Against the grain

Salman Hussain Al Lawati, Executive Director at Bin Salman Investment, believes that business sustainability is more important than having family members on executive seats

An industrial engineer by profession, Salman Hussain Al Lawati started off his career in 2008 at Oman Cables Industry (OCI), one of Oman’s leading manufacturing companies, where his family owned a stake.

After honing his skills in multiple areas and proving his mettle in key roles at OCI, Salman left the company in late 2013, to join the family business, Bin Salman Group. When the family liquidated their assets in OCI and set up Bin Salman Investments in early 2015, Salman was assigned the task of heading its operations as executive director. His younger brother, Hamza takes care of the other division of the group, Bin Salman Lighting and Electrical.

At Bin Salman Investment, Salman oversees the various activities including acquisition, and other financial instruments, in addition to implementing the overall strategy for the company. Says Salman, “My responsibilities in the company include implementing the sector diversification strategy, mixing and matching various types of investments including long-term value based as well as short-term return based investments, managing liquid assets, follow the volatility conditions and events in the international financial markets, exploring private equity opportunities, valuations and analysis etc.”

He adds, “We have illiquid assets as stakes in different companies which are run by professionals and where we attend only the annual meetings, in addition to liquid assets which I overlook on a daily basis.”

In addition to his professional pursuits, Salman personally takes a lot of interests in the liquid financial assets, preferably corporate bonds. “It’s an interesting asset class and very much linked with the global events and volatility”, he says.

In tune with times

Asked about the changes he has been able to bring in to the way the business is run and the challenges of convincing other family members about the rationale of such steps, Salman replies, “The only thing constant in life is change. If we build our business models and strategies based on this quote then we will be able to forecast things ahead of us.”

He sets an eye on new investment opportunities in non-conventional sectors like mid-stage technology based companies and believes that one should not let emotions and personal attachments cloud one’s investment decisions. He elucidates, “In the family meetings, I try to highlight two factors: First, how the rapid changes which take place globally are affecting the investment strategies. A good example of that is the technology sector which is not a conventional sector of investment like real estate, but in today’s dynamic world, earnings of this industry are much higher and the gains are faster, in terms of high returns, quick exit and rolling capital. The second factor is related to the business emotions and decisions. I try to adopt a culture where business emotions have very little impact on decisions. We as humans tend to get attached with the business which we have set up or put significant input in growing. There will be resistance when you try to sell a business unit or exit from an area with which you have some sort of cultural and emotional affinities. But in investment holding companies, this doesn’t work.”

He explains that emotions should be kept in abeyance when it comes to investment. “I don’t want to be emotionally attached to the companies where I invest in. Whenever I enter into a new venture as a private equity, I think of the exit strategy before I put in my money, except for strategic investments, where we keep investments for a long time. Otherwise, you will be static, and if you don’t exit, you cannot reinvest your money in new sectors and more productive ventures.”

Make it sustainable

Talking about the importance of a succession plan to ensure a smooth generational transition in family businesses, Salman says, “I believe family constitution is very important as and when the companies grow and the number of family members involved in the business increase.”

However he does not believe that the company must be run by family members alone. “Members from new generations might have their own ideas and things to do. Pushing them into family business by force could have negative impact on the business sustainability. It is important to bring family members on executive level but it is equally important to have the capable ones, and this can only be done with proper guidelines in place.

Salman believes that family business is not everyone’s cup of tea within the family. It’s not mandatory for all family members to join the business. Only those who have a passion for business and are interested in the job at hand can handle it competently and take the business to the next level. “It is not necessary for all family members to join the family business and be part of the executive team. Various members would have different interests which might not be correlated to the existing family business,” he avers.

He feels it’s always important to ensure that the business is run efficiently and more professionally than making all family members actively involved in the daily operations. “To ensure business sustainability is much important than to ensure having family members on executive seats,” he says.

Currently Salman looks into most of the operations of the company; however he is in the process of restructuring the investment unit to a more flat structure type.

Exploring new avenues

Salman says the renewed focus of government on public-private-partnership to set up new ventures will strengthen the pace of economic diversification in Oman and help tap numerous growth potential in the country. Recently, Bin Salman Investment has joined hands with Muscat National Development and Investment Company (ASAAS), which is owned by 10 government entities -to invest in Salam Air, Oman’s first low-cost airliner.

He also discloses that the company is evaluating a few opportunities in other key industries in Oman and, in the next three to five years, aims to have solid investments in three major sectors: hospitality, manufacturing industry and mining. “We are also considering mining as a potential sector for investment in the future. Inside Oman, we are focusing on green field projects while outside Oman we are opting for private equity ventures,” he adds.