< PreviousCO VER STO R Y | 20 Vol. 24/05, May 2023 CO VER STO R Yarabianbusiness.com 21 | MOH AMM AD A . BAKER arabianbusiness.com 21 SUN, SAND AND SUCCESS Mohammad A. Baker has transformed GMG from a Dubai-based sports retailer into a multi-billion-dollar global well-being company. With a presence in 12 countries, over 600 stores and more than 9,300 employees, the company has grown into a global powerhouse that has ambitions to be active in every major world city within ten years. In a rare interview, the Deputy Chairman and CEO explains how WORDS B Y ANIL BHO YRULCO VER STO R Y | 22 Vol. 24/05, May 2023 Family enterprise Abdulaziz Hassan Ali Baker, chairman of GMG (left), with son Baker at the launch of Himalayan pink salt manufacturing facility in Dubai Mohammad A. Baker remembers the exact moment he was o ered the chance to become the new CEO of GMG. “The chairman called me into the boardroom and asked me to take over. I said no. I said no three times. I just felt they wouldn’t really give me the chance to make the changes I wanted to.” The fourth time the chairman came calling, Baker said yes. “But on one condition – you (the board) do not talk to me for one year. For one year, I do whatever I want. That was in 2016.” and running Sun & Sand Sports shops, GMG has not just grown into the Middle East’s largest sports retailer. It is now a multi-billion-dollar giant, one of the UAE’s largest family-owned businesses, with interests in indus- tries across six key verticals: GMG Sports, GMG Everyday Goods, GMG Health and Beauty, GMG Properties, GMG Logistics and GMG Ventures. GMG has evolved into a global well-being company, retailing, distributing and manufacturing a portfolio of leading international and home-grown brands across sports, We are a family business, but we are not a charity. We are not a company for the weak. GMG is a company where if you come in, we treat you as our family Seven years later, not talking to his board was one of the best decisions both Baker and GMG ever made. From a company best known for creating arabianbusiness.com 23 | MOH AMM AD A . BAKER Regional giant GMG is expected to double its workforce by 2025 Brand builder GMG is one of only two companies in the world to have been given the global distribution rights (for countries it operates in) by Nike.com 100 The number of stores GMG plans to open in Egypt by 2026 everyday goods, health and beauty, properties, and logistics sectors. The past few years have seen high-pro le acquisitions, onboarding of leading international brands, and geograph- ical expansions. Today, GMG has a presence in 12 countries with over 600 stores and more than 9,300 employees globally. Oh, and if that isn’t enough, the workforce is expected to double by 2025. As for Baker himself – whose personality is best described as a blend of charm and ruthlessness, things are only just getting started, and there is no room for passengers on the journey ahead. “We are a family business, but we are not a charity. We are not a company for the weak. GMG is a company where if you come in, we treat you as our family. But in every family, there is a black sheep, and we have no problem to cut it o ,” says Baker, adding: “I actually think we are one of the most unique companies in the region. But you know why we have been so successful? We do not do things that we know nothing about. We reject 99 percent of the opportunities that come to us.” Baker clearly has a knack for pick- ing winning opportunities, especially with a massive overseas expansion plan underway. GMG took its first global leap by venturing into Asia, with the buyout of Singapore-based Royal Sporting House (RSH) in December 2020. In April last year, Nike-only stores were bought from SUTL Corpo- ration in Singapore and Malaysia. Across South East Asia, Baker plans to open 100 stores in the next two years. The company also launched Iraq’s rst ever Sun & Sand Sports store, with more to follow in the country. Another 100 store openings are on the cards in Egypt by 2026, with a new African headquarters just opened in Cairo. GMG is also one of only two compa- nies in the world to have been given the global distribution rights (for countries it operates in) by Nike.com. “My job was to take what my father (who started the company) had done in GCC and take it beyond. I was saying for years that we should expand into South East Asia and Africa – now we are doing that. If you go to these places on vacation, you will see some of the worst retail experiences ever,” says Baker. He adds: “There was a time in Dubai when the shopping experience was not great, we would go to US and Europe for a good retail experience. Today we have the best shopping experience in the world. Well, I want to take what we have done here into those places. Around 700 million people have been underserved in South East Asia for a very long time. Look at North Africa – one of my friends is an Olympic world record holder. But try and find a decent sports store in his native Morocco? You won’t. I was in Egypt last month – 105 million population, and the only decent sports store I saw was Sun & Sand Sports, which was only opened a few months ago.”CO VER STO R Y | 24 Vol. 24/05, May 2023 That said, Baker has an unconven- tional – if not unique – way of doing his research before making a big acquisition. He explains: “When we were thinking of buying RSH, it had 560 stores across South East Africa and the Middle East, before the pandemic. So, I got on a plane and visited every single one of them in 12 countries, 58 cities – in one month. I had a backpack and a