES?

There are various reasons why we look to buy certain companies. This can include providing different services (sometimes complimentary to our existing businesses), operating in a different sector or geographic location etc. We also place a large emphasis on the cultural fit, as we need to integrate the company into the wider Eltizam Group and our “Get Wonky” culture. We would only consider buying a company that we believe we can enhance and develop on what’s already there. With Fixis, we saw the potential to concentrate on single residential towers – they are a smaller company but dynamic and excellent for that sector. They also had a solid presence across Dubai. This allows our existing FM business, Tafawuq, to focus more on larger communities, commercial buildings and special projects such as the Louvre in Abu Dhabi.

Inspire Integrated was a very different deal. They were a much larger, more established company but operating in different sectors such as the high-end commercial sector and the energy sector. This provided a foothold into these sectors as well as delivering economies of scale with our other FM companies in the group.

WILL YOU BUY MORE COMPANIES?

We’re always open to discussions and have an active pipeline of transactions that our in-house team lead. As I mentioned earlier, if we see there is a good fit, it supports the long term vision of the group and we see a commercial opportunity then we will give it serious consideration.

WHAT ARE YOUR PLANS FOR THE NEXT 12 MONTHS?

We’ve obviously been very busy this year and this will continue into 2022 and beyond. We have opened up Tafawuq Egypt where we will have nearly 1,000 staff by the end of the year. This has been a strategic move that we have been working on for the last 12 months with our Egyptian partners, the master developer Al Ahly Sabbour. We will continue our geographic expansion with entry into KSA in the future.

Additionally, we will be focusing on the post-integration of our newly acquired entities. Whilst we generally have a 90day integration plan, we then have a postintegration period where we look for additional synergies and opportunities between the newly acquired company and the existing companies.

Another big feature for 2022 will be our continued technology adoption. Not all solutions are applicable or cost effective for each client, so we’re building on our range of technology offerings. We’re generally product agnostic, and with so many different facilities

ELTIZAM AND IFM HOLDINGS HAVE BEEN BUILDING A STRONG FOUNDATION FOR THE PAST 7 YEARS, IN TERMS OF OPERATIONAL EFFECTIVENESS, TEAM DYNAMICS, CLIENT BASE AND OUR FINANCIAL POSITION.

managed, we have great testing grounds before we roll them out. We also benefit from the proprietary technology that is developed by our in-house team of experts which is a key differentiator for IFM's companies. Examples are the adoption of our cleaning robot, I-traps for pest control, Nestro which holds all QHSE transactions electronically and client Power BI dashboards.

YOU’RE NOW CONSIDERED A VETERAN OF THE FM INDUSTRY IN THE UAE, WHAT DO YOU SEE AS THE TRENDS MOVING FORWARD?

Thank you, I suppose! Over the last 4 or 5 years we have seen a lot of consolidations in different sectors, from real estate developers to banks to diversified conglomerates. This has been driven in part by the need to provide better value to customers and one of those ways is to provide similar, and ideally better, services at a reduced price. By companies consolidating, there is an opportunity to reduce overheads and benefit from economies of scale.

The FM sector is an excellent example of this. Generally, it’s a lower margin sector, so lots of small improvements can have a big impact to the bottom line. This is why we focus on 2 main areas – creativity and scale. The creativity can be related to our operational delivery, the effective utilisation of technology, how we partner with clients, what we self-deliver, what we outsource, how we provide our overhead support functions etc., everything gets reviewed and assessed for effectiveness.

The size of an FM business delivers benefits through the economies of scale that can be realised when they develop or purchase products or services. Small to medium size companies often can’t justify developing new systems or techniques as the cost of potential failure is too great – the bigger we are, the smaller the relative impact of our research and development cost. Similarly, when we are buying at scale, we are in a better position to negotiate prices and payment terms which we can then pass on to our clients.

Mohammed Al Sharaf, divisional CEO of IFM Holdings.