The DIFC is ranked amongst the best 10 world monetary centres for its efficient enterprise surroundings, human capital, infrastructure, monetary sector development and wonderful popularity
Interview with: Rohit Walia, Executive Chairman, Alpen Capital
February 25, 2020
The Dubai International Financial Centre (DIFC) was established in 2004 as a particular financial zone to supply corporations with world-class infrastructure. Its opening led to a paradigm shift for the region, with the adoption of a widespread legislation framework, an impartial regulator in the type of the Dubai Financial Services Authority and the introduction of an impartial judicial system.
Today, the DIFC is ranked amongst the best 10 world monetary centres for its efficient enterprise surroundings, human capital, infrastructure, monetary sector development and wonderful popularity. Starting with solely a handful of corporations, the DIFC is now house to greater than 2,000 corporations from round the globe, at the least 600 of that are finance associated. It has offered an encouraging platform for many corporations to realize a foothold in the market and increase their operations throughout the region.
The GCC region has seen a good variety of offers remodeled the previous couple of years, with greater than half struck with international locations exterior the GCC
The DIFC has performed a pivotal function in not solely connecting the native region with worldwide markets, but in addition in establishing Dubai’s – in addition to the broader Gulf Cooperation Council (GCC) region’s – place on the world stage. It has enabled abroad entities to ascertain their administration places of work, holding corporations and household places of work nearer to belongings they personal or handle. In 2017, the DIFC launched the FinTech Hive, a first-of-its-kind accelerator in the space, which introduced cutting-edge monetary providers know-how to the region. In addition, the success and influence of the DIFC led to the institution of the Qatar Financial Centre in 2005 and the Abu Dhabi Global Market in 2013, each of which have frameworks just like the DIFC.
Alpen Capital was certainly one of the first corporations established in the newly revitalised DIFC. Over the years, the agency has seen the centre evolve into a vibrant monetary hub for the region. World Finance spoke with Rohit Walia, Executive Chairman at Alpen Capital, about the complete vary of monetary advisory providers provided at his firm and why the GCC region continues to draw buyers from throughout the world.
In your opinion, what are the most notable alternatives accessible in the GCC region at the moment?
The GCC is at present present process vital reforms – regional governments are investing in native infrastructure development, vacationer sights and retail institutions. Recently, the UAE launched adjustments to possession legal guidelines, which we count on will enhance the safety of current companies and encourage renewed curiosity from buyers. The Saudi Arabian Government has additionally introduced daring infrastructure plans as a part of its Vision 2030 programme. Its resolution to permit 100 % overseas possession for retail and wholesale companies, alongside the issuance of recent vacationer e-visas, is predicted to enhance the nation’s financial prospects. The different GCC nations are additionally implementing comparable reforms to create a extra profitable funding local weather.
The region has seen a good variety of offers remodeled the previous couple of years, with greater than half struck with international locations exterior the GCC. We have efficiently closed offers throughout the foodstuff, electronics and manufacturing sectors, the most notable being the sale of a majority stake in the Al Kabeer Group – a frozen-food participant in the UAE – to the Savola Group in Saudi Arabia. The region has additionally witnessed a variety of cross-border mergers and acquisitions, with our regional corporations buying stakes in quite a few overseas companies.
Foreign corporations have additionally made strategic investments in regional entities to strengthen their foothold in the region. We have witnessed a vital give attention to e-commerce and on-line retailing, corresponding to via Amazon’s acquisition of Souq.com, the largest e-commerce platform in the UAE, and Uber’s buy of Careem, the foremost transportation community firm in the UAE. At Alpen Capital, we’re at present working in a broad vary of sectors in the region corresponding to foodstuff distribution, IT, training, healthcare and manufacturing.
What about alternatives in Africa, Asia and the Levant?
We started exploring the Asian markets about 4 years in the past and have since efficiently concluded a number of transactions in the broader South Asian region. We have raised over $700m for Sri Lankan monetary establishments since we entered the market, whereas additionally elevating capital for purchasers in Cambodia and Pakistan. In Bangladesh, we’re at present elevating funds for banks and respected enterprise teams which have attracted curiosity from best development finance establishments (DFIs) globally.
Following our success in Asia, now we have ventured into the Levant and Africa over the previous two years, with each areas offering ample funding alternatives. For instance, in Lebanon we raised over $250m for monetary establishments and have been pleasantly stunned with the alternatives discovered in Iraq – a market we entered final 12 months. In Africa, now we have closed a number of offers over the previous 12 months and are at present engaged on elevating capital for native banks and monetary establishments. We are additionally engaged with firms (each native and worldwide) for capital elevating and mergers and acquisitions.
