When Hilco Consumer Capital, a retail-focused North American private equity firm, decided it needed a bolthole outside North America, it bypassed the normal European private equity haunts and headed into the Middle East instead. The firm has now set up its first international base in Dubai.
While Dubai is said to be through the worst of its debt-related crisis – Nasser Bin Hassan al-Shaikh, director general of the Department of Finance, recently said its $10 billion rescue package had helped stabilise the economy and positioned it for recovery – it is certainly not out of the woods. Last month, this section of PEI looked at how its ruler is consolidating the emirate's various investment vehicles and reining in its investment activity.
Why then has Hilco chosen the emirate as its first port of call? “Dubai is an international crossroads for retail,” says Reyaz Kassamali, managing director at Hilco, in an interview. “It's a destination for worldwide shoppers: all the major international brands are there.”
The case for the presence of a consumer-focused firm is therefore quite clear, but some would argue that consumption has already peaked in the emirate. Many would have heard the stories of thousands of expensive cars being abandoned at the airport by owners fleeing from their debts.
“Some people would see it as a contrarian move,” says Kassamali, “but there are plenty of opportunities to move in somewhere if you feel it's not going away in the long term. Dubai is not going away. This is a logical time for us to be expanding.”
Until now only a few large international private equity players such as Kohlberg Kravis Roberts and Carlyle Group have opened offices in the Middle East, with the market remaining dominated by regional mid-market firms.
Hilco has brought in Scott Hupe as a managing director to spearhead the firm's international operations. Hupe is an international retail veteran, having held directorships at The Bombay Company, a furniture and home accessories retailer, and Ben and Jerry's Homemade, an ice cream brand. In both positions Hupe was focused on Europe and the Middle East.
Hupe's remit will encompass both deal origination and the development of Hilco's current brands, which include clothing group CJ Apparel and House of Marley, a business set up to manage the image rights of the late musician Bob Marley.