This profile showcases a Private Equity firm that is focused on a high growth market. The company has been built on solid principals and demonstrated how contributing to wider society enables its portfolio companies to achieve hypergrowth.
HQ: Dubai International Financial Centre, United Arab Emirates
Industry: Private equity (financial services)
CEO: Iqbal Khan
Revenues (USD, year): over 750 million under management
Fajr Capital is a sovereign-backed principal investment firm, with a focus on realizing the growing economic opportunity presented by Organisation of Islamic Cooperation (OIC) markets. Our shareholders include: Abu Dhabi Investment Council, Brunei Investment Agency, Khazanah Nasional, and Mohammed Alsubeaei & Sons Investments Company.
Together with our portfolio companies, Fajr Capital employs over 15,000 people across the OIC region – including the Gulf Cooperation Council (GCC) markets, Algeria, Brunei Darussalam, Egypt, Indonesia, Malaysia and Turkey.
Fajr Capital’s success derives from our founding vision to invest in “what we know, where we know, and with whom we know”. We have a strong and diverse group of portfolio companies, consisting of “regional champions” operating across a range of strategic, demographic-driven sectors, such as Islamic financial services, infrastructure, education, manufacturing and renewable energy, among others.
We believe that key Muslim majority countries are emerging as one of the main growth engines for the global economy. Our target OIC markets represent a distinctive investment opportunity: common values and cross-regional trade flows, coupled with strong growth and high liquidity.
Case Study: Trust and Reputation as a Critical Cornerstone of Hypergrowth
While the economic instability over the past decade has cast a dark shadow on the conventional financial system, the Islamic finance industry has continued to grow at an exponential pace – with total assets expected to have surpassed $2 trillion in 2015 (from less than $600 billion in 2007) and steady expansion beyond core markets in Malaysia and the Middle East. Private equity as an asset class in the Islamic finance industry is relatively new and, on a global scale, still very small. Islamic private equity activity, however, is set to flourish over the coming years, particularly within Fajr Capital’s focus markets.
One of the core hallmarks of successful private equity investors is the ability to structure, nurture and drive value creation. We at Fajr Capital believe that effective investment strategies focus on creating enduring value not only for investors or shareholders but also the communities which the company serves. Our commitment to the principles of ethics, fairness, transparency and social responsibility shapes our investment decisions and also helps to attract and retain the industry’s best talent. Specific initiatives include:
The word Fajr means “dawn” in Arabic, representing Fajr Capital’s vision to become a pioneering, role model institution in the global financial services industry. As well as a robust governance framework, Fajr Capital has appointed three independent sharia supervisors (to form the sharia supervisory board) to ensure consistency with Islamic legal and ethical principles. Our strong focus on sharia principles has helped Fajr Capital create a unique sense of ownership across our diverse employee base.
Incentivizing management teams
Investment strategies should focus on investing in partnerships, in values and in a vision for the future. Fajr Capital, therefore, invests substantial time and resources in developing Musharaka- and Mudaraba-based long-term incentive plans that provide management teams of acquired companies with an ownership interest in the company and empower them to build sustainable and lasting value.
Enabling corporate governance
Strong corporate governance provides the mechanism with which the values, vision and mission of companies become institutionalized into strategic decision-making. We believe that long-term success derives not only from abiding by the highest standards of corporate governance but also through the principle of “Shura” (or consultation) and engagement with the board of directors, sharia supervisory boards, board committees and management forums to make informed decisions.
Institutionalizing social responsibility
Most companies, especially in the Muslim world, continue to implement sporadic corporate social responsibility initiatives without concrete goals or objectives. Corporate philanthropy provides an opportunity to redefine a company’s overall strategic purpose, as well as increasing blessings and goodwill at both an individual and institutional level. We at Fajr Capital encourage our portfolio companies to follow our lead by committing a specific portion of profits – over and above Zakat – to their corporate foundations. We also assist our portfolio companies with developing clear CSR policies, which create a renewed focus for employees across the group towards making a positive social impact.
Peer CEO Advice
- Learning from experience involves learning from both past successes and past failures of ourselves and others around us. CEOs operating in today’s dynamic world must remain open-minded, humble and develop a can-do mindset which states “that which is achieved the most still has the whole of its future yet to be achieved”.
- When learning from past mistakes, one should spend only 10% of the time on the problem at hand and instead use 90% of our time and energy on finding the solutions. When focusing on the solution we must surround ourselves with people who are “possibility thinkers” and doers.
- While learning from past successes and failures, the power of intent and knowing that we only control our efforts and attitudes give us a perspective which will lead to greater success.