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The Middle East Magazine

A Pakastini-born Muslim who grew up in London’s tough East End, James Caan rose to prominence building – from scratch – a successful multimillion-dollar international business portfolio. Here, he talks to Pat Lancaster about his new Shariah-compliant venture, 90 North Real Estate Partners, and how he sees Gulf markets developing in light of recent events.

A Pakastini-born Muslim who grew up in London’s tough East End, James Caan rose to prominence building – from scratch – a successful multimillion-dollar international business portfolio. Here, he talks to Pat Lancaster about his new Shariah-compliant venture, 90 North Real Estate Partners, and how he sees Gulf markets developing in light of recent events.

At a conference at the London Stock Exchange recently, you focused on raising investment from the Arab Gulf States. You stressed the importance of understanding the ‘Gulf investor’. Can you tell me more about how you see the Gulf investor?

Following the financial crisis and the considerable impact it had on investors’ balance sheets, Gulf investors remain risk averse and are looking to preserve capital with a steady income stream working with advisors they can trust. It is not surprising (bearing in mind some of the biggest losses were incurred from speculative local investments) that wants and needs have focused on mature markets, such as the UK, where there is a greater choice of investment grade opportunities and the risk of losses is much lower.

How have these impressions been gleaned?

I have a home in the Gulf and meet people there regularly. But the Gulf investor also travels to London. I have associates who have worked for Gulf-based banks and who have lived and travelled extensively in the region. Having a clear understanding of changing wants and needs is a basic requirement in our process allowing us to match our origination capabilities. A focus going forward in response to changing wants and needs is to originate and structure acquisitions for the growing number of Muslims who now insist on or would prefer to invest Islamically. So we have set up a new venture – 90 North Real Estate Partners – to advise on Shariah-compliant real estate investment and to work in partnership with clients wanting transparent business processes and sound ethics.

On the 90 North venture, my fellow co-investor Faisal Butt and I have recently partnered with Philip Churchill and Nick Judd who have a cumulative 20 years of working with Gulf-based investors – and have worked for Islamic institutions both in London and in the region. My fellow Muslims make up 25% of the global population yet only account for about 5% of the Global funds under management – so the opportunity for 90 North to serve this growing market is huge.

In the current economic climate, the ‘buzz’ seems to be much concentrated on India and China, with investors keen to break new ground in these areas. How do you anticipate this will affect international investment in the Gulf / Middle East region?

Investment in the emerging market BRIC countries has been very profitable for investors and so the ‘buzz’ is well founded although many investors have not clearly understood the risks or found the right partner to work with. The same applies to international investors looking at the MENA region - a less developed ‘frontier’ market – where the risks are even more difficult to grasp. Now that the MENA region is unsettled by the so-called ‘Arab Spring’ and is fragile politically, I would suspect that international investment into the GCC will continue to remain wary for now.

Because of the oil wealth of much of the Gulf, the most valuable investment into the region is not, for the most part, financial. What are the most vital investments the global community can bring to the table?

You are right – as per my earlier answer, whilst international investment remains wary of risks, there is plenty of local investment capital for infrastructure investment, the slowly recovering real estate sector, private equity, etc. As the MENA area develops into an emerging market the non-financial ‘investments’ the global community can make are related to helping establish robust business, investment, risk and legal infrastructure to provide a more solid, trustworthy and transparent platform from which the markets can develop.

Do you consider the Gulf Cooperation Council (GCC) as it is currently structured a help or a hindrance to increased investment flows from Europe and the West?

I think that increased investment flows are going to be driven by market dynamics and the social, political, and legal backdrop. There is work to be done in all these areas as the region emerges into the type of ‘high growth’ centre that, for example, Southeast Asia has evolved into.

You have consistently underlined the importance of investing in ‘human capital’. As you know, burgeoning populations and unemployment are issues all GCC states are currently confronting. How might investment in human capital help alleviate the problem?

As you say, the population of the MENA region as a whole is increasing rapidly with a substantial percentage under the age of 25 now entering the workforce wanting well-paying jobs so they can buy cars, houses and support their families. In many cases the graduates are very well educated as there is already substantial investment in human capital and education. Unfortunately the growth of private sector jobs in banking, services and other preferred sectors is not keeping pace and the public sector in each country is now taking up the slack and employing substantial quantities of graduates, many in poor-quality jobs with few prospects and low wages. This is causing widespread discontent. At the same time, huge quantities of expatriate labour is employed in banking, services, construction, etc. So you might reach the conclusion that there actually needs to be a review of the senior education system and courses offered to deliver graduates with the right skills (including vocational) to better match the needs of the MENA economies and to resolve this problem in the longer term.

You have a diverse range of business interests. How has this varied portfolio emerged?

Throughout my career, a central theme has been a focus on people – how to attract the right people, how to incentivise them, and how to ensure that they are performing. I guess this all goes back to my background in recruitment. These principles, however, have been instrumental in my success in other areas, such as real estate. Real estate alone cannot deliver the investor the profit – it comes down to the track record of the investment team, the capabilities of the asset managers, and the calibre of the consultants – all, once again, ‘people’ matters.

In addition to these key factors, my partners at 90 North really understand the primary importance of putting our clients and investors at the centre of everything we do and engendering partnership and trust throughout the transaction cycle.

I am aware that an important part of your business is within the real estate sector. Recent estimates anticipate impressive growth in Saudi Arabia and Qatar in the coming 12 months, which seem to make them among an almost unique global brand. How do you view these predictions?

Demographics are driving the real estate sector in those markets and they remain almost exclusively a ‘local’ affair driven by substantial government expenditure and national demand. Access to the returns the real estate sector in those countries might generate is for the experienced investor and realistically through locally listed entities.

I have read and enjoyed your best selling autobiography The Real Deal, in which you chart your rise from humble beginnings in London’s East End to celebrity – for your success, your entrepreneurial skills and your participation in the hit BBC Television show ‘Dragon’s Den’. Do you believe this sort of success could be achieved now, in similar circumstances, or were the James Caan years a window of global opportunity we are unlikely to see again?

I think that it was more down to my personal drive than the time or setting. It was my unwillingness to take ‘no’ as an answer and my perseverance despite having the odds against me. I think that the same level of success can be achieved again, but one must have the right attitude and ‘no fear’ approach to doing business.

If you were beginning your career again, as a young man with very limited funds in 2011, which sector of the economy would you focus on?

I think with limited funds, services businesses, and business services in particular, are quite easy to set up. I would look at recruitment, technology, real estate, and financial services. More than anything, I would try to find the right people to work with, because, as I’ve said before, services businesses are all about extracting value from people’s skills and expertise.

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