Page 83 - Aamir Rehman Gulf Capital and Islamic Finance The Rise of the New Global Players

CHAPTER 2 Entrusted Stewards 67

into JVs with a number of leading US universities. These include the
Weill Cornell Medical College, Georgetown’s School of Foreign
Service, Carnegie Mellon, and others. Each university has been
selected for its excellence in the particular area for which it is
engaged, and Qatar strictly insists that partner universities maintain
the same high standards in Doha as they do at their home campus.
This creative form of JV, like regional JVs in the realm of business,
allows each partner to bring specialist expertise into the Gulf and
transfer world-class knowledge to the local market.
As part of their active management strategy, specialist GIVs need
to employ professionals who can directly manage investments in the
demanding asset classes of private equity and other alternative invest-
ments. Mubadala’s professional staff is extensive, with 400 profession-
als who are split into an “operations” division that is responsible for
investments and a financial and corporate affairs group that is respon-
sible for central services and controls. 30 For each dollar invested, spe-
cialist GIVs require more people than SWFs do because GIVs are more
intensely involved in selecting and managing their portfolio compa-
nies. Other GIVs in the UAE are believed to have far smaller teams than
Mubadala’s, but nonetheless require substantial in-house expertise.

Focused Hybrids
In summary, specialist GIVs may best be understood as focused
hybrids. Their strategic approach and core business models reflect pre-
defined strategies akin to those of private institutions. They have a level
of specialization and investment focus that are not found in generalist
SWFs. At the same time, the visions of GIVs ultimately tie into national
objectives, and their focus areas are linked to the overall economic
strategies of GCC states. Thus, the category of GIVs is very much a mid-
dle ground between massive sovereign wealth funds and the private
principal investment firms that have become fixtures of capital markets
in the world’s most developed markets. In many ways, Gulf GIVs
reflect a spirit of public ownership with private operating practices that
has become a hallmark of GCC business culture over the past decade.

PRIVATE INSTITUTIONS: BUILDERS OF FORTUNES
The third category in our framework, private institutions, is perhaps
the most diverse. This category captures a wide range of entities,
including family offices, private investment vehicles, and other entities