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Thursday, 28 February 2019

Tarek Abdel Rahman, Managing Partner, Compass Capital

Tarek Abdel Rahman, Managing Partner at Compass Capital: My Morning Routine looks each week at how a successful member of the community starts their day — and then throws in a couple of random business questions just for fun. Speaking to us this week is Tarek Abdel Rahman, managing partner at private equity firm Compass Capital.

I’m Tarek Abdel Rahman, I’m 44 years-old and I’m the managing partner at Compass Capital, a leading private equity firm with a focus on value investments.

The truth is, anyone who works in private equity will always have a hundred things to do in a day, because you have so many different areas of business to think about. As the managing partner, I lead transactions on the potential opportunities for Compass to buy promising businesses. This means a lot of strategic thinking and planning, scoping opportunities, leading teams to assess the potential of a company and managing the acquisition processes from management meetings to due diligence to negotiating transaction documents and price. A lot of time you need to move swiftly and seize a good opportunity when one is presented, so in the course of a day you often have to switch gears very rapidly and be agile and responsive. That’s at the strategic level.

After acquiring a company, your role shifts, and you really assume responsibility for it. Since we are value investors and have an affinity for turnarounds, we get very involved in our portfolio companies, to the extent that sometimes at the early stage of the acquisition we become the executives of the company to make sure our game plan is implemented to extract maximum value. I am the acting CEO of Bonyan, the company that owns the Walk of Cairo. We’re extremely busy trying to get the Walk of Cairo ready for launch by September this year and are keen to introduce a retail and entertainment experience unseen before in the Egyptian market. This means taking care of numerous details to ensure everything is on track and that the company delivers to the standard we require. Then of course you have all the concerns that exist for any CEO — how to optimize performance, how to make sure your revenue generation is not only sustainable but steadily increasing, how to get the best from the company’s team, build and retain talent. There are a lot of different things to think about.

Because of this, my morning routine sets me up well for the day. I wake fairly early, at 6:30 am, and head to the gym first thing. Then I check Enterprise as I’m on my way into work; it’s great for giving me a concentrated shot of all that is important in Egypt, the region and the world. I honestly don’t know what I did before it was created. I pass by the Walk of Cairo and spend a couple of hours there to make sure things are on track and get some face time with the team. We’re set to have well over 100 retailers — both local and international — in one gated outdoor space resembling the high streets of major European cities in terms of both size and setup, spanning 60,000 square meters of gross leasable space, so the amount of work going into it is huge. Then I head over to the Compass office and it’s on with the rest of the day.

What does this look like? Well truthfully, it’s work work work for the day but I try to be home around 8 pm to have dinner with my wife and kids and spend some time with them before heading to bed around 10 pm.

I recently enjoyed reading The Smartest Guys in the Room, which is about the rise and fall of Enron. King of Capital, another recent favorite, is more of a success story, but also has plenty of twists and turns and highly recommended to anyone in finance, especially on the investing side. I also found Orwell’s 1984 a particularly important read, though of course it’s very dark. And a less well known book I also found very interesting was Lenin on the Train, which describes Lenin’s journey back to Russia to lead the revolution in 1917. I’m very big on TV series, and recently watched The Ted Bundy Tapes and Peaky Blinders.

Compass Capital was established by my partner Shamel Aboul Fadl in 2010 and he always sought to grow the firm based on attracting talent and expertise.

When it comes to the organizational culture we’ve created, we really value teamwork, discipline and rigor in our investment approach and when defining strategic initiatives to increase the value of our investments, as well as agility when it comes to the implementation process. We’re sector agnostic, so we care much more about the business model of the companies we acquire, and the values that guide them. There are a lot of opportunities in Egypt, which is our main focus area. Still, we face many challenges in making sure we recruit the right people, ensuring that the right business plan is put in place and that they are supported effectively. We actually prefer distressed assets; we feel that the support we offer is very important in terms of turning a company’s fortunes around.

I believe that Compass Capital’s niche is our genuinely hands-on approach. We’re very involved in the businesses we acquire and therefore we’re very selective. We’ve examined the prospect of buying 140 companies since 2010 and in the end we bought only four that we thought were a really good fit.

People don’t understand the level of involvement we have in our businesses. For us, buying a business isn’t just about financial acquisition. Not at all, in fact. In many cases we really take over. We become the management body of that business, and the business becomes ours while we implement our game plan. Then we bring the right management team on board to lead, and to pick up where we left off. So the whole process is about so much more than restructuring, or even maximizing profit — although of course these are both essential for it to work. We see something in the company when we buy it, then we want to make sure that the right plan is in place and is being implemented correctly so that the company fulfils its full potential.

I think that the way we use data analytics will be a real game changer in the field of private equity. Until now PE has not been affected by technology too much, although there have been some improvements in the way data is gathered and analyzed.

I think the problem that occurred with Abraaj has affected the industry significantly, especially in terms of fundraising, but I believe this will be a short-term effect. I expect in the long term much more competition in the PE space, which until now has had very few players in Egypt and the region as a whole.

Unscheduled time is quite rare and precious, and I think I use it well: spending time with my family, scuba diving, going out, reading, and watching TV shows and documentaries.

Many people have given me great advice throughout my career. Probably the best advice I’ve ever been given was to listen more than I speak. Another thing I learnt is that no one is indispensable. The team is really more important than the individual.

How do I stay organized? I’m a methodical person, so I have a to-do list that I make every day, and as I complete tasks, I tick them off one by one.

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