< Previous10 Vol. 23/09, September 2022 25+ The number of countries and more than 60 locations in which Julius Baer operates fast moving, but also because they are popular among investors keen to make quick profits or respond to economic developments and changes in the fortunes of public companies. But that means they can be extremely volatile, fluctuating sharply in response to specific events or changes in wider investor sentiment. Commodities and currencies react to macroeconomic data and equities tend to move in response to short- term variations in a company’s perfor- mance. Dealers might be able to buy and sell quickly, but prices can quickly move against them. Always keep in mind that in during times of market stress, liquidity can evaporate very fast. We believe that private equity can be a valuable tool, but should only be held by sophisticated investors as part of a diversified portfolio that contains other styles. u Expert advice Simon Ibbitson, Head of Private Markets Fund Distribution at Bank Julius Baer SPO TLIGHT/ JULIUS BAER It is among the last things that any investor wants: to be stuck with an asset they no longer wish to own but are simply unable to sell. It is there- fore hardly surprising that the commonly held view is that an ‘illiquid’ investment, or one that is not easily tradeable, is a bad thing and should be avoided. The reality is more nuanced. There are plenty of benefits in owning illiquid investments, just as there are pitfalls in holding highly liquid positions. For the best private equity investors, illiquidity is something to embrace, as nurtur- ing an investment away from public markets can reduce volatility and drive up rates of return. At Julius Baer, we think private equity investments have a part to play in a portfolio, as long as they are held alongside other diverse assets, includ- ing liquid equity and debt securities. Here are five things that prospec- tive investors might want to think about when balancing issues of liquidity and illiquidity in their decision. Consideration 1: Do I want my entire portfolio to be exposed to public market volatility? The world’s most liquid investments, where traders can move in and out of their positions in seconds, include the markets for oil, foreign currencies and equities listed on international stock exchanges. They are liquid, not only because they are large and To be or not to be illiquid? – Five key considerations for private market investments It might be tempting to assume that all private equity investments are diffi cult to exit and so best given a wide berth. The reality can often be far from that. Here we explore why and set out the main questions for prospective investors to considerarabianbusiness.com 11 / JULIUS BAER Q TODAY, PRIVATE ASSETS HAVE NEVER BEEN MORE ACCESSIBLE. WE RECOMMEND OUR CLIENTS TO OWN BOTH PUBLIC AND PRIVATE ASSETS” Consideration 2: Can I commit to a long-term investment? Investments in privately owned companies or projects tend to be slower moving and less widely held, so therefore more illiquid. Private equity investing takes a variety of forms, from the provision of funds to startups, early-stage or growth companies to sometimes extremely large leveraged buyouts involving acquisitions of public companies. Not only do private equity inves- tors undertake lengthy research, or due diligence, before committing capi- tal, but they also tend to stay invested for relatively long periods, of at least three years and sometimes more than a decade. While it is true that the nature of this investment style means that it is often less easy for buyers and sellers to switch in and out of their positions, there are considerable benefits. By backing a company at an early stage of its development, investors can often invest on very attractive terms. Holding an investment longer term, especially one that is shielded from the volatility of daily trading, can also lead to better returns. The evidence suggests that private investments outperform public markets over time. Consideration 3: Do I have an exit strategy? Private equity investments are not static. Because the market has devel- oped considerably since it first came to prominence more than 30 years ago, there is an established ‘second- ary market’, where other investors buy and sell existing private investments. Let us also not forget that private equity investors are temporary owners; they will have an exit strategy and aim for the right moment to sell, either to realise profits or free up capital to invest else- where. In short, just because an invest- ment is privately held does not mean it is necessarily illiquid. Consideration 4: Am I investing in a suitable fund structure? The way an investment is