Gulf Capital chief executive plots course



Before Abu Dhabi beckoned, Karim el Solh's career appeared destined to play out like that of the prototypical investment banker of the freewheeling 1990s: a Lebanese "master of the universe" in the making.

He worked for Donaldson, Lufkin and Jenrette and then for Credit Suisse after it acquired the company for US$11.5 billion (Dh42.23bn) in 2000. It undertook leveraged buyouts in Europe, raising billions of dollars from investors to take over companies by selling bonds that paid high rates of interest.

It was a wonderful gig even in that delirious age and had been an especially lucrative one after Michael Milken, the famed "junk-bond king", pleaded guilty to securities fraud in 1990 and exited the industry, leaving a vacuum.

Even by the high standards set by Mr el Solh's family, one of Lebanon's most powerful political blocs, the erstwhile academic prodigy was doing well. Before Donaldson, Lufkin and Jenrette, he worked as a consultant with Price Waterhouse advising governments on how to spin off state-owned companies during a rash of privatisations in the early 1990s.

He was one of the first people to consult with the Russian government on putting the energy titans Gazprom and Lukoil in private hands at the urging of international agencies including the World Bank, IMF and the US agency for international development.

"I remember that was around the same time when the coup happened and Yeltsin rose to prominence while I was there seeing from my hotel windows the tanks rolling by - it was in 1991, I think," Mr el Solh says at his office at Gulf Capital, the company he helped to launch in Abu Dhabi five years ago.

"I was stuck there and I saw it live on TV but the marching orders from the World Bank were to help privatise as many companies as possible in Russia. We were in on the biggest auctions of public companies like Gazprom and Lukoil and all the giants we see today."

Mr el Solh was just 21 when he joined a team of Price Waterhouse advisers assisting governments on what to do with their state-owned assets. He came to the company fresh from an MBA programme at Georgetown University in Washington, having graduated from Cornell University, an Ivy League school in New York state, at 19 with a degree in civil engineering.

The privatisation work led to a third degree - a doctorate from the Institut d'Etudes Politiques de Paris, France's top economics school - that he completed part-time while working for Price Waterhouse. His thesis was on the philosophy behind selling state-owned enterprises.

"The guidance of my father back then was that any self-respecting Arab had to be an engineer, a lawyer or a doctor, so these were my three choices," Mr el Solh says. "So I went to the US and I studied civil engineering at Cornell University.

"I did that and I finished at the age of 19 and told my father, 'So I did the engineering degree and the respect that comes with it. Now let me pursue something that I like.' So I enrolled into an MBA programme at Georgetown."

The call from Abu Dhabi came in 2001 when Mr el Solh was comfortably ensconced at Credit Suisse. The board of directors of The National Investor, a local investment bank, wanted to talk to him about taking over as its chief executive. They were looking for someone with experience in investment banking, buyouts and big debt deals, and who knew the region and spoke Arabic.

Mr el Solh fitted the bill. He had lived for several years in Saudi Arabia, the country to which his family fled after the Lebanese civil war broke out in 1975. He knew the Middle East on a professional level from his travels with Credit Suisse and Price Waterhouse - he had worked with the governments of Turkey, Morocco and Tunisia - as well as during a brief stint with Citigroup in the mid-1990s, when he raised money from western investors to buy into companies in the Middle East and eastern Europe.

Taking the helm of a company was appealing. But it was far from clear in 2001 that Abu Dhabi would develop into anything beyond a sleepy but oil-rich Gulf town.

"It was a difficult decision because I was working on multibillion-dollar transactions. London's a financial centre, and to relocate to a small market and a small investment bank was not an easy task," Mr el Solh says.

"But on the other hand, it was a huge opportunity to be the captain of a ship, to help focus and shape the company I worked at and take it to the next level. Abu Dhabi was just beginning to take off in 2001, so I accepted the position and I moved here along with my family."

Mr el Solh's main achievement in his tenure as the chief executive of The National Investor was taking a long list of companies public. The company arranged the listings of Aabar, then an oil and gas holding company; Aldar, Abu Dhabi's biggest property developer; and Aramex, one of the Middle East's largest shipping and logistics companies.

By 2005, though, he decided he wanted to take the merchant banking model he had brought to The National Investor - a model in which banks invest their own money in companies they work with instead of merely providing advice for a fee - and deploy it across the region.

Mr el Solh signed up some of Abu Dhabi's most prominent businessmen and government officials to form a founders' committee for what is now Gulf Capital, where he is the chief executive. They recruited 300 prominent investors from across the region and raised about Dh1.22bn in capital to start the company.

Gulf Capital is still in its formative stages. It has raised a couple of regional buyout funds and launched a property division that recently teamed up with Related Companies, a big US developer, in a joint venture that will work on projects in Abu Dhabi and, perhaps, later in Saudi Arabia and Egypt.

But Mr el Solh has big plans for the company, which he intends to grow into the region's pre-eminent "alternative" investment firm, a discipline that encompasses buyouts, property, credit and venture capital among other investments that are off the beaten track.

The idea, he says, is to make Gulf Capital a conduit for international investors who want to profit from the region's growth and at the same time help turn the traditional economic equation upside down in a region that is more often a source of capital than a destination for investment.

"We felt it was time to launch a regional champion from the region for the region," Mr el Solh says. "They [the company's shareholders] are fed up with exporting capital abroad and they saw the opportunities here. They wanted to develop an institution designed and bred here and launched for the region.

"We have aspirations to become the premiere regional alternative asset management firm - and we're making good progress."

Despite his roots, el Solh says he has no plans to enter politics

Karim el Solh was born in 1969 into what is perhaps the Levant’s most powerful political family, one that has produced 16 ministers and four prime ministers including Riad as Solh, the country’s first prime minister after its independence from France in 1943.

Another granduncle, Sami as Solh, served as the prime minister seven times during the 1940s and 1950s.

Mr el Solh’s family left Lebanon in 1975 after the civil war broke out. They moved to Saudi Arabia where his father ran a construction business. He stayed there until he was 10, when he and his brother were sent to France to continue their studies.

An academic prodigy, Mr el Solh graduated from secondary school in France at the age of 15 and attended Cornell University in the US where he earned a degree in civil engineering at 19. He then enrolled in a business master’s degree programme at Georgetown University in Washington, from which he graduated at 21.

He then joined Price Waterhouse, the professional services company now known as PricewaterhouseCoopers, advising governments on the privatisation of state-owned assets in the early 1990s. He left five years later for a brief stint at Citigroup before moving to Donaldson, Lufkin and Jenrette and organising leveraged buyouts in Europe.

In 2001 Mr el Solh was recruited by The National Investor in Abu Dhabi to become its chief executive. While there, he helped arrange some of the biggest public stock listings in the emirate and across the region, including those of the regional shipping and logistics giant Aramex and Aldar Properties, Abu Dhabi’s biggest developer.

He helped form Gulf Capital in 2005 and became its chief executive, aiming to focus on buyouts of private companies and expand TNI's hands-on investment approach across the region.
Despite his roots, Mr el Solh says he has no plans to enter politics.

“To be honest, ever since the civil war broke out it became very difficult to be in the political arena,” he says. “It’s safer to be in the business arena.”

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