However, the first step is to make them a regional player and a regional network, and Jordan is an ideal base to do it from.
What makes Jordan a good base or market for a private equity player?
Several factors. We are strategically located in the region, particularly in the Levant. There is security and stability in Jordan that you don't find in many places in the Middle East, a highly educated population, and we have an enlightened leadership that has implemented a very ambitious reform process. For instance, the government has passed over 200 laws recently that have contributed in making Jordan an environment more conducive to investment activity.
All these factors help Jordan's investment environment, and the inter-Arab trade and investments, surplus liquidity from the Gulf, and an increasingly sophisticated investor community enhances Jordan's prospects.
What is the investment environment like in Jordan? Overall, it is still a very small market.
Yes, it is. And this is why it is important to leverage the relationships we have in the Gulf, in order to have Jordanian based companies that don't solely rely on the Jordanian market.
There is a lot of GCC capital coming into Jordan, but obviously not enough from a Jordanian point of view. We hope to attract much more, and His Majesty has been working hard to make Jordan as attractive as possible to capital, and our investment climate is extremely attractive. I do believe we are on the right track.
Much has been done, and whilst there is still room for improvement, we have come a long way. I would still like to see an even more open environment, and less bureaucracy. Speeding up the privatisation process will also act as a vital catalyst for attracting investment.
Are there any areas or sectors that you find particularly interesting?
The main focus of JD Capital is probably on the raft of privatisations coming up on the horizon in Jordan. We are very interested in the privatisation programme of the Jordanian government. These companies have a lot of potential, and we feel that we can not only enhance this potential, but also create much leaner companies that will benefit shareholders, employers, and the wider economy.
We are also looking at industrial projects, as we don't want to concentrate too much on real estate, given there is already too much focus on this sector. Having said that, we have developed a diversified investment strategy, and have recently announced the largest investment project in Northern Jordan to date worth over JD 100 million ($141 million) to develop a tourism resort in the Ajloun forestland. Overall, we want a very diversified investment strategy that capitalizes on various opportunities in a wide array of sectors.
You have $300 million in capital, a significant sum for Jordan. How much are you hoping to invest, and in how many deals?
First of all, $300 million is only a starting point. We are looking at how to get as much 'bang for our buck' out of this initial capital, and, when need be, expand our capital base further.
We have criteria for how large our smallest investments should be, but it is not set in stone. If it is an opportunity that is worth pursuing then we will do so. Our strategy is not to limit ourselves to a certain stage of investment, and we might undertake seed investments in some cases, and mature business investments in others.
The only rationale that guides us is to generate returns for our shareholders by adding value to the investments that we undertake. We believe that this additional value can be realised either through direct involvement or our ability to attract the right strategic partners.
We will do the full gamut of investment situations, and we already have a healthy pipeline of deals that we are looking at. We don't necessarily need a majority stake, if the company is managed well. As a general rule, we like to maintain minority control, but it all depends on the company, its size, and the exit strategies that are open to us. We strive to be not only the largest investment company, but the most effective.
You intend to take part in Public Private Partnerships (PPPs) in Jordan, but there have been very few PPPs in the Middle East.
No, there haven't been, but one of the reasons JD Capital was formed was to show that PPPs actually do work well. There is a lot of synergy, and much can be done when the public and private sectors work towards the same goals.
I worked in the government for 18 years, so I know how the public sector functions, and I think there is a need for more dialogue and discussion between public and private sectors, and to understand that whilst our goals re the same, the way to get there varies.
The business of government is to not be in business, but there is a need to understand that there are socio-economic considerations that the government has to take when privatising publicly-held companies. In the short term, the bottom line is of course important, but the long term view is also important. Companies that come here to take part in the privatision programme, but only take a short term view and want to 'strip and flip' a company, will not do well.
In the long term, we believe in a conservative strategy to your bottom line will be more useful to the shareholders and the wider economy as a whole.
Is the importance of developing and serving Jordan's wider economy and industry important to you?
It is very important to us, because we are here for the long haul. We believe that by strengthening the economy, and being able to support Jordanian workers and hopefully increase their pay; we can benefit both us and our stakeholders.
Private equity is often always about a short-term, bottom line approach. How does this fit with your long-term approach?
We believe that there is no contradiction between being somewhere for the long-term, and generating good returns for investors. But we have to pay attention to the socio-economic situation. And I must add, expanding the 'middle class' is vital to achieve this.
DIC has a joint venture with HSBC, the MENA Infrastructure fund. Might DIC or the fund itself invest alongside you in any deals?
DIC is the largest shareholder of JD Capital, so we hope that through their investment in something like the MENA Infrastructure Fund, they will join us in some of the privatisations that are coming up on the horizon.