Our work with the Tata Group in assist of a advanced off-balance-sheet financing transaction for certainly one of its operations in Africa helped reveal our core strengths, significantly with reference to elevating capital. Owing to the present underdeveloped state of the market, there may be substantial curiosity from worldwide buyers, and loads of alternative to fulfill their urge for food. We consider that venturing into these markets has yielded nice outcomes, and we count on to additional cement our presence right here over the coming years.
Can you inform us about your work with DFIs?
DFIs are sometimes backed by developed international locations, and are sometimes established and owned by governments to supply funds for initiatives that embody socially accountable investing. DFIs can embrace multilateral development establishments or bilateral development establishments. These play a essential function in offering credit score in the type of higher-risk loans, fairness standing and danger assure devices for personal sector investments in growing international locations.
Over the previous couple of years, now we have suggested a number of monetary establishments in rising markets on debt and fairness options delivered via DFIs. We have concluded a number of transactions with establishments together with the Asian Development Bank, the European Investment Bank and Proparco, which has allowed us to enter markets in India, Sri Lanka, Lebanon and elsewhere. One of the transactions in Sri Lanka was funded by three DFIs: the Germany Investment Corporation, the Development Bank of Austria (OeEB) and the OPEC Fund for International Development (OFID). Our shopper at the time used the funding to assist the development of small and medium-sized enterprises (SMEs).
In your opinion, why is influence funding changing into more and more widespread globally?
Impact investing refers to investments made into corporations, organisations and monetary establishments with the intention of producing a helpful social or environmental influence, in addition to monetary returns. This supply of financing is primarily gaining reputation as a result of it facilitates capital to deal with the world’s most urgent challenges, corresponding to sustainable agriculture, renewable vitality sources, conservation, microfinance and reasonably priced providers. Given its progressive targets, this supply of funding has attracted a large number of buyers, each particular person and institutional. Historically, now we have seen that DFIs can present capital for rising economies – nevertheless, these days there has been an growing curiosity from pension funds, outstanding household places of work and personal foundations.
By establishing monetary centres amongst the top-ranked in the world, the GCC has established a stable ecosystem worthy of world recognition
Can you inform us about a few of your hottest social influence transactions? What sort of response have they’d?
Most of our transactions have concerned the funding of banks or monetary intermediaries in rising markets that subsequently lend to SMEs and microfinance establishments. This helps monetary inclusion by making monetary services accessible and reasonably priced to all people and companies. The advantages listed below are twofold – underserved people, entrepreneurs and SME homeowners all profit from being included into the formal economic system. Reciprocally, banks and governments profit from incorporating the underserved into the formal economic system, because it gives extra prospects to mortgage to and a extra regulated economic system.
For instance, Alpen Capital suggested Cambodia’s PRASAC Microfinance Institution in elevating a time period facility from the Asian Development Bank. The funding has been utilised by PRASAC to increase its lending to SMEs and to develop enterprises in rural areas. In one other transaction, we assisted Lebanon and Gulf Bank to boost a syndicated senior time period facility from the Netherlands Development Finance Company, the OFID and the OeEB. This led to the creation of jobs in certainly one of the most underserved SME markets in the world.
We are at present engaged on a transaction to fund a non-banking monetary firm to lend to feminine entrepreneurs to allow them to develop their very own companies. We are moreover elevating funds for a solar energy plant in South Asia by way of influence investing funds.
In mild of the services you present, what do you suppose the region’s funding panorama will appear like in the future?
The GCC region has been very dynamic and proven sustained development over the previous 15 to 20 years. It has additionally skilled its share of highs and lows, given the latest financial slowdown, fall in oil costs and geopolitical situations. However, to mark its presence on the worldwide enterprise stage, the region has undergone huge infrastructural and monetary development.
By establishing monetary centres amongst the top-ranked in the world, the region has established a stable ecosystem worthy of world recognition. In order to keep up the movement of capital, governments are implementing regulatory and financial reforms, which I consider will deliver an upswing in demand and exercise.
Despite current challenges, we’re at present engaged on a number of merger and acquisition offers inside the region, with anticipated deal closures in the close to future. In order to outlive the latest financial slowdown and keep operational efficiencies, there have been consolidations in the market, and I count on this to proceed. I additionally count on to see a revival of personal capital funding as financial exercise rises.
Going ahead, we’re anticipating a lot of traction in the broader region from markets in want of infrastructural and socioeconomic development. Alpen Capital might be available to assist these coming developments.