How to Build & Grow a Fund: What you Need to Know

[Music] good afternoon everyone and welcome to this exploration of the art and science behind building and scaling successful investment funds in today's ever evolving market we've got a great panel lined up for you today uh these experts have not only navigated turbulent qus but thrived by redefining the rules of the game just to reintroduce myself I'm Louisa baldini former BBC correspondent and a co-founder of composure media so let me introduce the panel first at the end we have Karim elol co-founder and CEO of Gulf Capital representing a vision of scaling alternative Asset Management on a global scale particularly in the high growth investment corridors of the gulf and Asia we also have Huda Al lawati founder and CEO of Alf Capital the first female founded private Equity Firm in the Middle East so a private Equity Trail Blazer really whose leadership and Regional expertise have set benchmarks in transformative Investments and next to me we have Peter Hughes founder of Apex whose expansive solutions from fund to corporate are integral to the financial backbone of countless organizations so welcome to all of you and Kareem to you first really just wanted to ask looking back at the biggest obstacles that you found in the early stages of building your fund how did you overcome them and and more importantly what would you do differently now thank you thrilled to be here so um we founded golf Capital 18 years ago when I came to region I used to work in leverage buyouts and high yield and New York and uh Europe in London I came here and there was no private Equity industry or private Equity Firm worth backing so I said why not recreate the same concept the buyout concept that you see in the US and Europe here so we created golf Capital we raised our capital for from 300 shareholders who all rallied behind us to create a regional champion from the Gulf for the gulf essentially so it's very exciting and obviously when you start from a scratch you don't have a track record so how do you raise funds and that was difficult initially so we started using our balance sheet to warehouse deals and prove the returns the amazing returns you can make in this region once we buil that track record we started uh ra raising a series of funds we're launching our fourth fund now which will be 800 million our third fund was 750 million but what I'm very proud of is today with our track record we're raising more capital from outside the region then from the region we're backed by a large number of Asian Sovereign wealth funds European Pension funds American fund of funds and local Sovereign wealth funds who all see the region as a very exciting region to be invested in so if you had to pinpoint one thing what would you do differently today I mean obviously the Landscapes changed is there anything you can pinpoint for anybody out there wanting to start a fund uh we opened recently an office in uh Singapore in Asia and we're pushing our companies in Asia and I think now we're launching a pan asan strategy and it's a very exciting uh region and I wish I opened office earlier because there's a lot of capital going across Asia and we can raise more money with a not only Gulf strategy but a Pan Asian strategy okay Kareem thanks very much Huda being a startup in a fund Management in fund management is very different uh to most other startups what's your advice to anyone wanting to start a fund uh so thank you for having me here so you know I've been doing private equity in the region for 20 years started in 2004 but my company's relatively new it's less than 3 years old and some of the challenges are still there first time manager is always challenging because there's no track record and in the region there's not a lot of um uh there hasn't been historic a lot of acceptance of blind pool funds and backing firsttime managers one of the reasons we set up Al if Capital to invest in the midm market and the GCC is we saw the Gap but the other one was the sovereigns here are supporting this strategy and this asset class um um so I think that has helped us sort of get there and start the fund and a startup in fund management is not building a widget from your garage you can't do it you're responsible for hundreds of millions of dollars of other people's money and so you need a base level of operating infrastructure compliance F admin all of these things adgm is a great place to do that uh but you also need Capital you also need experience and talent to do that and obviously ultimately making good investment decisions you need a very very experienced team so I think the the challenges of a startup are common everybody has you know the uh startup risks the having to do everything yourself but I think when you're managing other people's money you just as such a high bar to start with now we've talked about this and I know it doesn't Define you but what advice do you have for women in fund management firstly and secondly you sit on many boards what piece of advice would you give to Future female leaders or future women on boards today so the advice I'd give to Future Leaders of all genders is to uh work very very hard know your um uh you know your material your content very very well and be prepared to do the hard work have a thick skin and and you know struggle a bit really and I think that's a little bit generational what I end up said talking about this a lot it it is more challenges of course the female representation in fund management is abysmal if I can put it that way and we do see that challenge I think the institutional um investor base the institutional uh world is actually very willing to support um it doesn't mean you're going to get you know uh money or backing for being a woman no you still have to do everything else and people naturally I think not intentionally you know I studied behavioral neur Neuroscience in college and people have natural biases and naturally people expect a man to be leading so they sometimes get surprised they sometimes try to find out who's backing you I've been asked in meetings so whose money are you managing or whose company is it uh multiple times so there are challenges I think hard work great keep at it keep at it that's that's what I'll tell everyone well thank you for sharing your thoughts on that and and Peter getting the optimal structure right right for a fund to ensure both operational and also uh operational resilience and also investor confidence in uncertain markets that must be a difficult balance uh yes I think particularly now when um globally it's about the hardest time to raise money so you can't take shortcuts You' got to be really thoughtful about where you put your structures uh What uh technology using what reporting you're going to give to investors what technology you're going to report to investors on so for example if you're thinking about raising money here yeah you can't do a Cayman fund right so you've got to make sure you think about where you're equating your substance and where you're trying to attract the capital from otherwise you're going to fail it's as simple as that it's a particularly hard time and it may not feel like it in this region because this Region's where the capital sits but by the rest of the world you got to make sure you don't make any mistakes you take every box that investors would expect not just about the structure but obviously the manager your materials um you know and having confidence in the right service providers around you as well you know it's actually important