Hasan Shakib Al Jabri is an established leader in the Islamic asset management industry. Winner of the GIFA Islamic Finance Personality Award for 2013, Al Jabri has numerous accolades to his name. He has developed a state-of-the-art Islamic asset management business that fulfils both Shari’a and ESG requirements. It is owing to his leadership role that SEDCO Capital has emerged as a leader player in Islamic asset manager. In the interview below, he shares with us his experiences, which also reflects on his management style.
Please tell us about Sedco Capital, what it is, what it aims for and what are the different segments within it.
SEDCO Capital is a leading Shari’a and Environmental, Social and Governance (ESG) asset manager in the world. Although we are headquartered in in the Kingdom of Saudi Arabia, we have a global offering covering equities, real estate and private equity. SEDCO Capital currently has the largest set of Shari’a funds registered in Luxembourg than any other asset manager in the World. Our range of investments spans the globe, from the US all the way to the Far East.
Carved out from a family office and formed an independent Capital Market Authority (CMA) licensed company with an initial capital of SAR 50 million in 2010, the journey of SEDCO Capital’s transformation from being a family office into an institutionalised asset management firm required enormous and dedicated efforts.
Please tell us your ownership structure and who are your shareholders.
SEDCO Capital is a subsidiary of SEDCO Holding. The Saudi Economic and Development Company (SEDCO), is a leading conglomerate investing in a number of sectors regionally and internationally. It is considered a major player in real estate development and management, hospitality, wealth management, auto leasing, and healthcare, all conducted in accordance with Islamic guidelines widely known as Shari’a. It manages a wide and diversified spectrum of real estate investments, equities investment, and other businesses in Saudi Arabia and around the world.
Please share with us who are your clients? And how have you assisted them?
Our clients (international, regional and local), range from sovereign wealth funds, pension funds, financial institutions, institutional investors, family offices and UHNWIs. We provide them a range of investment solutions that previously have not been available within a Shari’a investment context. Given our choice of 14 different global equity funds, coupled with our strong real estate and private equity offerings,we can provide a total asset allocation in a well-diversified portfolio, uniquely for the Shari’a-sensitive investor. We also provide white-labelled services to manage funds under third-party names. SEDCO Capital also provides bespoke discretionary portfolio management services – in Saudi and GCC equities as well as Saudi real estate, we also offer our KSA clients and corporate-finance advisory. Among our investment solutions, 10 solutions are also ESG compliant (environmentally friendly, socially responsible and follow corporate governance principles), which is a commitment we have bestowed upon ourselves moving forward.
How are you different to other asset management companies in investment advice and choices?
SEDCO Capital has a very strong and solid track record that spans 28 years since it’s inception as a family office in 1976. Our diversification in products offering paired with our smart and innovative investment solutions and processes have promoted SEDCO Capital to be the leader in Shari’a-compliant asset management. Our founders have played a vital role in the development of the Dow Jones Islamic index as well as recently becoming the first Islamic asset management company to sign the United Nations Principles of Responsible Investments (UNPRI). As a result of UNPRI, SEDCO Capital has opened up the market to conventional, responsible investors as well.
Socially Responsible Investing has lately become a buzzword for the Islamic banking and finance industry. Does that mean that Shari’a-compliant investments are not socially responsible? What is the difference between the two and how does Socially Responsible Investments add value?
Following our leadership in Shari’a investing, we are very glad to be the pioneers in Socially Responsible Investing in the Shari’a world (as mentioned earlier, we are the first Shari’a-compliant asset manager to become UNPRI signatory) and we have supported bridging the gap between the two industries when we announced the launch of our first 2 ESG funds in February 2013.
Shari’a finance is ethical by nature, this is an industry that has evolved for hundreds of year, and it has developed rapidly over the past 30 years to reach almost 1.831 trillion dollars.
Responsible investing has been evolving as well especially since late 1996’s when Kofi Anan, UN Secretary-General at the time, took a leading role in creating the UNPRI. Today it has become more than 10 trillion dollar industry.
With our in-house research, we recognised the commonalities between both the Islamic and ESG industries, as far as the negative screening is concerned and without losing focus on creating sustainable economies. We added value to their existing practices with our prudence approach in investing through our leverage parameter that avoid excessive leverage in investing (which ESG investing doesn’t consider) and we learned more about active involvement which we started applying to our investment processes and our manager selection processes.