structured has a big bearing on liquidity. With u Investment The private equity industry offers investors a wide variety of options sold to a professional secondary buyer only the ownership changes hands. It does not trigger forced selling by the manager. Therefore, the portfolio valuation is not disturbed. Most private equity investment firms use the closed-end model and also place restrictions on investors’ ability to leave, further reducing risks. Consideration 5: Do I want to broaden my investment horizon? The private equity industry offers investors a wide variety of investment options, from company inceptions to the turning around of mature compa- nies in distress, and every stage of company development in between. Private capital can flow into assets and businesses to which public capi- tal does not have access to. By includ- ing private assets in one’s investment strategy, one can expand the invest- ment choice and diversify an invest- ment portfolio. Conclusion for investors To be, or not to be, illiquid? It is true that private equity investments tend to be more illiquid than other assets. On the other hand, they can be less volatile than highly liquid assets and tend to outperform them over time. Put simply, illiquidity has its bene- fits. Today, private assets have never been more accessible. We recom- mend our clients to own both public and private assets. an ‘open-ended’ vehicle, where new shares or units are issued or redeemed in response to demand, sales by other investors can depress the value of a portfolio, while also triggering forced asset sales by the manager in order to meet redemp- tion requests. In falling markets, the liquidity of the underlying assets will reduce. This can lead to financial distress within the portfolio. With a ‘closed-end’ fund, share capital is ‘closed-ended’. Portfolio redemptions occur when an asset within the portfolio is sold by the manager and the capital is returned to investors via a cash distribution. However, if a fund participation is $444.8bn The Assets under Management of Swiss Private Bank Julius Baer at the end of June 202212 Vol. 23/09, September 2022 C OMMENT / By Ehssan Abdallah, founder and CEO of Adaptive Global on organisations to create a compel- ling value proposition for prospective employees. It goes beyond a compet- itive salary but also crafting an engag- ing organisational culture, upskilling, and career growth opportunities. Adding additional pressure are the accelerated nationalisation targets and demand for digital-savvy operators across all functions of an organisation. These realities are further compounded by the aggressive competition for high-quality talent across geographies (i.e. nomads) and sectors (i.e. fintech). Winning the war for talent in the GCC u Important asset An effective employee value proposition must be authentic and centred around the organisation’s values The war for talent in the GCC is heating up to unprecedented levels. The pandemic severely disrupted the regional labour market with employees considering more than just salaries when selecting an employer. As a result, the need for organisations to ‘protect and attract’ talent has become the primary focus of leaders. Globally, a 2022 Deloitte study found CEO’s rank labour and skills shortages the top external threat likely to disrupt their business strategies. Compounding this regionally, the Together 2021 UAE Culture Survey found 88 percent of the UAE work- force would consider leaving their jobs due to a poor organisational culture. This puts tremendous strain C OMMENT / By Ehssan Abdalla Employers need to protect and attract talent if they are to thrive in the GCC 5.38 million The number of private sector employees in the UAE by the end of June, according to data from the Ministry of Human Resource and Emiratisation (MoHRE)arabianbusiness.com 13 C OMMENT Q IMPLEMENTING A SUCCESSFUL GROWTH CULTURE TO WIN THE BATTLE FOR TALENT REQUIRES A COMMITMENT FROM ALL LEVELS OF THE ORGANISATION” expensive fixes include hiring senior- level executives or external consultan- cies which proved unsustainable. Upskilling employees based on merit and mutual value-generation provide a win-win solution for all parties involved. For one regional automotive conglomerate, developing its cadres’ technology skills based on market demand resulted in delivering unprec- edented growth in its sales and aftersales divisions. This helped strengthen employee-commitment, ensuring the successful implementation of its digital transformation at a time of intense labour market competition. Long-term incentive programmes Driven by the region’s drive for economic diversification, traditional players are finding it impossible to compete with