The whole world in his hands

Islamic finance is fast becoming the most profitable business sector in the region with a multitude of the Middle East’s mega real estate projects funded or advised by Shariah-compliant institutions. James Bennett meets one of the youngest, most powerful and fastest rising Arab bankers on the planet and learns why in just six years he has already become a financial legend

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By  James Bennett Published  October 1, 2006

|~||~||~|So you want everything related to Mr CEO right?,” says Esam Janahi, relaxed, head dress off and leaning his large frame towards me while sitting at his grand desk in his spacious chief exec’s office. “Okay, CEO, CEO, hmmm? I want to create something interesting and not be repetitive”, he says, refreshingly aware that the standard corporate line is all too often used and not what people want to hear. But Janahi is certainly interesting, and very rarely repetitive. The CEO of Gulf Finance House (GFH), a groundbreaking and innovative Shariah-compliant investment bank, is one of the youngest and most powerful financial players in the Middle East and has been responsible for leading the way in some of the region’s largest and most crucial mega real estate and infrastructure projects. His secret? He never stops and is constantly on the look out for further achievement and success for the institution — a core skill he developed when he met one of his first CEOs. “Without mentioning which institution, I once had a question from one of my CEOs and I told him, ‘okay, all I have is short, medium and long-term strategic visions’. “In the short-term I want to succeed straight away and in the medium-term I want to be in your position. I didn’t mention the long-term.” GFH has won high acclaim among regional and global investors for its pioneering Shariah-compliant regional and global investments that provide new growth opportunities to Islamic investors. The bank has and continues to play a leading role in investment advisory, infrastructure investment, property funds, private equity, venture capital and asset management. Most importantly, it is always hungry and feeds on developing its own growth as well as that of the region from where it originated. Since its creation six years ago, under Janahi’s leadership, GFH has financed some of the most important, forward-thinking developments in the Middle East, including the US $1.4 billion Bahrain Financial Harbour (BFH); the US $1 billion-plus Al Areen Development in Bahrain; the US $1 billion-plus Royal Metropolis and Jordan Gate projects in Amman; the US $1.4 billion Gateway to Morocco; the US $3.8 billion trio of Legends theme parks in the under construction Dubailand; the US $2.6 billion Energy City in Qatar; invested a significant sum within the gigantic Prince AbdulAziz bin Mousaed Economic City in Saudi Arabia and committed a serious sum to the transportation infrastructure in Egypt alongside the Egyptian government. I listen to Janahi reel them off and he tells me “that’s only the half of it”. I’m out of breath listening to it all. NATURAL BORN LEADER Janahi was born to lead. You can just tell. And so could his classmates during his time at university. “I started to look at things in a different way to others. Others will tell you ‘it can’t happen, it’s too difficult, it takes a lot of I don’t know what’. I got used to the doubters and the herders. But I said I have to achieve it for a better benchmark.” Janahi leans back and says that to be successful in an increasingly competitive regional business world, it is not enough to have a unique selling point. You have to have something else in order to rise to the top of the pile. “Whenever you take a project, for example, if you are in Dubai today and you want to be successful, they tell you that it is too competitive. But if you are creative enough to get in there with an innovative idea and the lead time takes one and a half to two years to replicate it, then make sure you digest it and know it off by heart. This is where you create your competitive edge.” It is his approach to risk, however that has transformed his and the bank’s fortunes since its creation in 1999. The majority of people, he says, define risk as being calculated. Of course, Janahi measures his approach to risk but says he isn’t afraid to risk big in order to reap high. “I look at the most aggressive, sharpest curve on the risk chart, and with the sharpest one you can hit the highest in terms of the best reward. The normal types of rewards are 10%. Everybody can do it. I’m talking about the bank where we give extraordinary rewards to our investors. “I will take the right risk by not understanding the normal dynamics of risk that others look at. Looking from banking is one thing, but I also look from the inside of the business where it matters.” Risk has formed part of Janahi’s career ever since he started work in 1989 as a junior employee at Merrill Lynch. In those days, he says, he used to take risks for others, convincing high net worth individuals and decision makers to invest in various Middle Eastern markets. But one day he says that he was so tired of reaping rewards for others, that he wanted to get to the top himself. “I was involved in the establishment of First Islamic Investment Bank in Bahrain. I helped it raise capital and promoted it regionally, but then I said ‘that’s it, enough is enough, why should I take someone else’s risk as Mr CEO if I am promoting and doing a lot of stuff myself?’ This is where there was a turnaround.” TAKING A CHANCE But the biggest risk Janahi has ever taken, he says laughing and looking back to where it all began, is when he took the decision to create Gulf Finance House, particularly as he was, and still arguably is, the youngest CEO to have held such an elevated position in such a large institution. “At that point I was the youngest Mr CEO to handle a bank. I started by doing the fund raising, getting the strategic partners and putting the business plan together myself. From there I created the core team and from there the biggest risk I took was creating GFH.” This was also his biggest challenge at the time, however, the far greater feat, he adds, was to take the model and successfully copy it across the entire region as well as within international markets. “Whatever I do in terms of projects, creating new companies, getting into a city, sometimes it is a learning curve, such as creating a hub like Bahrain Financial Harbour. Sometimes you need to be in a sharp learning curve to know what the challenges are that can be overcome, but the bottom line then becomes the replication effect.” And repeat it he has with projects spanning right across the GCC, Levant, North Africa and Europe. When these projects are completed and up and running they will form both the backbone and the future of the Middle Eastern economy — all thanks to Janahi’s model and drive to see his vision completed. As he says, GFH’s projects should not be branded as pure real estate, “there are other big institutions that deal in that”. Janahi insists determinedly that GFH’s “catch” is that it will always look at infrastructure. “This is where you add value to yourself and the countries you work in and work for. They will reap the rewards.” Dr Fuad Al-Omar, chairman of GFH and his shareholders must also be fairly pleased with the bank’s progress, with the first half of 2006 proving to be a record year. The institution’s market capitalisation today exceeds US $3 billion, assets rose 118% to US $1.3 billion, consolidated net profit climbed to US $117 million, an increase of 87% over the same period in 2005, the bank’s liquidity grew to US $730 million in cash deposits, while shareholders’ equity increased by 101% to US $580 million. Not bad going in only six years. HOME IS WHERE THE HEART IS One area, however, will always remain close to Janahi’s heart and that is where it all began — Bahrain, otherwise known in Janahi jargon as “the Kingdom of opportunity”. An area where GFH has contributed to around US $8 billion worth of “value creation”. “We are very loyal to it because this is where we started. It has all the dynamics to promote itself and will be very important in the future of the region,” he says. “We have gone vertical with the Bahrain Financial Harbour, gone horizontal with Al Areen, we have done direct investments and we carried out the first acquisition of a controlled consumer finance company,” says Janahi pausing for breath before he continues to run down an off-by-heart list of Bahraini achievements. “We have done another acquisition for Balexco, the Bahrain Aluminium Extrusion Company, we established ‘Solidarity’, an Islamic assurance and insurance business, we have done the first leasing bank, the Royal university we have done a lot of things and still it is not announced that we have established Khaleej Gulf Holding company out of Kuwait worth US $900 million that will benefit Al Areen and Bahrain Financial Harbour.” The list of projects Janahi and the bank are involved in is mind blowing. Not only that, his success and ambition also runs in the family with his brother Rashad, the CEO of Abu Dhabi Investment House (ADIH). The siblings work closely together on several projects including the Qatari Al Rayan Bank, one of the largest Islamic financial institutions in the world and Prince AbdulAziz bin Mousaed Economic City in Saudi Arabia. He says he doesn’t compete with Rashad, but then again why should he? Janahi only does first, and never second. In his own words, “we are never in the passenger side, we are always in the front cabin driving the engine”. “Energy City is the first of its kind and I am the first to do it. No one else has done it in the Islamic sense so you have to go and do an Al Rayan bank. We recently announced Masrafy, the first women-only Islamic investment bank in Bahrain with an authorised capital of US $1 billion, aimed at targeting high net worth women in the region and located at the Bahrain Financial Harbour. And I’m a founder member with ADIH, each one owning 10% of that institution, no one else has done it.” Janahi and his team are fuelling the future of the Middle East, both financially and with the creation of some of the most important physical (infra)structures to have ever been planned. But on 23 December this year he will be 40 years old, an event that because he has achieved so much at such a young age, clearly worries him, and that is making him re-focus his priorities. “In the US they call it the shaking age,” he laughs, “so we’re creating deputy CEO’s under Esam Janahi and appointing a new managing director into our organisation’s chart to fuel GFH for the future. “All of them by now have the right mindset. Even if they leave here to manage somewhere else, they will turn it into the equivalent of Gulf Finance House, because they have the knowhow and managerial skills to achieve what we are achieving at GFH.” Janahi has done the hard part and it is now time for him to take a step back and play a more strategic role, rather than give all his energy and commitment to the fast-paced world of regional investment. “What I’m aiming for is to relax a little bit, have a nice lifestyle and to be with the children. When they reach 15 years old it’s difficult to attach yourself with them. At the moment they are young and I have a chance to see them grow. “I have to devote more time to them, not to be out of the industry but to delegate more and only be involved in strategic investments that I think can add value to the bank.” The big deals are exciting and GFH’s growth is set to exceed anything seen in the industry before, but sometimes family comes first. Janahi did promise to give me everything related to ‘Mr CEO’, and he didn’t disappoint. ||**||

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