Author: Jules Gray
30 Jul 2013
If you had asked international observers in 1971 which country would be the world’s richest within a couple of generations, not many would have claimed the recently independent State of Qatar. However, since untying itself from British rule that year, Qatar has soared up the rankings of the world’s wealthiest countries as a result of its vast quantities of oil and natural gas. This culminated in 2010, when Forbes placed Qatar at the top of its annual list, with the highest rate of GDP per capita and growth of 19 percent.
The staggering transformation of this resource-rich country is set to continue in the coming years, with ambitious plans of the ruling al Thani royal family to bring the football World Cup to the country in 2022 – meaning an overhaul of the infrastructure is required in the next decade.
While there are plenty of opportunities domestically, a good deal of Qatar’s leading businessmen have started to look abroad for investments. The Qatari Investment Authority (QIA) has led the way in investing considerable amounts of money into real estate around the world, but private investment companies are also broadening the scope of their interests.
Founded in 1999, QIPCO is one of Qatar’s leading private investment firms, with a range of interests that includes real estate, construction, finance, and energy. It is also well known for its backing of horse racing in the UK, with a substantial sponsorship deal for flat-racing events such as the British Champions Series, worth £4m.
It is the investment vehicle that manages the interests of six brothers – cousins of the Emir of Qatar, although it is entirely independent of the QIA’s interests. Run by Sheikh Hamad bin Abdullah al Thani, the company has begun to look overseas for opportunities to grow its business and raise the profile of both its firm and its country.
Speaking from his London residence – a stunning 185-year-old house on London’s Park Lane, away from his headquarters in Qatar, Sheikh Hamad talks about how he decided to embark on a business career: “At the beginning I studied political science, as well as some business studies. But I feel a business career comes more with experience and motivation. Since I was maybe 21, I found that nobody had time to run my family business, because the rest of my family was in politics and I wasn’t.
“So I said, ‘why don’t I work with my family – my brothers and my direct family?’ I started with whatever holdings and inheritance we had, and started to develop them, together with a very dedicated team, who I consider part of the family.”
He is keen to emphasise the importance of his team, without who he said he would not have achieved as much as he has: “They have worked for 12 years now and they are still part of the family. I cannot accomplish a mission or a business endeavour without the support of a dedicated team around me, and I was lucky enough with this team.”
Sheikh Hamad acts as chairman and CEO of QIPCO, taking care of the day-to-day running of the business, while the board helps him formulate a general vision for the future. He says that the philosophy behind his investment decisions is sustainable growth, and he is wary of loading the portfolio with risky holdings. He says: “We had certain criteria and a certain percentage [of investment] that we concentrated on. Whether it is real estate, equity, direct equities, or different diversified investments. We look at it always as a percentage, and it hasn’t changed over the last few years.
“The most important lesson I learned is that the more an investor is greedy and wants a 20 or 30 percent return, the more risk they will have. I am very happy to see ten percent growth every year, as it’s sustainable. That is the most important thing that I advise my team on. It needs to be sustainable, with a ten percent benchmark every year.”
The company’s initial focus was on the local Qatari market, especially as the country was experiencing rapid economic growth. “At the beginning, we concentrated much more on our local market. At the time the growth in Qatar was in the double digits, so we concentrated highly on the local market,” says Sheikh Hamad.
Around 2010, however, QIPCO began to broaden its horizons. Like the QIA, the company looked outside of Qatar for growth opportunities. Sheikh Hamad says the company is “part of the global market”, and so it made sense for it to expand into international markets.
In Europe the safest country to invest in at the moment is the UK. A lot of people think that it’s in a very bad situation – it isn’t compared to other European nations
One specific market QIPCO has focused on is the UK. This is borne out of the Sheikh’s affection for the country, where he spent much of his life: “I was born here, I spent maybe four months every year of my childhood here, I studied here, and I’ve also got lots of cultural interest here. I am very, very attached to the UK.”
The QIA has a strong presence in London, with notable investments including 95 percent of the recently opened Shard skyscraper, world-renowned department store Harrods, much of the newly vacated Olympic Village in East London, as well as spending £13bn on buying a former army barracks in affluent Chelsea.
QIPCO is looking at a number of opportunities in Britain’s capital, and Sheikh Hamad says that it is where the safest opportunities are within Europe, despite the negative sentiment engulfing public debate about the state of the economy. “In Europe the safest country to invest in at the moment is the UK. A lot of people think that it’s in a very bad situation – it isn’t compared to other European nations. It is lucky it didn’t join the euro – I think that was a very wise decision.”