An important element in bridging this gap is to help explain to the world what Shari’a-compliant investing is all about, and its resemblance to responsible investing.
Sedco Capital has recently launched funds platform in Luxembourg, can you please share more details on it.
SEDCO Capital Global Funds (SCGF) is a family of 14 liquid strategies and 3 illiquid strategies that total to about $1.6 bn of AUM. We saw that Luxembourg is well recognised regulated jurisdiction to ease access for investors no matter their domicile.
On the SCGF, we continue to conduct our thorough due diligence on the selection process of managers as well as have continuous monitoring and supervision. The platform also offers independent performance calculations, reporting, administration and custody; it is also plugged into more reputable financial systems like Bloomberg, Lipper, FundInfo and Morning Star. The platform has helped introduce strategies not only to Shari’a compliant, but ethical and responsible investors.
How challenging is it to explain the benefits of Socially Responsible Investing to your shareholders and Shari’a-sensitive investors? How much aware are the Shari’a sensitive investors of ESG issues?
It is a learning curve for us and for our clients; we explain what Shari’a is and what ESG is. We share our practices and inform them that it not only ensures economic sustainably but also leads to good performance. By comparing the three main indices (Dow Jones Islamic Market Index, MSCI Social and S&P 500) we realised that both the responsible and Islamic indices performed better than the conventional with a clear advantage for the Islamic (due to low leverage).
We feel responsible towards the industry and how important these investment methodologies are; this is what we communicate to our shareholders, every time we have an opportunity.
Please share with our readers the recent developments at Sedco Capital in terms of acquisition both in international and local markets.
In international real estate, SEDCO Capital has successfully executed transactions worth $1 billion over the past 3 years. We also successfully sold 21 investments in France, Malaysia, Singapore, UK, and Mexico while acquiring 19 investments in strategic markets such as USA, UK and KSA.
In liquid strategies, we have decided to launch a fund with the strategy that allows investors to navigate the portfolio alongside different stages of the business cycle in terms of durable versus sustainable strategies (more cyclical).
As there was an increase in the money market fund (sukuk murabaha), the main purpose of this extended offering is to allow the clients, which are Shari’a compliant, to protect their wealth during market downside.
As far as our offering is concerned, we have added to our portfolio a multi-asset class portfolio called “core diversified fund” which as a strategy allows to enter into different terms of risk-adjusted returns, using a cyclical asset allocation process, reviewed on quarterly basis.
In 2014, SEDCO Capital’s private equity programme continued its growth streak completing SAR1.4 billion worth of transactions. Exiting about SAR414 million and buying SAR321 million worth of equity deals, in addition to SAR665 million of new fund commitments. The new commitments came from 9 different managers, diversified across 8 regions globally. The private companies exited in 2014 were sold at a healthy multiple of 2.4 times (32% IRR).
Mr Al Jabri, you have been a CEO of Sedco Capital for quite some time now, tell us how different Sedco Capital is now from when you started?
It’s simple. We were a family office that transformed into a well-institutionalised, regulated, highly sophisticated and performance-driven asset manager. To reach there, we had to beef up the team and build up operational, administrative as well as risk management capabilities to be able to provide good service to the clients. We also invested in compliance & audit, finance, treasury and marketing.
Today, we handle third-party clients, and we have a good number of institutional investors as well as SWF and HNW investors. We also developed further our strengths in local equities (as an asset manager), real estate and agriculture. Also this required us to change our mindset to deal with all types of sophisticated clients.
What are the short, medium and long-term plans of Sedco Capital?
Our aim is to beccome the leading Shari’a asset management company globally. While we have achieved this goal to a large extent, we realise that this is a dynamic goal and we will continue to exert utmost efforts to deliver to our clients the best opportunities and services. We must be well-recognised in the Islamic world. Our goal in the medium and long run is to become the asset manager of choice for Shari’a investors as well as ethical and responsible investors globally. Also we must be able to capture responsible clients who see us as a good investment company that has a superior track record, driven by a strong process and asset management team.
What challenges do you face in achieving your goals and working with investors from different backgrounds? And who are your competitors?
Market volatility is a constant element that we always have to manage, obviously the increasing regulatory requirements are becoming a major point of focus, as well as attracting and retaining the best talent.
