The private equity man with a focus on growth markets

 
David Hellier
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Abraaj’s chief exec is at home in London

WHEN he studied at the London School of Economics in the early 1980s, private equity boss Arif Naqvi says that his tutor, on meeting his class, told them they were mostly a hopeless lot, a lost cause even.

Maybe it was a well known academic trick to get the best out of the group but PJ Wiles certainly made a lasting impression on at least one of the students.

All these years later, the jibe amuses, perhaps, because Naqvi goes on to say that while the subject he was studying – the soviet economic system – became somewhat redundant after the collapse of the Berlin wall, some of the people he studied with have gone on to do some pretty exciting things.

One of his fellow students, Tharman Shanmugaratnam, climbed the political scales to become the deputy prime minister of Singapore and another became an important central banker in South Africa.

Naqvi hasn’t done too badly himself either.

He has been named as one of the 50 most influential people in the global private equity industry by Private Equity International.

Nowadays he runs the Dubai-based Abraaj Group, one of the world’s largest investor of its kind, focused on high growth markets.

Naqvi is Dubai-based but the Pakistan-born former Arthur Andersen and Morgan Grenfell man is in London on one of his frequent visits: Abraaj looks for around 20 per cent of its funds from Europe.

“When I first started to build Abraaj there were people who predicted it could not be done. They said there’s no way you can build a private equity business in the middle east but in those days people were just using middle eastern interests to contribute to funds.”

Abraaj focuses on investing in 35 high growth markets – the new name for emerging economies – around the world. Naqvi reckons that two thirds of the global growth comes from just 50 cities around these markets.

“We’re living through one of the great defining trends in history, that of rapid urbanisation in these areas,” he says.

The group has offices across markets such as Asia, Africa, Latin America and there are six global hubs, Bogota, Dubai, Istanbul, Mumbai, Nairobi and Singapore, with an office in London.

“It’s important to be multi-local,” he says. The group has raised around $7.5bn (£4.9bn) since inception in 2002, and returned around $3.8bn to investors.

Last year it bought Aureos, a specialist private equity firm helping to build sustainable small and medium-sized businesses in emerging markets. Aureos started life as part of the UK government, a joint venture with CDC, the government’s development investment agency.

Naqvi says his funds focus on demographic changes, investing primarily in manufacturing, education, retail, aviation, healthcare and agribusiness, with sustainability being high on the corporate agenda.

When asked about his funds’ returns, he smiles before saying they’re scarily good. “We’re giving back three times capital often,” he says. His latest projects involve setting up a fund to invest in low-income funding and he’s also intensely interested in the development of nursing homes for the growing economies.

Realisation of assets often comes through IPOs in emerging markets. Last year Abraaj participated in one of the largest IPOs in the world when it floated off the healthcare group IHH in Singapore and Hong Kong. “I think we left money on the table and the after market has been very strong,” he says.

“We have not yet floated anything in London but I remain intrigued by the possibility.”

Naqvi suggests the difficulties of the Eurozone have been broadly positive for the business he is in. “The availability of credit is drying up, so for private equity that’s perfect.”

“London is still the centre of the universe,” Naqvi says with a smile, before adding that the capital city of the UK could still do with re-energising itself after a period of austerity. “The Mayor is very focused on this as is the City of London,” Naqvi says.

He feels that many private equity groups have strayed from earlier models and no longer treat their investee partners as true partners.

“When we look at people we raise money from we truly look at them as partners and therefore do not find an issue with fund raising.”

And as for the economics tutor who initially wrote his class off, Abraaj established a PJ Wiles scholarship in 2006 at the LSE in his honour, a mark of respect for being an inspiring teacher at one private equity guru’s alma mater.

CV ARIF NAQVI

Lives: Dubai

Studied: The soviet economic system at the London School of Economics.

Past career: Trained at Arthur Andersen and then had a spell at Morgan Grenfell.

Other interests: Serves on boards including the United Nations Global Compact, Pakistan Human Development Fund, IMD Foundation and Endeavor Global, and several think tanks.