ever-increasing salaries. To get ahead of the curve, one progres- 91% The percentage of employees across the MENA who said they are considering changing jobs this year, according to a new survey by Bayt.com u Opportunities for growth Upskilling employees based on merit and mutual value-genera- tion provide a win-win solution for all parties involved Whilst this resurgence presents unparalleled opportunities for the competent and ambitious, these trends undermine many organisations, espe- cially those who fail to build adequate talent engines. Such organisations waste precious resources by deploying unsustainable salaries with no mean- ingful development pathways for high-performing staff. Implementing a successful growth culture to win the battle for talent requires a commitment from all levels of the organisation but must be driven by executives. Here are some of the most tangible steps implemented by winning organisations: Evolving an organisation’s employee value proposition An effective employee value proposi- tion must be authentic, centred around the organisation’s values and perceived appeal within the labour market. Underpinned by its relevance and goodwill towards employees, this requires a meaningful translation into capabilities, growth-oriented devel- opment, outcomes, and rewards. Beyond marketing slogans, such attri- butes must be articulated and lived by leaders unconditionally. A famous GCC retail group devel- oped its hiring and onboarding process to closely align with its fami- ly-driven values and trading heritage. Expatriates and nationals alike are offered exciting prospects of develop- ment across all business units throughout an employee’s lifecycle. This created a heightened allure within the labour market, resulting in decreased employee turnover and reduced hiring costs. Moving from development to mutual growth A commitment to growth must be purposeful and tied to intentional capability building enabling staff to deliver results within the organisation. Of late, GCC organisations required a major step-up in their technology and data capabilities. Short-term, yet sive energy group deployed an incen- tive programme rewarding staff for the long-haul if shared organisational objectives are met. The tight alignment of strategy and incentive benefited both executives and employees. The executive team was able to create greater clarity on expectations, objec- tives, and responsibilities while employees increased their awareness of the desired organisational culture and behaviours required. Most importantly, this lever moti- vated all staff members, regardless of their background or department, creat- ing a sense of ownership and advocacy. As a result, the organisation witnessed an increase in profitability and produc- tivity within the first six months. Its lost time incident rates and average sick days also saw a major decrease. The stakes are high with severe consequences for organisations who do not nurture employees in this war for talent. Employees will only engage your customer base if they themselves are part of an engaging environment themselves. Whilst implementing this long-term play, organisations should be careful not to be allured by quick wins alone. Rather, balancing imme- diate successes with long-term and durable organisational outcomes. C OMMENT / By Jean Faivre, DAMAC’s Senior VP Hospitality Hotels & Resorts If first quarter figures in 2022 are anything to go by, one can safely say Dubai’s hospitality sector is most definitely back. Between January and March this year, the emirate welcomed 3.97 million overnight visitors, according to figures released by the Department of Economy and Tourism. That 7.12 million The number of international overnight visitors to Dubai between January and June this year, according to the latest data from the Department of Economy and Tourism Booming back into business u Key industry Hotels in Dubai deliver stellar performance to post significant growth CO MMENT / By Jean Faivre, D By any metric, Dubai’s hospitality sector has returned to growth amid a post-Covid-19 recovery that could serve as a template for other cities to follow 14 Vol. 23/09, September 2022 represents a massive 214 percent growth vis-à-vis the same period last year. Equally impressive, Dubai ranked first globally in terms of hotel occupancy in the first quarter of 2022, registering an 82 percent occupancy rate during the first three months, beating London (56 percent), New York (55.3 percent) and Paris (51.2 percent), as per data from hotel management analytics firm STR. That is a massive achievement that reflects the wisdom of Dubai’s tourism strategy that has made the emirate the global poster city for post-pandemic