Our Investment Philosophy
Why Invest in the Middle East?
The underlying fundamentals and demographics of the MENA region are strong. More traditional investment markets like the US and Europe look poised for a prolonged downturn, making the MENA region an attractive area for investment relative to the rest of the world. Regional cross border trade and investments will likely increase, leading to a similar situation to the market convergence of Western Europe in the late 1980’s. All these factors will continue to drive both the demand and growth of regional financial services.
Why Invest in Financial Services?
Financial services - encompassing but not limited to banking, insurance, consumer finance, mortgages and asset management - is just as vital to an economy’s infrastructure as transport, utilities, water and other physical facets of infrastructure. It is the third largest industry by assets in the region after petrochemicals and defense, both of which are relatively closed to private investors. There is now an acute need to create a regional financial services infrastructure with the instruments and capacity to absorb the region’s liquidity and unlock the regional economies. Saffar possesses the ability and experience to leverage proven business models from developed economies and adapt them for regional markets.
Why Invest in Growth Stage Companies?
The vast majority of private equity funds in the region are pre-IPO or buyout, allowing Saffar to operate in an underserved space. Further, pre-IPO and buyout funds may provide a natural exit for many of Saffar’s investments. Saffar mitigates traditional risks of venture funds by investing in proven business models - not new technologies or new and unproven business ideas or concepts.
Why Private Equity?
Recent history has shown that public companies in the region are not as transparent as originally suspected; private equity provides more control and greater visibility of company operations. Improved regulatory and legal frameworks and the opening up of sectors such as retail, telecom and infrastructure has encouraged PE funds to invest in regional companies.
Why Invest Now?
This is familiar territory; Saffar’s investment in Zawya was made during difficult market conditions following the internet bubble and September 11th. Saffar does not attempt to time the market as it is not possible to pick the bottom, however, investments made close to the bottom of an economic cycle coupled with the compelling growth outlook of the emerging MENA region creates an unprecedented potential for exceptional investment returns. The current environment, though challenging to most parties, represents an opportunity for Saffar to establish itself as a leader in this field as Saffar’s investments do not rely on debt but rather focus on strong, fundamental cash flows and controls from the outset.