Man Capital’s Hisham Halbouny on direct investing

Hisham Halbouny, the managing director of the Mansour Group’s family office, private equity fund and asset management arm, tells Private Equity International why it is betting big on direct investments.

Hisham Halbouny, managing director at Man Capital

How does Man Capital’s strategy differ from other private equity investors?

It’s not a traditional or typical family office where you have the procurement of goods and services for the family. The way Man Capital is structured is broken down in a few pieces: one is managing the family trust, which does public equities and private equities [fund] allocations, then you have Man Capital investment arm, which is where I sit. The trust has a small allocation to funds, but the investment side – and this is where we’ve been growing the team – is basically looking to invest direct.

What are your motivations for going direct?

We’re happy to keep the fund allocation where it is, but we prefer doing things directly because we’ve invested a lot on an investment team that is capable of going out there and sourcing deals and executing deals across borders. [With] your commitment to funds, you put the money in and then you have all your distributions, and keeping that allocation on a cliff is quite challenging. Looking at most of these funds and [their] investment horizon it’s quite short-term from where we would like to see [our] investments. We prefer holding for longer periods and allowing those businesses to grow larger and expand more geographically. It’s not about leveraging the business seven, eight times EBITDA, cost-cutting and selling in a few years.

What is your strategy for creating value?

If you look at how the group was first created and where the success was – it’s that partnering up with global, developed markets businesses where we were able to grow them and expand them and adapt them to the local markets. We’ve done that with General Motors [Al Mansour Automotive], we’ve done that with Caterpillar [Mantrac Group], we’ve done that with McDonalds [Egypt]. We focus on sectors where we see a significant amount of pent-up demand: under-served markets in the Middle East and Africa that are poised to benefit from mega trends. You have a young, growing population, with a rising middle class [but] you have the exact opposite of that in Europe. We look at those businesses and we give them a completely different direction and enable them to actually grow in these territories, because these sectors are quite challenging for most private equity players. They don’t know how to operate in the territories we operate in.

Founded in Egypt by the Mansour family during the 1950s, Mansour Group is now a global conglomerate with total revenues exceeding $6 billion, over 60,000 employees and a presence in over 120 countries. Man Capital was launched in 2010, but did not disclose the total value of its AUM.