There is a company that focuses exclusively on growing the amount of Arabic content on the internet. Known as Danat e-ventures, this business incubator started in 2006 and invests in new online startups. Here, Hisham Baker, the company's general manager, discusses how it works.
q&a
q Danat oversees five sites, including an Arabic classifieds portal called Bezaat.com and Tedry.com, which features photos from regional events. How do you build these up?
a We created them from scratch. Danat is an incubator. You come to us with your idea, and we analyse the business plan and have our own designing department for usability and how to build the best code for the interface. We add value to you as entrepreneurs by partnering with Microsoft to have the best [tools] to build these websites.
q Then what happens?
a After that we have a team for online marketing ... to create traffic for it. We have a digital network that guarantees selling adds to your website, because we're connected to the largest advertising websites. It's original content, not aggregators. We try to have solid quality.
q But do entrepreneurs have to give up a stake in their business?
a Yes, of course.
q How much is that stake?
a It varies [based on] the risk amount. Let's say somebody asks for Dh4 million [US$1m], we take [the vast majority] because it's high-risk. If it's low risk - for Dh100,000 - sometimes it might reach to 50 per cent.
q In either case, that is still a lot.
a The difference between Danat and other VCs [venture capitalists is] we have our team specialising in different areas - designing, development and sales to support his business. The other VCs, they just give him the money.
q What is the biggest challenge in vetting a new business idea?
a Finding the entrepreneur. He's the executioner. If someone brought you an idea, and he left, you cannot simply find someone else to run it. You need the entrepreneur to start it and then commercialise the idea.
q What kinds of sites do you look to invest in?
a We invest in all websites targeting the region - it has to be GCC and Mena [Middle East and North Africa] region. Each website has to fulfil a certain need. Argaam.com is a financial portal. [On Logta.com] there's online shopping where you can buy from any country and deliver to any country [in Mena]. Evearabia.com doesn't talk just about Saudi and UAE but women across the region.
q Which are the fastest-growing portals?
a The classifieds and e-commerce [sites]. At Tedry, in less than three months, we had more than 100,000 downloads on iPhone; you can browse events and images, and find links to the venue.
q And the smallest portal in terms of visitors?
a The smallest is Argaam, because it's related to financial audiences only.
q Which sector have you not covered yet?
a We are missing the games. Augmented reality [a kind of virtual reality experience on smartphones and] games on mobile.
nparmar@thenational.ae
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The number of Chinese people living in Dubai: An estimated 200,000
Number of Chinese people in International City: Almost 50,000
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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.”
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