Regarding the state of the European economy, he says that the ongoing eurozone crisis means that he is wary of putting his money into certain countries, and is not a fan of gambling on distressed assets: “It is very difficult [in Europe] today because of the euro situation. For example, Germany is a very strong economy, but [the likes of] Spain and Greece are in trouble. They are all joined to one currency at the end of the day, and if they don’t have the same strategy and don’t agree they will have a very tough time.”
He points out the example of Cyprus as a reason for not investing in distressed assets in countries suffering economic turmoil, because of the threat of governments taking drastic action that could harm that investment: “It’s not clever enough. There’s a huge risk.”
Instead, he is happy to wait and see what the next few years bring for Europe, and believes it is too difficult to predict: “It’s going to be a difficult time but we cannot anticipate, we need to wait and see. It will be a very interesting next few years.”
One area that he has been keen to invest in is horse racing, and particularly the industry in the UK. This is more out of passion for the sport than any straight business decision: “The main reason for this was that we have a lot of interest in the racing world, and it’s a very strong hobby in our family. I found it is very important to support such an industry that a lot of people live off. Three years ago, when we started, it was really almost dead, which was very sad. When I found there was a possibility for us to help in something that interested us very much, and helped an industry that we are part of, I said ‘why not?’ We should join it.”
QIPCO will be familiar to racing fans due to its sponsorship of the British Champions Series and its setting up of Qatar Bloodstock, owner of 2010’s 2000 Guineas winner Makfi. He says that although there has been interest from other racing markets, his attachment to the UK makes it his main interest.
The World Cup
Sport is becoming a central theme of Qatar’s future. Unsuccessful bids for the 2016 and 2020 Olympic Games were made off the back of the successful bid for the 2022 football World Cup, and the government plans to continue down the path of bringing major sporting events to the country.
The World Cup itself will see the country transformed over the next decade, inevitably presenting local companies with plenty of opportunities. QIPCO will be taking an active part in the building of key infrastructure and real estate projects to ensure the country is ready to welcome the world’s football fans in nine years time.
He says the challenges will be considerable, and work needs to start in the next year: “The amount of infrastructure that is required for the World Cup is huge. It will give opportunities for all the local companies and international companies. We are very happy to assist. I think the infrastructure building will need to start next year. It’s going to be a huge challenge.”
While the World Cup will help to transform Qatar into an international destination for businesses and tourists, the country’s capital is already a key economic hub in the region. Sheikh Hamad tells me that Doha will continue to be one of the key economic destinations in the region, alongside other cities like Dubai and Abu Dhabi: “For the region, (Doha) will definitely be one of the main hubs. It will be a very strong hub, but not the only one.”
Part of the reason for Doha’s success is the relative stability of its political and economic environment: “The stability (of the economy) is very important because it was taken in a cautious way in the past few years, which has been an advantage.
“Each country has its own character. Dubai is much more of a tourist attraction and people buy houses there from all over the world. Bahrain used to be a very good financial centre, but the political situation over the last few years has harmed them.”
Ambitions and achievements
While most leading businessmen have personal ambitions centred entirely on their own achievements, Sheikh Hamad is more concerned with ensuring that those around him enjoy the fruits of his success. He says: “The thing that gives me the most pleasure is the day I find my collaborators – the people that work with me, the companies that we deal with – are all happy and successful with us together. This is my greatest ambition and greatest pleasure.”
Another of his ambitions is to develop partnerships with leading international businesses, citing the successful work QIPCO has done with leading German firm Siemens. He says he would prefer a partnership with such firms, rather than merely acting as a regional representative: “In the old days, these international companies had representatives in the region. At the time we said ‘Why do you have a representatives? Why don’t we become partners?’ I don’t believe in representation, I only believe in partnership – I put my money in and the others put their money in. You share the profits.
“We want strong partnerships with the best names of companies worldwide, based on mutual respect. This is really the biggest achievement that will make me happy.”
It is this ambition for an international presence that is driving QIPCO towards becoming a highly visible name in international investment. A ten-year plan is currently being formulated by the board that will set out the road ahead for QIPCO, and Sheikh Hamad is keen to develop the firm’s operations in more regions around the world, such as its already successful partnerships in the far East. What is certain is that Qatar, and QIPCO, will be playing a leading role in the world’s economy over the years to come.