ratings sheet. I would rate them on the spot and send a screenshot back to my finance people in Dubai. This was before making the decision to buy – it was a very simple sheet to rate stores; using this information and data, I would run the numbers. We decided to buy the company but also shut down 60 percent of the stores.” If Baker isn’t wandering around sports stores in a backpack, he could well be found in random a food store. Equally impressive and at a similarly rapid pace has been GMG’s growth in the food industry. While GMG had a history of being a distributor of branded food products for decades, the company entered the food retail industry in April 2022 through its buyout of Urban Foods from Dubai Holding to operate existing brands such as Géant, Franprix, Monoprix, and Monop from the French retailing giant Groupe Casino and also own the rights to expand the brands across the Middle East. And just two months ago, Baker acquired aswaaq LLC, including its companies operating in retail, trading and properties, positioning the group as one of the UAE’s largest community mall operators. In line with its ‘farm-to-fork’ vision, GMG now also covers the entire food consumption chain with world-class food manufacturing facilities, an expanding food retail network, and distribution of both their own product such as Farm Fresh and popular inter- national brands. These facilities are supported by an R&D kitchen. Royal visitor Sheikh Mohammed bin Rashid Al Maktoum with Baker at Gulfood 2023 154 The number of countries GMG is licensed to export to with its world-class food productsarabianbusiness.com 25 | MOH AMM AD A . BAKER As a company today we are huge, we are large, we are successful. But we are still constantly trying to change. We are not scared of mistakes or new ideas The company now owns the world’s second largest fully automated Hima- layan pink salt manufacturing facility, plus several large food manufacturing facilities for meat, sh and other pack- aged products. “Farm to folk is what we do. During the pandemic I got more involved and decided to make our own brand Farm Fresh a market leader – in 2020 we had three unique products, now we have 700. I have been pretty hands on in this eld. For a month when we had the lockdown, I ate chicken for breakfast, lunch and dinner. With the help of my sisters, we would try and cook the exact percentages of herbs and spices needed for di erent products, write it down, send to the factory – I tried it all out. It was a lot of eating,” he says. All that eating has paid off hand- somely. GMG is on course to become one of the world’s major food manufacturers, and is licensed to export to 154 countries. Indeed, pretty much everything Baker has done has reaped rich rewards, and with his leadership, GMG has become a conglomerate. It doesn’t publish revenue or pro t gures, but there is zero doubt that any cursory valuation would put it over the $10bn mark. But its journey to this point has been nothing short of remarkable. His father, Abdulaziz Hassan Ali Baker rose from humble beginnings, having originally worked in a bank. After getting married, he needed extra income so he bought a boat, went sh- ing, and rented a store to sell sh. This progressed into opening Dubai’s rst gourmet butcher shop selling special cuts close to Jumeirah Beach in 1977. “He would watch everyone playing football on the beach, wearing sandals. Rubber shoes didn’t exist, so he would see both slippers and balls in the air. That gave him the idea to start a busi- ness selling rubber shoes, and he did that with Dunlop in 1978. That’s how this business, GMG, was rst started.” Baker himself – although the natu- ral heir to the family business – was initially not interested in joining his father. He went down the entrepre- neurial road after ditching a desk job in a bank, and started his own gym business. When he did eventually join GMG, it was at the bottom and work- ing across several departments. “When I joined the company in 2010, I was very young. The company was a very ancient organisation we did not have any systems, everything was manual, even though we were consid- ered an organised retailer. I was 21 and we went through a journey, I was eager to change things and tried to convince a lot of senior people with more experience than my entire age. That was quite a challenge,” he says. In a relatively short time, Baker has achieved the type of growth and diver- si cation that most businesses would take decades to come close to. However, he says the real secret to GMG’s success is always acting like a new kid on the block – listening, learning, evolving. “As a company today we are huge, we are large, we are successful. But we are still constantly trying to change. We are not scared of mistakes or new ideas. In a way, our mentality is more like that of a startup.” Now also the Deputy Chairman of the group, Baker’s own vision is for GMG to be present in every major city in the world in the next decade. Only a fool would bet against him succeeding. Crown Prince Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum visiting Gulfood this year Team leader Baker with his staff at the newly opened GMG Africa HQ in Cairo, Egypt in MarchSUSTA I N A BILITY | 26 Vol. 24/05, May 2023 Why the MENA startup ecosystem is still hot Founders need to be selective when partnering with venture capitalists Capital gains Business founders should not underestimate the signi cant impact that international VCs can have $1BN The venture capital deployment in Saudi Arabia last year ST AR TUP | has further cut into the ecosystem. It