Our investors are from different backgrounds, this is a positive challenge. As we have the most diversified group of investment opportunities and fund strategies, we always have to listen to their needs and be able to advise them appropriately rather than be product pushers.
Our investments for the past 3 decades have always been global in nature, including developed as well as emerging markets, and through our Luxembourg platform we can deal with investors from all over the world.
Big private banks saw our products as being strong and diversified in the Shari’a world and they started distributing them globally through fund platforms of some of the largest international and well-regarded banks. In Saudi Arabia, we have a dedicated business development team.
We have different competitors for different asset classes and geographies, including GCC asset manager and global international banks.
Sedco Capital has been receiving a lot of industry awards, one of the recent one is the Global Islamic Finance Awards (GIFA) 2014 in Dubai, please share your thoughts on it and what it means to you.
GIFA has been doing a good job in identifying the market makers in the region and all over the world. We are very proud to receive recognition from GIFA as a socially responsible fund manager. All these great initiatives are in line with Shiekh Mohammad Bin Rashed Al Maktoum’s (Ruler of Dubai) vision to make Dubai the islamic economy capital of the world. We are very proud to have won many awards in the industry including the “Islamic Economy Award” for “Best Islamic Fund” presented to us by Sheikh Mohammad bin Rashed Al Maktoum in 2013 during the GIES.
All that Sedco Capital has achieved would not have been possible without the hard work, commitment and support of your team, please share your views on the team and how do you motivate them as their leader.
We all work together, we always give positive feedback, we have a great working atmosphere and we base our culture on mutual respect;
all these elements have made us an employer of choice in the industry where top talent is approaching us to join SEDCO Capital. All this is in line with our shareholders’ vision and the strong governance by the authority (and trust) given to management. Today SEDCO has been ranked as the 11th best working environment employer in Saudi Arabia.
Share with us your journey into Islamic banking and finance?
SEDCO Capital was born Shari’a compliant; we started all of our product offerings since inception to be in line with the principles and practices of Shari’a. As we developed over the years, we continuously innovated products and solutions in an industry that is based on interest and hedging; this proved to be very challenging. However our determination, experience of over 20 years and our well-rounded team allowed us to develop products that not only lead in the Shari’a world, but also to be at par with conventional offerings from other banks.
Moreover, our scale has also contributed in providing very competitive TER’s in the market, which has put us at a clear advantage.
Share with the readers of ISFIRE a typical day of Hasan Al Jabri. How does it start and how it ends and what is on your must-do list?
To have a clear schedule for the day, week, month, and even the year ahead of time is what you need to deliver and achieve. My work involves a lot of travel since a lot of our investments are international in nature. Our strong team manages their portfolio, yet I have to visit our clients and managers globally. Travel takes a lot of my time; nevertheless, we must schedule the time way ahead so you can use it efficiently. I do delegate a lot especially to our strong team. I keep an open door policy to spend time in listening to senior and young staff.
I take lunch as an opportunity to have discussions with our colleagues; this helped to get to know them better and listen to them while keeping me in tune with the whole organisation on both a professional and personal level.
What are some of the most exciting projects you have worked upon?
Over the past 2 year, our main focus has been on launching the Luxembourg platform as our work in bridging the gap between Shari’a and responsible investing. We are also working on a few projects to support SMEs that are vital for sustainable economic development.
The US real estate timing was spot-on so it was really quite an interesting opportunity to work on. Also developing our co-investment activities where we’re buying into very exciting businesses globally.
On the CSR front, the financial literacy programme developed by SEDCO holding in the name of “Riyali” has gained a lot of ground over the past two years included in the circle of beneficiaries are young business owners and student as at all levels. Another interesting CSR initiative that we are involved in is “Foras”, an angel investors programme that helps young Saudis develop their business.
You have contributed to the industry in different ways, through speaking engagements, article contributions etc. How do you balance these with the workload?
Thanks to the strong team that I have, they always help me with great ideas and with the day-to-day workload. This gives me the opportunity to spend more time on other engagements, which is also helpful in developing our knowledge and network.
One has to try and balance the requirements of the day-to-day business and our responsibility to share our knowledge with the industry. This gives us the chance to introduce what we are doing and share our view on the future, on the investment team and on the industry in general through our innovations and services we offer to our clients.
