Venture Capital Private Equity

							Venture Capital & Private
Equity
                           …the Shariah Solution

          Dr. Ahmed Al-Jawhary
               Chief Investment Officer
       Venture Capital & Business Development
VC/PE Landscape – Characteristics


The Industry:
  Highly Fragmented Industry
  In Early Stages of Development

Target Companies:
  Mostly Family-Owned Enterprises
  Funding Comes from Savings, Personal Loans, Family Reserves, etc.
  Available Portfolio Lacks Diversity - Services & Trading

Venture Capital & Private Equity Investment Firms:
  Islamic & Conventional
  Mostly ‘Window’-Operations as Opposed to Dedicated Players

Regulation:
  Lags Behind Industry Aspirations
Why the Region Needs VC & PE?


  Dire Need for Growing Employment Opportunities

  Current Over-Dependence on Oil & Gas Necessitates Economic
  Diversification

  Support Much Needed Privatization Initiatives

  Provide a “Way-Out” for Family-Owned Business Going Through
  Succession Issues

  Fostering Innovation and Entrepreneurship

  Creation of Profitable Investment Destinations for Excess Regional
  Liquidity
Drivers


  Improving macro & micro economic conditions:
        Government spending                      liquidity
        growth rates                             per capita income
        GCC integration


 Improving regulatory environment:
        new financial markets                    banking laws
        capital markets (IPOs and stock market craze)


 Change of Attitude
        family businesses
        government sponsorship
Impediments

     Political instability
     Relatively small capital markets
     Information unreliability
     Limited exit strategies with underdeveloped or non-existent
     secondary markets
     Judicial system and regulatory framework inefficiency
     Little comprehension amongst concerned groups of a novelty
     concept
     Lack of equity culture
     Resistance to loss of control of ownership\management
     Limited talent pool
     Return expectations (Quick-Buck)
     Limited deal flow
     Absence of entrepreneurship results in few startups/new ventures

Perceived barriers have historically led Global private equity and venture
                   capital firms to ignore the region…
Industry Prerequisites

•   Entrepreneurial
•   Willingness to let go of family business
•   Professional Management
•   Availability of Finance
•   Regulatory
•   Political Stability
•   Law & Order
•   Viable Exit Opportunities
•   IPO
•   Comparable Valuation
•   Credible Judiciary Framework
•   Favorable Tax Regime
•   Market Depth
D R I V E R S     The Venture Capital Bank Model

                  Macroeconomic Conditions


                  Regulatory Infrastructure


                   Economic Restructurings
I N D U S T R Y




                                                                               V C
                    Availability of Capital   Access to Capital

                                              Structuring & Execution Skills




                                                                               B A N K
                       Human Capital
                                              Value Creation Abilities

                      Exit Mechanisms         Exit Possibilities
   The Venture Capital Bank Model
A Sharia’a compliant venture capital style institution

The first venture capital investment bank in the region

Initial capital USD 66

GCC Shareholder base: 80 investors

Business Focus:            Venture Capital
                           Private Equity
                           Themed Real Estate
                           Financial Advisory

Source, structure, place and manage Venture Capital deals

Geographical Coverage:     MENA region plus International linkage

Sector Focus: Opportunistic & Industry Neutral

USD 250 MM MENA SME FUND launched June 2006