recovery. Compelling reasons The staging of the Expo 2020 Dubai has obviously been a big draw for Believe the hype, it’s here. ENTER THE NEXT DIGITAL UNIVERSE GET Y OUR EVENT P ASS THE WORLD’S LARGEST & MOST INFLUENTIAL TECH + STARTUP EVENT NEW NEW DUBAI WORLD TRADE CENTRE SHOW TIMINGS: 10 Oct - 11am to 5pm | 11 - 14 Oct - 10am to 5pm DIAMOND SPONS OR PLA TINUM & LANY ARD SPONS ORTECHNOL OG Y & DIGIT AL P ARTNER GOLD SPONS ORGOLD SPONS OR A TTENDEES BADGE SPONS OR INNOV A TION P ARTNER MAJLIS L OUNGE SPONS OR CONNEXIONS L OUNGE SPONS OR SIL VER SPONS OR16 Vol. 23/09, September 2022 In addition, Dubai offers some of the most exciting retail and shopping experiences with a plethora of malls offering a wide selection of brands – from fashion to gadgets and every- thing in between. Sustaining the momentum As if these numbers were not enough, Dubai is bent on sustaining its momentum towards the end of the year as it seeks to broaden its appeal to new and diversified market segments, while also attempting to increase lengths of stay as well as encouraging repeat visits. It certainly helps that a fresh pipe- line of developments will see 10,000 rooms added to Dubai’s hotel indus- try in the second half of this year, according to JLL’s Q2 2022 UAE Real Estate Market report, which also esti- mates that approximately 333,000 square metres of retail space will be completed in Dubai for the remainder of 2022. Adding to Dubai’s favour is the staging of the World Cup in Qatar in November, which will provide an extra boost to hotel occupancy in the u Shopping Dubai boasts a number of retail destinations offering world-renowned brands both domestic and international tour- ists, with the global event attracting nearly 24 million visitors during its six-month run. Beyond that, however, Dubai’s appeal as an international hub for business, tourism and leisure could be attributed to its strategic, multi-pronged approach to the hospi- tality sector that includes establishing a world-class infrastructure, provid- ing a safe environment and organis- ing a plethora of events and activities that are essential elements to attract- ing tourists and travellers from around the world. In a statement released during a regional travel exhibition held in Dubai earlier this year, Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of UAE and Ruler of Dubai said, “These results attest to the emirate’s ability to develop a compelling value prop- osition… and innovative new offer- ings that meet the needs and preferences of the most discerning of global travellers.” This value proposition includes a large collection of superb hotels and dining outlets, as well as a robust and modern transport network that makes it easy and convenient for anyone to go around. The city boasts an impres- sive range of tourism spots and land- marks that include the tallest building in the world, and the most beautiful, with the recent launch of the Museum of the Future. Dubai offers a gastronomic jour- ney unlike any other city, with some of the world’s best restaurants providing culinary masterpieces that appeal to different tastes and budgets. Every year, hundreds of business conferences and events take place in Dubai, as well as entertainment and leisure activities that draw millions of visitors from all corners of the globe. The entertainment industry’s biggest names have been to Dubai to perform, while celebrities have on a regular basis been known to visit the emirate to enjoy its luxury resorts and holiday destinations. emirate as tens of thousands of foot- ball fans are expected to make the city their base during the course of the world’s most watched sporting spectacle. Dubai’s F&B sector is also expected to benefit from the massive influx of tourists, with various outlets already preparing special offers and football-focused experi- ences such as mini fan zones and big screen installations. Moving forward Despite its well-established reputa- tion as a global economic and tourism hub, Dubai is certainly not letting up in its desire to further its ambition to be the world’s most sought-after travel destination. New legislative initiatives have been introduced, such as increasing the duration of the tourist visa from 30 days to 60 days that will commence in September, which will further boost visitor arrivals and encourage visitors to stay longer in the city. Expect new developments in the hospitality, retail and leisure industries from private sector developers who would want to leverage opportunities being offered by Dubai’s robust tour- ism industry that will in turn contrib- ute to its future growth. With all these coming together, Dubai’s hospitality sector can look forward to more business than usual not only