has become clear that the recently boisterous startup funding has seem- ingly slowed down to a trickle in the face of rising interest rates and muted growth. That being said, the MENA startup ecosystem seems to have found lifting o in a position with signi cant tail- wind, propelling the ecosystem forward. Across MENA we seem to be in an auspicious growth stage; boiling with innovative tech startups, that continue to attract signi cant funds. We are witnessing foundational growth rippling across the GCC and wider MENA. Within this surge Saudi Arabia is clearly in the pole position to lead the pack – driven by its young population and tech adoption. Saudi Arabia is the largest economy in the region, constituting approxi- mately around a third of MENA’s GDP and boasts a comparatively high GDP per capita at $20,110. It is a young econ- omy with over 70 percent of the popu- lation under the age of 30. This means BY GHASSAN ALOSHBAN, GENERAL PARTNER AT EMKAN CAPITAL Undeniably, the global tech sector has weathered a rough start to the year – following an already di cult 2022. But, in contrast to these persisting global economic headwinds, the pace of VC capital deployment in MENA has seen expo- nential growth. Particularly in the GCC, where in Saudi Arabia for instance, VC capital deployment has increased from $40m in 2017 to approximately $1bn in 2022. Over the past months, we have witnessed tens of thousands of jobs being slashed across both blue-chip giants and many smaller tech rms moved in lockstep. Now, the bank run on Silicon Valley Bank (SVB) which seemed to have been spurred by a combination of groupthink and panic arabianbusiness.com 27 Regional leader Entering the Saudi market is necessary for most MENA startups that want to achieve unicorn status Funding growth The GCC’s venture capital market is still very much a seller’s market, Aloshban says that cracking the Saudi Arabian market is necessary for most MENA startups that want to achieve unicorn status. The acceleration of Saudi’s economic and technological ecosystem is also driven by substantial tech infra- structure, world-leading consumer tech (and social media) adoption, and the sweeping Vision 2030 macroeco- nomic and regulatory reforms. We can expect a slowdown in 2023 but we are still at a very low base in comparison to reference regions like Latin America and India. The ratio of VC deployment to GDP in MENA, shows that VC yearly invested capital still has room to grow at least five times to match that of Latin America and upwards of even 10 times to meet India – before catching up with peer regions. The enormous appetite for digital and social consumption combined with critical gaps in o ine o erings, create leapfrog opportunities for growth and tech innovation. Startups simply need to focus on their consum- ers pain points and identify an oppor- tunity big enough that allows for viral adoption of the right solution. There are a lot of these pain-points in the economy, and they are ripe for the picking for the right entrepreneur. Arguably, in current conditions the GCC VC market is still very much a “seller’s market”. Although it’s no longer as frothy, here is still a lot of dry powder in the region and a slew of new VCs on the block, with Emkan Capital being just one of them. If you are an entrepreneur that is addressing tangi- ble issues, whilst leveraging the bene- cial societal and economical macro factors you will have no problem getting access to funding. Nevertheless, many VC funds are again cautious in deploying funds with more grounded and realistic outlooks after having some frenzied valuations left investors disappointed in 2021 and 2022. Now valuations seem to have come back down to earth, which is a healthy place to be for sustainable deployment. Despite the abundance of regional dry powder, the capital levels are still considered limited by global standards, especially post series B and C. Having a top-tier international VC invest in earlier rounds signals to other inves- tors that the ecosystem is producing quality deal ow, which can be procy- clical and attract more investors to the ecosystem. This ultimately leads to more scrutiny and robustness in the due diligence cycle startups are exposed to, which ends up levelling up the quality of the ecosystem as a whole. Established international VCs bene t from vast network of connec- tions in various industries, by virtue of substantial investments in numerous startups globally. This network can be leveraged to help startups cross border growth and expansion. Lastly, founders should not under- estimate the signi cant impact that international VCs can have through providing vital access to international markets, players, businesses and investors. Startups in regional ecosys- tems may have limited access to global markets, which can restrict their growth potential. International VCs can leverage their global network to help startups expand their business into other countries. The environment is fertile, the VCs are increasingly waking up to oppor- tunities, and more than ever it is crit- ical for founders to be mindful of work- ing with the right investors and look beyond the equity investment. It is critical for founders to be mindful of working with the right investors and look beyond the equity investment | ST AR TUP and what the ecosystem lacks is more participation from tier-1 international VCs; this will be crucial as the ecosys- tem matures. Local or regional VCs may not have the nancial resources to invest in startups at the same scale as international VCs. This can dampen the potential