Dubai's Stanford Marine Group and its backers weighed a crucial choice two years ago: batten down the hatches for the financial crisis or try to take advantage of it.
Doing the latter would mean taking risks in global economic waters that looked far from calm, despite the strong pace of investment in oil and gas - an industry Stanford serves by building, repairing and chartering ships that supply offshore rigs.
And yet for Abraaj Capital, the Middle East's largest private equity firm, propelling Stanford to the next level was a logical if difficult choice.
"When I came along in early 2009, I said, OK, there's a huge crisis going on," says Ahmed Badreldin, a senior partner at Abraaj, which acquired 51 per cent of Stanford in 2007.
"We can either hide under the table and bunker down for the next few years or we can take advantage of other people's crisis and see if we can grow quicker than everybody else."
Today Stanford has a fleet worth almost US$350 million (Dh1.28 billion) and 2,443 employees. The average age of its ships in 2007 was 19 years; now it is about 2.9 years.
How Stanford and Abraaj made that happen, transforming the company in the process, provides a rare glimpse into the strategic mindset of one of the region's biggest investors during the crisis.
It also underscores the adjustments that many private-equity firms have had to make, holding on to their investments for longer than expected and providing a depth of strategic direction that had not been necessary in the good times.
The challenge for Abraaj and other private-equity firms, which make money for their investors by buying, growing and selling private businesses, has always been choosing the right companies and giving them the financial muscle and expertise they need to get bigger and better.
As those companies become more valuable, the firms sell them and deliver returns to their investors. In times of uncertainty, however, making the right moves becomes all the more fraught with danger.
"Not everybody goes down in bad times, and not everybody succeeds in good times," Elias Nassif, Stanford's chief executive, says in his office on Sheikh Zayed Road, musing on his company's financial-crisis growth spurt. "But the majority do succeed in good times and the majority go down in bad times."
Abraaj bought control of Stanford, then called the GMMOS Group, in 2007 in an auction after the patriarch of the former family business died. The other 49 per cent went to Abraaj's partner in the venture, Waha Capital of Abu Dhabi.
"Both Abraaj and Waha saw the offshore supply vessel business with strong fundamentals and a fragmented regional landscape that allowed for consolidation," said Mustapha Boussaid, the former Waha executive who helped to arrange the transaction. "The management had good operational expertise to be complemented with our financial know-how."
Back then, Stanford was a bit player in the offshore supply industry, with 1,553 employees and a small fleet of ships worth about $20m. It was producing about $17m of profits, excluding taxes, interest expenses and other factors, Mr Badreldin says. Its operations were confined to the Gulf, where it had long-standing contracts to charter ships as well as a ship repair and ship-building operation called Grandweld. The company also owned a subsidiary that fabricated metal parts for oil rigs and another involved in construction cranes.
Abraaj bought in largely because it believed in Mr Nassif and the rest of the management, which steered the company through its early growth.
Mr Nassif came on in 1989, having graduated from Boston University and the Massachusetts Institute of Technology and taken a job with McDermott International, a major offshore engineering firm. His father, who was friends with the Lebanese-Armenian family that owned the business, encouraged him to come to Dubai.
"The old man basically said you have to come, we need somebody like you," Mr Nassif says. "I was reluctant actually to come, but I said, OK, I'll give it a try, I'll come and spend three or four years and I'll go back to the States. Now it's 22 years."
GMMOS grew gradually in those years. But Mr Nassif left the company in 1997 after it sold the supply-boat chartering business he was most interested in. He started his own chartering company, Stanford Marine, which GMMOS then bought and brought back under its wing only a few years later.
"I was more inclined to be in the offshore supply vessel business," Mr Nassif said. "They basically sold it and this is what I like to do."
Stanford, he said, started out with two vessels. "I grew that company organically over the next five years until in 2002 it grew to about eight vessels," he says. "This is when my ex-boss came to my house one day and said 'look, I like what you did. How about we bring you back to the group'?"
One of Abraaj's first moves when it took the reins four years ago was to improve the company's operations, upgrading its information technology systems and clarifying the management's duties. It then decided the company should be building and chartering supply ships - but should sell its other ventures.
The company sold its fabrication business this year and is looking for buyers for its construction cranes business.
"We wanted to make sure we invested money in the division that was stable, had a high valuation and makes a good story," Mr Badreldin says. "We decided let's figure out what's core and not core for the business. We decided that core was the chartering, i.e. owning and operating the boats for oil and gas companies, and number two was ship building and repair, so marine-related. And that's it. That's the core."
The next step was to find financing and grow. But that was when the financial crisis set in.
In 2009, banks were cutting off credit and building up provisions to deal with a rise in bad loans. Few were in the mood to lend to companies - even good ones. Yet the crisis also threw up opportunities for those who could get financing as other players in the supply-boat market were forced by banks to sell their assets to reduce excessive debt.
Mr Badreldin and Mr Nassif knew there were ships to be had from distressed sellers in Asia at low prices and with long-term charter contracts already in place. That was a recipe for easy profits if they could find the cash.
Towards the end of 2009, they convinced local banks to lend the company $100m for boat purchases and to refinance debt taken on to fund Abraaj's acquisition. It was a risk for Abraaj, Stanford and the banks.
"The people we bought from were basically guys that had gotten way too much debt on their balance sheet and the banks were forcing them to sell assets," Mr Badreldin says.
"Honestly without the support of the banks, we wouldn't be where we are today," he says. "The banks were very supportive of the company from the beginning."
In December 2009, Stanford added further to its fleet by taking over a Singaporean company with 10 large supply vessels. That brought it into the Far East for the first time, although it had opened offices in India.
The plan now is to expand further, perhaps into Africa and South America. Stanford is set to receive two huge new supply ships this year and early next year, which will quickly help it to expand its footprint.
"In 2012 we start the second phase [of the company's growth], which is building more vessels, looking for more acquisitions and using the right opportunities to expand the company further," Mr Nassif said.
After overseeing Stanford during an extraordinary period of growth, Abraaj is getting ready to exit. It may pull out by listing Stanford on a stock exchange. Alternatively, Abraaj could invest more money and watch Stanford grow further, sell the company to its management team or merge it with another company.
Neither Abraaj nor Stanford is in a hurry to find new owners, however, and all sides want to make sure they are putting the company in the right hands for its next stages of growth.
"We talk to a lot of people," Mr Badreldin says. "I think that especially in emerging markets things take a very long time. It's like you get to know a girl, you're dating, and by the time you get engaged and married, it's a process."