Rebranded Rasmala to focus on regional assets
Sometimes a rebranding tells you of little except a chief executive’s low boredom threshold; sometimes it tells you a lot about future strategy.
The renaming of EIIB Rasmala as Rasmala is an example of the latter, as Zak Hydari, the financial firm’s chief executive, is keen to point out.
“Remember in 1999 when Rasmala started, there was no Dubai International Financial Centre, no capital market, no regional asset management industry. So the bank has been interwoven into the Gulf financial structure ever since then and dealing with investors across the GCC,” he says.
The European Islamic Investment Bank, on the other hand, has been around since 2004 with a listing on the Alternative Investment Market of the London Stock Exchange. The two have been together since 2012 when EIIB replaced Deutsche Bank as the biggest shareholder in Rasmala.
“Rasmala means “capitalisation” in Arabic so that was a clear sign of what it did – it was part of the core investor base in the GCC,” says Mr Hydari.
The renaming was always on the cards from the time of the takeover, to emphasise the new direction of Rasmala as above all a player in the regional markets, even with its London heritage.
One of Mr Hydari’s first acts on joining Rasmala was to close the brokerage business that had until then been one of its most important units, in partnership with Royal Bank of Scotland. “We did not think brokerage would be profitable for us. We wanted to focus on fewer activities that would give us a better chance of scaling up, and we’ve done that with asset management,” he says.
Indeed, he can claim to have been in the vanguard of the explosion in asset management that has seen most financial institutions hiring managers and launching funds in the region. Assets under management have surged from US$400 million in 2012 to about $1.2 billion now at the firm.
“It is a competitive market, but when we said back then that AM [asset management] was the place to be, we got strange looks. Now I believe it is still at a comparatively early stage. Even with all the competition, AM is virtually a cottage industry and therefore good for boutique players like us,” says Mr Hydari.
The opportunities are certainly there, but they need to be exploited efficiently.
“I firmly believe there isn’t enough innovation and product range in depth in regional asset management. So we have expanded by extending the product range into leasing, trade finance and real estate.
“Each time, we were told there would be no takers for these products, but we pushed them through. So I am convinced and determined that this is the way forward,” he says.
He put his money where his mouth is this week with the launch of two new funds, one in real estate and one in credit. Both are aimed unashamedly at the UAE, highlighting the increasingly close cooperation between Rasmala and government bodies to promote asset management, and especially Islamic asset management.
Hitherto, Rasmala’s interest in property has been intended to channel UAE and other Arabian Gulf funds into European and American assets. “We like the UK, especially northern secondary cities in commercial property, where we closed one recently. Now, because of currency movements, I believe Germany will be popular again,” he says.
But increasingly the thrust will be into the Gulf region itself. A policy paper launched this year in cooperation with the DIFC and the Dubai Islamic Economy Development Centre spelt out the potential to grow the Islamic asset management business to close to $200bn worldwide, compared with about $60bn now.
“We think there is a need for the private sector to work with the government to help the UAE in this respect. The trends are becoming clearer: the authorities are beginning to get more expats into pension schemes and replace the gratuity plans.
“We need to get existing funds to direct resources into the new schemes. The role of the government is to interface and engage on the industry about pension reform,” he adds.
He sees the reform of the Australian pensions industry, an initiative which pulled in billions of dollars of new funds, as a role model.
Of course, there is another serious player in the regional and global asset management business starting up in the capital, with the launch of the Abu Dhabi Global Market and its asset-focused approach.
“The ADGM is such a good thing. It’s about increasing the whole of the UAE investor base in asset management, and getting pools of capital in AD as well as in Dubai. I don’t believe it is about competition. It is more about the UAE strengthening its asset-management industry by attracting assets from all round the world.
“If you were to take ADGM as a one-year perspective it might be challenging, but not over 10 years. We’re very excited about ADGM and actively considering what role we should play. We’ve been co-hosting events with Abu Dhabi already,” he says.
Nor does he see the economic challenges associated with a low oil price as a deal-breaker for the asset management business.
“Whatever the price of oil, whether its at $30 or $50 or $80, there is still an existing pool of wealth in the GCC, from households, big family offices, sovereign wealth funds.
“The house view is that the oil price is looking at the bottom of a cycle and is becoming oversold. I can’t say we agree at all with Goldman Sachs at $20 a barrel. We are looking at buying opportunities in equity markets,” he says.
The “new” Rasmala might also seek expansion opportunities in its three core markets – UAE, Oman and Egypt. It is believed there have been talks about a possible acquisition in Cairo.
Rasmala, it seems, is back – helping to capitalise the Middle East.
Follow The National’s Business section on Twitter