HEDGING BETS

Oman 2019 | FINANCE | INTERVIEW

A smart firm knows when to diversify its business and invest in the future.

Sanjay Tiwari
BIOGRAPHY
Sanjay Tiwari is a chartered accountant with accreditations from the Institute of Chartered Accountants of India. A graduate in commerce, he has 25 years of experience in industries ranging from textiles, cement, tires and engineering to FMCG. He has in-depth knowledge of the Middle East, South and Southeast Asian markets. His core expertise has been to monitor and manage operations of varied industries from financial and commercial viewpoints. He has also been instrumental in turning around loss-making companies in Asia and the MENA region. He has worked in some of the leading companies in India, UAE, and Oman.

How do you determine when to divest in a holding?

Al Anwar Holdings has long been driven by a philosophy that centers on creating sources of non-oil based revenue. Our board has been mandated by the shareholders to invest in certain sectors where we have scope of value addition in the processes or business. We are currently working to divest from National Biscuit, which represented a fantastic investment opportunity for us, but since the company is run by professional management under the able guidance of other shareholders, who are experts in the field, we had limited scope for value addition. The board typically reviews a company's future potential and how we can improve its value, which works well in limited sectors where we have expertise.

Why did Al Anwar shift its focus to the financial services sector?

Risk mitigation policy played a major factor. Each sector has its own underlying set of risk, which determines the level of investment risks to be taken by savvy investors. We have defined a range of reasonable risk for our holdings, and the financial services sector was the lower and upper limit for investment. At the same time, we also understand that the financial services sector has a leveraging impact with the economy, and therefore, we needed to focus on it. It was mainly about balancing certain sectors against others, and how we manage our risk portfolio. The board of Al Anwar Holdings is comprised of successful entrepreneurs and business leaders that make smart decisions toward sectors we can contribute in.

What sectors in Oman represent the best hedging opportunity?

There are many hedging strategies within, say, the industrial sector; however, we primarily hedge through diversifying the sectors we focus on. For example, we see excellent opportunities in education and healthcare. Oman is a big country whose demography is an advantage. Therefore, we see many opportunities to invest in various sectors to hedge our bets. Education and healthcare are two defensive sectors of the economy that in the long run will continue to contribute to society. The population is young, and there is huge potential for growth as more children go to school.

What differentiates the Omani market from those in the rest of the GCC?

The GCC markets are mainly driven by oil and gas revenue. Oman is different because it has less dependence on oil wealth. At the same time, it is not tax free for the corporate sector. Other neighboring markets tend to be more so, up until the beginning of 2018, when the UAE introduced its first VAT, a significant game changer. Oman has not yet introduced VAT and is waiting to see how it impacts the UAE. The other thing that makes Oman unique is its local population and its intrinsic need to diversify.

How are you implementing your diversification strategy over the next year?

We are setting up a new project in Duqm and constructing a new four-star business hotel that will be run and managed by Novotel. There will also be managed offices spaces for customers. We have recently invested in the education sector and are working to expand in this. At the same time, we are exploring the possibility of investing in healthcare. We aim to expand in hospitality, hospitals, schools, and other industries.