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TBY talks to Hasan S. Al-Jabri, CEO of SEDCO Capital, on the company's activities, sharia-compliant products, and investment choices.
BIOGRAPHY
Hasan S. Al-Jabri has been a major player in investment banking and corporate finance in the MENA region for over 27 years, holding leading positions in two of the region’s most influential financial institutions, NCB Group and SAMBA. His achievements have driven these institutions to become leaders in corporate finance, corporate banking, and investment management. He has focused the investments of SEDCO Capital both locally and internationally in different asset classes including private equity, public equity, and global real estate, all in compliance with sharia guidelines, spear-heading ethical investment solutions. Al Jabri currently chairs the World’s Presidents Organization Chapter in Saudi and is a BSC graduate of the American University of Beirut (AUB) and an Executive Management Program graduate of Columbia University.Could you give us a brief overview of your investment activities and your mandate in Saudi Arabia?
SEDCO Capital was formed four years ago; however, SEDCO itself was formed in 1976, originally as a family office. In 2010, the Group felt that there was a niche for sharia-compliant investment, as there was a scarcity of products that were both sophisticated and diverse not only in Saudi Arabia, but also globally. We are a local investor with a global reach. You will find us in different asset classes, from public equities to real estate, private equity, timber and agriculture, and commodities. These are our different asset classes, and we invest locally and internationally. When it comes to local investments, we invest in the local public equity markets, but we are also involved on the real estate side, especially when it comes to income-producing real estate. In addition, we see many prospects in terms of residential developments and logistics. On the private equity side, you will find us involved directly in private equity or through local general partners (GPs). Sometimes our clients want to divest or acquire certain types of companies; therefore, we either do it for our clients or sometimes we take it on for our own account. We offer these services to our local clients. On the international front, we are active in real estate, and we pick up properties around the world, from China to the US and everything in the middle. We are again focused on income-producing properties, and in many cases we are able to improve the yield by making enhancements to the properties and it is leasing positioning. It is the same for private equity; as we are involved globally through GPs or co-investments and sometimes through direct transactions. On the public equity side, we currently have over 12 global products covering a diverse range of geographies including developed countries, emerging countries, Asia-Pacific, Europe, as well as having different strategies including, tactical, defensive, active, and passive.
What is the benefit of having a niche in sharia-compliant investment?
There are several benefits of investing in a sharia-compliant fashion. The first is the fact that one of the main parameters of sharia is leverage, and the size of financing you are allowed to take. You are allowed to take up to 33% of total market capitalization. That 33% is a prudent measure of risk. If you go beyond that level, it puts your investments at risk. We think that sharia-compliant investing and financing is prudent because it keeps the level of financing to a tolerable level, which is one angle; the other angle is that you are not allowed to sell what do not own. An important element is that we are also responsible investors, meaning that we invest in things that add value to society and the economy. The risk factor helps you from a performance perspective, and responsible investing helps the economy and the society you work in. We are at the cutting edge of what is happening around the world regarding sustainable and ethical investment, according to the UN's Principles for Responsible Investment.
What guides your choices for investment, particularly in agriculture?
Agriculture is an asset class for us, and of course we see the full agriculture story, which is a scarcity of fertile land and potable water, in line with Saudi Arabia's food security program announced a few years back; these factors directed us toward investing in agriculture. Another interesting area related to agriculture is timber, which, if done properly, investors are able to receive yield on a regular basis, and at the same time there is a healthy capital appreciation on exit. Usually, in timber, a certain area is bought where the trees are cut; new trees are planted that also grow quickly. This assures the continuous presence of crops from where you receive your profits. We have done such timber projects in Brazil, Chile, New Zealand, and Australia.
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