for the rest of the year, but for the years to come. 74% The average occupancy rate in Dubai hotels in the fi rst half of 2022 – one of the highest in the world Q DUBAI OFFERS SOME OF THE MOST EXCITING RETAIL AND SHOPPING EXPERIENCES WITH A PLETHORA OF MALLS OFFERING A WIDE SELECTION OF BRANDS – FROM FASHION TO GADGETS AND EVERYTHING IN BETWEEN” C OMMENT / By Jean Faivre, DAMAC’s Senior VP Hospitality Hotels & Resortsarabianbusiness.com 17 / BRAND VIEW The new Mercedes-AMG SL returns to its roots with a classic soft top and sporty character. At the same time, the luxurious roadster as a 2+2 seater is particularly suitable for everyday use and puts its power down on the road with all-wheel drive for the first time. High-tech components such as the AMG ACTIVE RIDE CONTROL suspension with active anti-roll stabilisation, rear-axle steering, the optionally available AMG ceramic high-performance composite brake system and the standard-fit DIGITAL LIGHT with projection function sharpen the sporty profile. In combination with the AMG 4.0-litre V8 biturbo engine, this results in a driving experience of the highest order. As a consistent Performance Luxury model, Mercedes-AMG in Affalterbach has developed the SL completely independently. One variant with AMG V8 engine will kick off the market launch, with additional engine variants being released later in the lifecycle. The new Mercedes-AMG SL combines the sportiness of the original SL with the luxury and technological excellence that characterise modern Mercedes-AMG models. The exterior design combines the modern Mercedes- Benz design philosophy of sensual purity with the sportiness typical of AMG and characteristic details. The two power bulges on the bonnet are just one of numerous reminiscences of the first SL generation. The interplay of light and shadow makes the overall appearance visually light and low. Characteristic features of the body design are the long wheelbase, the short overhangs, the long bonnet, the passenger compartment set back with a strongly raked windscreen and the powerful rear end. The new interior space concept with 2+2 seats offers more room and functionality than before. The minimalist interior of the 300 SL Roadster, equipped with high-quality materials, inspired the designers in the interior design of the new model: The result is an exciting combination of analogue geometry and digital world, called “hyperanalogue”, exemplified by the fully digital instrument cluster, which is integrated into a three-dimensional visor. One of highlights in the interior of the new SL is the sculptural seat design of the standard, electrically adjustable AMG sports seats. The head restraints are integrated into the backrest and emphasise the sporty character. The AIRSCARF is on board as standard: Warm air flows into the passenger compartment from air outlets in the head restraints and wraps around the head and neck area of the driver and front passenger like a scarf. The latest generation MBUX (Mercedes-Benz User Experience) is intu- itive to operate and capable of learning. It offers numerous functional contents and the operating structure of the second-gen- eration MBUX system, which debuted in the new Mercedes-Benz S-Class. In the SL, AMG-specific content is added extensively in five display styles. The new Mercedes-AMG SL: The new edition of an icon For almost 70 years, the distinctive sports car has delighted Mercedes- Benz customers of every generation around the world u Brilliant engineering With its exciting design, state-of-the-art technology and outstanding driving characteristics, the new Mercedes-AMG SL sets standards in the luxury sports car segment18 Vol. 23/08, August 2022 18 Vol. 23/09, September 2022arabianbusiness.com 19 arabianbusiness.com 19 Arabian Business profi les 50 business leaders who are propelling the Middle East towards a bright future Profiling the business leaders who are inspiring others to perform, innovate, and drive change is no easy feat. This year, Arabian Business has sought to honour a true cross-industry representation of inspiration, celebrating those that using their influence, experience, and ambition for the betterment of their businesses and the region at large. The Middle East has been on a transformational journey, becoming a global hub for innovation, technology, and growth. With so many stories of success, it was no easy feat to pick just 50 leaders among the many deserving contenders to fill this list. From the leaders of some the biggest businesses in the Middle East, to the startup entrepreneurs envisioning the future of industry, we hope you find the names and stories within this list as inspirational as us. Congratulations to all those listed. Next >