of startups and the overall ecosystem, SUSTA I N A BILITY | 28 Vol. 24/05, May 2023 Why gold is essential in turbulent markets With the global economy facing headwinds, investors should look to precious metals Valuable Gold's long-term stability and reliable performance make it an opportunity for investors looking to hedge against economic uncertainty $2,053 The value of an ounce of gold as of 17 April 2023 COMMODI TIES | Largely due to recent market turbulence, gold has seen a rise in investor adoption, with the recent collapse of Silicon Valley Bank (SVB) in the US. Since SVB’s recent collapse on 10 March, the value of gold has skyrocketed by approximately 10 percent. As such, it is vital investors consider proactively engaging with their portfolios on a monthly basis in order to achieve their nancial goals. Turbulent markets are a reminder that it’s important to act like an active fund manager, rather than passively holding onto investments. Macro trends are routinely changing and with sudden economic shocks, its essential investors are proactively engaging with their portfolios to gain the best possible returns. Despite market irregularities, the current economic landscape proves to BY AZIZ MOTI, GENERAL MANAGER AND HEAD OF ANALYSIS AT ISA BULLION F or the second time in 2023 the price of gold reached, and briefly surpassed, $2,000 per ounce before dipping back down to approximately $1,935 on 23 March. As of 29 March, gold stands at $1, 965 per ounce, demonstrating the financial impact and potential gains to be made under current market conditions.arabianbusiness.com 29 Sound investment A great way for investors to combat ongoing market uctuations is to regularly invest in gold on a four-to-six-week basis Smart move Moti says gold acts as a backbone investment to any portfolio be an excellent opportunity for inves- tors to rebalance their investment portfolios and reassess their invest- ment strategy. A great way for investors to combat ongoing market uctuations is to regularly invest in gold on a four- to-six-week basis, rather than making one lump-sum investment and remaining passive. In doing so, inves- tors can analyse the market perfor- mance and invest more should the price fall. Whilst gold has historically acted as a safe-haven investment where back- ers have sought economic shelter during downturns, the recent peak and trough in spot price for gold can be attributed to the Federal Reserve’s decision to increase interest rates by 0.25 percent, giving rise to a slower pace of rate adjustments as the nan- cial sector grapples with ongoing instability. Whilst it can be viewed as the Fed attempting to take the middle ground between taming inflation, supporting the war in Ukraine and stablising the nancial chaos across the economy, gold investments provide funders with the opportunity to carve a stable nancial path. More speci - cally, gold acts as an anchor investment across all classes, giving weight to making a steady return across a long- term horizon. In times of market irrationality, it’s essential to act strategically. A key part of building a strong investment port- folio is understanding time in the market carries far more weight than attempting to time when to enter the market. As the last few weeks have highlighted, investing on a regular basis will allow investors to combat market fluctuations whilst not adversely affecting their day to day living standards. In doing so, using this investment method allows for a struc- tured and organised way to develop a strong, long-term nancial standing. When selecting an investment pool of assets, gold acts as a backbone investment to any portfolio, safeguard- ing against inflation and adverse macroeconomic issues. Its long-term stability and reliable performance make it an ideal opportunity for inves- storms far better than portfolios which solely include riskier assets such as cryptocurrencies, which are prone to extreme market uctuations. The last few weeks have proven to be turbulent for global markets, and more speci cally emphasise the need to act rationally when markets behave irrationally. It is essential to act strate- gically and take advantage of the current economic climate, in order to maximise your nancial returns. As gold continues to act as a stable invest- ment, despite a drop in price, recent uctuations indicate the importance of its inclusion in a diversi ed portfo- lio. Rather than investing a one-off lump-sum into assets like gold, inves- tors should consider regularly engag- ing with their portfolios and following a four-to-six-week investment cycle. By drip feeding investments into gold in this way, it provides investors with the opportunity to regularly assess their portfolio in line with macroeco- nomic activities taking place. Investors should strongly consider making gold a proportion of their diversi ed asset portfolio, whilst also being aware of macro trends and the Federal Reserve’s interest rate deci- sions and their impact on the gold market. In following these strategies, investors can better safeguard their investment fund and weather chal- lenging market conditions. It is essential to act strategically and take advantage of the current economic climate, in order to maximise your nancial returns | COMMODI TIES tors looking to hedge against economic uncertainty. With that in mind, it is crucial investors ensure their portfo- lios remain diverse in order to mitigate risk to your returns. While diversi ca- tion doesn’t guarantee investment returns or eliminate risk of loss, it does aid investors in weathering nancial Next >