to have brand named service providers fortunately like Apex um that will actually make a difference and how do you ensure Peter transparency and maintain strong relations with limited partners especially when markets are Vol volatile well I think that's key I I remember coming into this region in in 2005 and it was a it's a massive bull market and investors didn't really want to know what the numbers were they were very happy with what they got but when it turned in in 2006 and 2007 they were wanting to check very carefully that someone independently was was giving them the right reporting in the right frequency so they really understood what was going on in their portfolio so you know there's a bit of trust but it's the actual verification and independent verification and Reporting frequency and quality you know people want to get their information at their fingertips they wanted to be on Portals um so the the actual transparency is critical to the success of both your businesses I'm sure who Huda is is that your experience as well and what strategies have you Founders have proven most effective for attracting and retaining limited partners in today's competitive environment absolutely agree with everything Peter said I think having the right infrastructure we use a lot of we our one of key aspects of our thesis is digital transformation for our portfolio companies um and we apply that to ourselves as well we use a lot of digital tools we work with Apex they use a lot of digital tools I think making it transparent convenient is very very important for you know to give information have the exchange with LPS I also think it's important to not have an Us Versus Them approach internally you know from your analyst your uh uh Partners whoever you have the the the relationship with your LP base has to be a good a good one and a strong one and one that is uh friendly uh you're not trying to uh position information you you want to give them the true story because and and I would say this you know we found our LPS to be extremely supportive um and you know of course there there are always challenges there's always uh uh learnings uh We've leveraged LPS to learn about sectors we're investing in through their other Investments right and I think that open relationship has been very very effective I think spending that extra dollar on having the right advisers the right um uh service providers is also important I don't think something again going back to the point that you're managing a lot of money is you should stting on that that those are investments worth making and LP see it they notice it they uh appreciate it thank you and Kareem want to talk about investment Styles what's your investment style how do you rise above the noise how do you attract yourself to attract Global position yourself to attract Global LPS and find your Niche it's interesting we perfected a new investment model we're in the control growth buyout uh business we borrowed a page from the West on control and a page from the east on growth we're obsessed with growth essentially so we like to acquire majority stakes in our businesses we bring our big bench of operating Partners industry advisers we restructure we grow our companies on average we triple the profitability of our companies before we sell them but I think having that controlling Stakes as you see in the US in control byouts is very important to be able to drive the growth influence uh the companies and to be able to exit we mostly sell to strategic buyers and the first thing they ask us you need to sell us a controlling stakes in the business so we help ourselves when we acquire controlling Stakes essentially and can you pinpoint any Innovative approaches that you've adopted to really identify and capitalize on alternative investment opportunities well uh I noticed the previous panel was on AI this is something we're using a lot in our portfolio companies uh not as much at the investment level at Gulf Capital but we're pushing it into our portfolio companies and it's making a big difference for example we we own a business in revenue cycle management where we help hospitals clinics build insurance companies and we are processing 300,000 claims a year today with AI software we're processing 3 million claims so we have 3,000 coders in India but to process 3 million claims we probably would need 10 20,000 but we don't cuz we're using software and Ai and this company has been using AI for several years way before open AI came to the market and shut GPT and we're feeling the benefit and we quadrupled the profitability of this company because of the growth in efficiency and Peter AI very Hot Topic at the moment not only from Kareem's point of view but um is a trend is that a main Trend when you look at what what are you observing in fund management and now how are you adap in to stay ahead yeah I I think it's a step before AI in terms of that what we're doing with servicing it's the blockchain it's getting smaller ticket sizes to invest into private markets funds it's taking private markets funds in tokenized form it's being able to distribute into the wealth channels which was never there before it's just for institutional investors but instead of having a minimum subscription size of say a million dollars locked in for 7 to 10 years actually if that's 50,000 and actually you can get out quarterly suddenly it's much more attractive to everyone and I think that's really going to be the transformation we see in certainly private markets investing and fund creation is is in more of a format that appeals to both institutional and also the wealth channels and even retirement channels and we we only have a couple of minutes left so HUD do I just want to conclude with you whether you can share any specific examples of strategies or decisions that have helped your fund whether economic downturns or Market disruptions and any advice for our audience so look I think uh one positive thing about private Equity that it is a longer term asset class we're not obviously you know we do have to exit but one of the things that we did when we started the fund is we were very transparent with our LPS about our a longer whole periods 5 to seven years the reason is that we're saying we're going to invest in growth opportunities and invest in the J curve in technology in Talent to build up these businesses I think it's a fallacy to say you're going to invest for 3 to four years what what a reasonable hold period does is allows you to invest in the business think longterm and whether the storm because you can write out Cycles in a region that has a link to a commodity cycle intrinsically as well that becomes particularly important the other thing that we do is we are very careful about and and this is a little bit different for what Karim was saying is that we think you have to be careful about mixing toolkits um I think lbo and growth you cannot uh take a growth opportunity and lever it up completely for example right because what you're doing is taking away that Capital that you want or cap thatb capacity that you want to go into growth uh to finance your acquisition and we I found especially in the down cycle that that is a bit challenging for the Investments if you go through a downturn so we're very careful about how we use leverage as well Huda thank you very much indeed I'd like to thank all three of you for your amazing insights hopefully absorbed by our audience here so many thanks firstly to Huda alati to Karim El and to Peter Hughes thank you very much indeed shukran [Music]