Launched 3 days ago by Abraaj Capital one of the world’s 50 biggest private equity groups Riyada Enterprise Development (RED) has $500 million in cash to invest on around 100 SMEs over the next 2-3 years. And they’ve kicked it off with investing in 5 already.
If your wondering what an SME is exactly, RED defines it as any company with an enterprise value of less than $50 million. That provides good reason to make your mouth water.
The industries they cover include process food, pharmaceutical, diapers, media, it services, medical testing, educational products and services, , media content, construction material, specialized logistics, child support solutions, clean energy can and should be addressed by SMEs in the region.
Some of their local partners are in Palestine the Palestine Investment Fund, in Jordan it’s Jordan Enterprise, in Lebanon it’s CISCO, and Banque Nationale d’Algérie in Algeria to name a few.
The people from Abraaj Capital successfully attempted to put the money together by contacting developmental finance institutions around the region along with a $50 million they put forward since last year. One of which was OPIC: United States Overseas Private Investment Corporation.
The OPIC allocation following president Obama’s 2009 speech was a $500 million tender for development in the Middle East, which RED received the largest single chunk of, which is $150 million. They added another $200 million from their investor base. And before you know it, they got the local funds to chip in getting it up to $500 million.
They started screening companies, 180 companies in total from around the region in 4 months. 160 of them weren’t of interest, the remaining 20 were. As a result they ended up investing in 5:
- E3 is a regional medical IT Services company
- Egypt-based integrated agriculture company which specializes in Artichoke growing/producing
- Egypt-based regional IT services firm OMS
- Kuwait-based Teshkeel Media Group lead by Dr. Naif Al-Mutawa creator of The 99 comic book
- Jordan-based Arabic online portal d1g.com
D1g.com is obviously the most interesting investment to us because it not only represents in an investment in an Arabic online portal, but an investment in digital Arabic content as well.
Having Usama Fayyad’s Yahoo!’s former Chief Data Officer and Executive Vice President of Research & Strategic Data Solution as Executive Chairman of D1G encouraged us to attend a presentation of his during the Celebration of Entrepreneurship in Dubai and the numbers are staggering.
Since Arabic Internet content is less than 1% of all Internet content yet the Arabic language is ranked second according to the number of native speakers of that language after Mandarin, the crisis is offline as much as it is online. Another interesting fact is that only 2% percent of Arabic speaking Internet users are comfortable with doing their business/personal matter in English.
So if 98% of Arabic speaking people can’t comfortably access the content online, the Internet revolution is actively leaving them behind.
Now if we consider the offline Arabic content dilemma it’s also rather concerning. 330 books get published per year, when comparing the number of ‘quality articles’ on D1G.com, the amount of content would be equivalent to 368 books per year. And that is more than the entire book industry in the Arab world for one year.
It appears RED has made a successful investment, at least in the Arabic content generation industry we hope will catch on to other platforms and online industries.
Talk a little bit about your discussion of AT&T in the book.
In the 1910s, AT&T promised the American public that they would do no evil. Their president, Theodore Vail, turned to the government and the American public and he said we are a public utility and our duty is to the American people before profit. In there was the grand bargain that we keep making between the great information monopolists and the American nation. AT&T was the 1910 counterpart to Google’s pledge to do no evil.
When did AT&T become “evil”?
Most monopolists create a golden age that lasts a decade or more, and then slowly they became more interested in being in power. AT&T became dangerous when they began to suppress technologies that might threaten their rule.
Which technologies did AT&T suppress?
In the book I tell the story of tape recording technology, which AT&T itself invented in the late 1920s, and then suppressed because they believed that the recording technology would lead to the abandonment of the telephone.
Do the technology monopolies surrounding the Internet look different than the past?
The question is whether there is something about the Internet that is fundamentally different, or about these times that is intrinsically more dynamic, that we don’t repeat the past. I know the Internet was designed to resist integration, designed to resist centralized control, and that design defeated firms like AOL and Time Warner. But firms today, like Apple, make it unclear if the Internet is something lasting or just another cycle.
What do you think will happen?
My gut tells me that a return to 1950s prime time seems outlandish, but I can imagine a future where we have choices but something will be lost.
Which companies do you fear the most?
Right now, I’d have to say Apple.
What about Facebook?
I think Facebook is looking for a mentor, they are looking for a role model. Right now it is choosing between Apple and Google in this great war between open and closed. It is possible that whatever side Facebook takes will have a lot to do with the future of how we communicate.
What worries you about Apple?
As I discuss in the book, Steve Jobs has the charisma, vision and instincts of every great information emperor. The man who helped create the personal computer 40 years ago is probably the leading candidate to help exterminate it. His vision has an undeniable appeal, but he wants too much control.
Is this book about business or power?
I write about business in the way that writers have traditionally written about war. I’m interested in the quest for dominance, in industrial warfare. I believe that capitalism, by its nature, is about conflict, and ultimately the life and death of firms.
So what makes Steve Jobs and Mark Zuckerberg get up in the morning?
Joseph Schumpeter, the famous economist, wrote about a special breed of men who are motivated not by money or comfort, but the will to found a private kingdom. The men in my book are motivated by power, and the information industries offer possibilities unavailable to people who sell orange juice or rubber boots, a power over people’s minds.
Do these C.E.O.’s make decisions that aren’t in the best interest of the public?
As I show in the book, there’s a similarity to power and great nations. The man who starts as the great reformer often ends his career by becoming increasingly paranoid and abusive. There’s a cycle, and the problems usually shows up when the great leader feels his power is threatened, like a political leader.
What part of these “evil” acts are the C.E.O.’s and what part are the employees?
I think the mogul makes the medium, but it’s also true that once a firm has been in existence long enough, it begins to have a life of its own.
Do you think that will apply to Apple?
Yes.
But who will take over it from Steve Jobs?
I think it may not matter. I think the mark of Steve Jobs is firmly placed on that firm, that it will continue to be him long after he passes from leadership.
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