Multi-sector investments

Multi-sector investments

The Middle East is home to a large concentration of multi-sector investment companies, including sovereign wealth funds, private equity firms, and diversified conglomerates, many of them family-owned. These multi-sector investment entities contribute to the majority of their country’s value creation and growth, in terms of GDP, employment, and foreign direct investments. They typically own investments across asset classes such as operating companies, financial investments, real estate, and infrastructure; across sectors such as banking, construction, consumer, and manufacturing; and across geographies such as the GCC, other MENA countries, or globally.

Strategy& serves all multi-sector entities in the Middle East, including sovereign wealth funds, private equity companies, diversified conglomerates, and family principals.

We have extensive regional and global experience working with diversified entities on a wide range of topics, including investment strategy, corporate operating model, corporate finance, and governance. We also support the institutionalization of family-owned conglomerates as they evolve from family-focused entrepreneurial businesses to professional corporations that separate the business from family assets, services, and rights.

With deep insight into regional family businesses, conglomerates, and the investment market, our Arabic-speaking team of experienced professionals has served clients across the MENA region and Europe. Our collaborative approach with our clients enables us to develop tailor-made strategies and solutions.

Key trends

Sovereign wealth funds
  • Allocating a larger portion of their portfolio to direct investments with a more active investment approach
  • Adopting a global approach to investments across emerging and developed markets
  • Developing an appetite for alternative investment classes such as infrastructure and real estate
  • Balancing economic development and financial returns mandates
  • Focusing on specific investment themes in line with their country’s economic and development vision
  • Setting up deal sourcing and co-investment partnerships with other institutional investors or private equity firms
  • Institutionalizing policies and processes (e.g., portfolio management) in line with best practices
  • Improving governance and transparency in line with best practices and Santiago principles
  • Developing best-in-class corporate capabilities across the investment life cycle with deep portfolio management expertise

Client examples

Pan-Arab sovereign investment company portfolio turnaround
A Pan-Arab GCC-focused joint-stock company that conducts equity investments and wholesale lending engaged Strategy& to develop a five-year strategic business plan.
Local direct investment strategy for a GCC sovereign wealth fund
A GCC investment company wholly owned by a sovereign wealth fund retained Strategy& to develop its local direct investment strategy and policy.
Multi-sector/Family-owned conglomerates
  • Focusing their portfolio on core activities where they can leverage their differentiated capabilities, while aiming to divest or turn around underperforming businesses
  • Expanding core operating businesses into new geographies or adjacent sectors while leveraging strategic and operational synergies
  • Developing partnerships and joint ventures with international industry leaders to set up or enhance operations in local markets
  • Monetizing investments and generating liquidity through minority sale of assets (e.g., to private equity firms) or listing a subsidiary
  • Redefining their corporate management role and level of involvement vis-à-vis portfolio companies
  • Institutionalizing business activities by segregating them from family services and assets
  • Enacting best-in-class corporate and family governance frameworks to address ownership and oversight challenges during transition to subsequent generations
  • Developing best-practice functional capabilities at the holding level to support the group and portfolio companies in executing core and support activities
  • Professionalizing corporate governance with formal committees, independent directors, and a detailed delegation of authority across the organization .

Client examples

Multi-sector portfolio strategy for a new geography
Due to slowing growth in its core business and excessive exposure to the distribution of one brand, a leading MENA-region family conglomerate was searching for diversification opportunities.
Corporate strategy and governance model for family-owned conglomerate
A family-owned business that operates in the distribution business and manages investments wanted to review its corporate strategy and governance model.
Investment portfolio restructuring and operating model review
A leading GCC investment company, asked for Strategy&’s help to design a formalized investment strategy and operating model.
Private equity companies
  • Creating dedicated opportunity funds targeting specific sectors or geographies with deep industry capabilities
  • Expanding geographic scope to new emerging markets including Africa and South East Asia
  • Focusing on sustainable value creation from existing assets when exiting investments in the next five to seven years will be difficult
  • Strengthening corporate capabilities to improve portfolio management and value creation
  • Setting up co-investment partnerships with other PE players or institutional investors to improve deal sourcing capabilities
  • Considering a wider range of funding sources including mezzanine and debt financing

Client examples

Commercial due diligence for a leading regional private equity player
The private equity arm of a large international bank wanted to acquire a stake in a company dealing in the tissues and diapers markets in the MENA region.
Assessing investment opportunities in the GCC healthcare and education sectors
A UAE investment company conducting private equity investments in the GCC wanted an assessment of the opportunities in the healthcare and education sectors.
Family principals
  • Developing a family governance structure that maintains the family unity and balances the potentially divergent views of family members
  • Establishing formal family offices to provide various services to family members, including wealth management, concierge, education support, and philanthropy
  • Professionalizing the family service delivery model to optimize service levels at the lowest possible cost
  • Gaining alignment on a set of principles and values regarding family and ownership matters
  • Enforcing agreed-upon governance mechanisms through local regulations that may not have the required flexibility
  • Identifying alternative sources of wealth creation beyond core businesses to maintain an acceptable level of income and wealth for a growing number of family members
  • Supporting next-generation development through education, entrepreneurship ventures, or employment opportunities

Client examples

Single family office feasibility assessment and business model
A high-net-worth European family engaged Strategy& to define the optimal business and operating models for its single family office (SFO).
Family group constitution and shareholder agreement
A GCC-based family conglomerate welcoming the family’s second generation into the business ranks was experiencing discord and divergent interests among the beneficiaries.

Our thought leadership

Leveraging an untapped talent pool
GCC family businesses can leverage a critical source of competitive advantage: the women of the family. Business leaders and governments should encourage the region’s high level of female education and training, the gradual growth in women’s labour participation and entrepreneurship, and women’s involvement in family firms’ governance and succession plans.
read more
The debt dilemma facing many of Kuwait’s investment companies can be addressed through a three-step restructuring process that enables stakeholders to identify investment companies that are worth saving and those that should be wound up.
Private Equity in the Middle East
In April 2010, Strategy& (formerly Booz & Company) and INSEAD conducted a survey of private equity professionals in the Middle East to get their perspective on the opportunities and challenges facing their industry. This paper summarizes the results of that survey and provides an overview of private equity's development in the region in order to map out how the industry can progress from here.

read more multi-sector investments thought leadership >