Fadi Ghandour, the founder of Aramex, is to step down as chief executive of the Dubai-listed logistics group after 26 years at the helm.
"There is no better time than this 30th anniversary of Aramex, capping an astounding journey of challenges and achievements, to propose that you and I are ready for yet another leap," Mr Ghandour said yesterday.
Day-to-day operations will be handed over to Hussein Hachem, the head of the group's Middle East and Africa regions, while Mr Ghandour will become the vice chairman.
Aramex, which competes in the Middle East with Deutsche Post's DHL and United Parcel Service, was founded in 1982 in Jordan and New York by Mr Ghandour and William Kingson. It today employs more than 12,300 people in 353 locations in 60 countries.
Mr Hachem joined the company 20 years ago and was responsible for re-establishing its operations in Kuwait after the 1991 Gulf war. As the chief executive for the Middle East and Africa, he leads the largest revenue-contributing region for Aramex.
The company, listed on the Dubai Financial Market, first went public in 1997, trading on the New York Nasdaq until 2002, when it went private again until 2005. It posted a 4 per cent increase in fourth-quarter profits last year to Dh57.2 million (US$16m) compared with the same period in 2010.
Aramex shares have gained 2.2 per cent this year after dropping 13 per cent last year. They closed 1.1 per cent higher in Dubai trading last Thursday, giving the company a market value of Dh2.69 billion.
Mr Ghandour made the official announcement that he was stepping down at the company's annual conference in Dubai.
"Looking at you and the team that has been helping me make Aramex the fantastic place it is today, I know that I have fulfilled my promise and that the day-to-day running of the company, under the leadership of Hussein Hachem, is in very capable hands," he said.
Aramex is the only Middle East-based company ever to list on the NY Nasdaq. In recent years, its aggressive expansion and acquisition strategy has taken it to South East Asia, mainland China and Africa.
Last month it said it was contemplating acquiring debt to fund future expansion. It said its potential targets were in Turkey, Nigeria, the Ivory Coast and Thailand.
"With our acquisitions last year our cash went down, but being a company that has very little debt, our debt capacity is quite substantial," Mr Ghandour told Bloomberg News on March 26. "If we do an acquisition over a certain size we will have to tap the debt market. It will be something between $50m and $100m."
Aramexexpects to generate about 50 per cent of its revenue from the Arab world this year compared with 65 per cent last year.
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
