In December, while most of the world was winding down, Abu Dhabi was doing the opposite.
Formula One. Abu Dhabi Finance Week. Global allocators flying in and out. And a Financial Times headline calling it the “Capital of Capital.”
Behind the spectacle is something quieter—and more powerful: a disciplined machine for allocating long-term capital.
In our latest Ignite LP conversation, Rajesh Ranjan, Head of Investments at Ali & Sons Holding, pulls back the curtain on how Gulf family offices really think, decide, and deploy.
If you don’t have time for the full episode, here’s what matters.
From Farming Fields to Family Office Capital
Rajesh didn’t grow up around capital pools. He grew up in a farming family in India. He became a chartered accountant because it was the most affordable way to continue his education. He trained in public equities, worked through the 2008 crisis at UBS, and eventually moved into the Gulf family office world—spending over a decade inside capital allocators across Oman, Saudi, and the UAE.
Today, he leads investments at Ali & Sons Holding, a 45+ year-old Abu Dhabi conglomerate spanning:
Automotive dealerships (Porsche, Audi, VW, Skoda, Xpeng, MG)
Energy and industrial services
Real estate construction and development
On top of operating businesses, they run a global investment program across private equity, venture capital, private credit, and co-investments.
This is not a startup family office writing $100K checks for fun.
This is institutional capital with memory.
The First Rule: Capital Preservation Is Sacred
Across Gulf family offices, one principle is consistent:
Preserve the capital. Grow it intelligently. Don’t blow it up chasing hype.
What differs is maturity. Some family offices have deeply institutional processes. Others are still building their private markets muscle. But preservation always sits at the core.
That mindset shapes everything—from IC structure to manager selection to pacing.
And it explains why Western GPs often get the region wrong.
The Biggest Misconception About GCC Capital
Many Western managers assume Gulf capital is unsophisticated, slow, or purely transactional.
It’s not.
It’s relationship-driven.
Rajesh describes it as a trust market, not a transaction market.
If you show up three months before your final close, book ten meetings, and expect commitments, you’re probably misunderstanding the culture.
Allocators in the region think in 10–15 year horizons. They’re not underwriting a quarter. They’re underwriting a partnership.
Rajesh puts it simply:
“When we allocate capital, it’s like sending your child to boarding school.”
You don’t hand your child to someone after one Zoom call.
Why Fundraising in the GCC Takes Time
A short cycle is 6–12 months.
A long cycle can stretch to four years.
Why?
Because allocators are validating more than track record. They’re evaluating:
Philosophy
Behavior under stress
Communication transparency
Key person risk
Long-term survivability
Data can be sent in a deck and data room. Trust cannot.
And here’s a subtle but critical point: culturally, “this looks interesting” does not mean “you’re getting a check.”
It means: we’ll do more work.
Managers who mistake politeness for commitment often misread the region entirely.
The 4 Ps Framework
When evaluating managers, Rajesh uses four lenses:
People
Performance
Portfolio
Philosophy
The most misunderstood? Philosophy.
Everyone claims to invest in AI. Or fintech. Or climate. etc…
But philosophy is deeper than thesis. It’s about how you behave when markets turn. How you size risk. How you communicate downside.
In a world where every deck looks polished, philosophy is the real differentiator.
The Direct Investing Temptation
Ali & Sons didn’t start with a perfect allocation model.
Like many allocators, they initially leaned more heavily into direct private deals. It feels powerful. In control. Like buying Nvidia instead of an ETF.
But direct investing requires:
Deal flow access
Deep diligence infrastructure
Favorable terms
Strong in-house bandwidth
Without those, you’re often late to the party—and paying worse economics.
Over time, the strategy shifted toward a more disciplined framework: primarily funds, with selective co-investments where strategic synergy exists.
That evolution wasn’t theory. It was learned.
Overselling Kills Deals
One of the fastest ways to lose credibility in the Gulf?
Artificial timelines.
If you say, “You must commit by Friday,” and the fund is still open six months later, the signal is clear.
Trust erodes.
References work the same way. Name-dropping inside a tight ecosystem is risky. If your claim doesn’t check out, the reputational damage spreads quickly.
In a small, interconnected capital network, reputation compounds—both positively and negatively.
Abu Dhabi’s Bigger Shift
Zoom out.
The region isn’t just deploying oil wealth anymore.
Abu Dhabi is building:
AI research institutions
Massive data center infrastructure
Sector-specific clusters in healthcare, food, logistics
Globally competitive regulatory frameworks like ADGM
The goal is clear: diversify beyond hydrocarbons and become a global capital hub.
And with over $2 trillion across the broader Gulf ecosystem, the capital base is already there.
The next phase is institutional sophistication and global integration.
What Will Define the Best Allocators Over the Next Decade?
Rajesh’s answer is not access. Not speed. Not AI tools.
It’s discipline.
AI will accelerate information flow. Markets will move faster. Volatility may compress into shorter cycles.
But the allocator who keeps long-term focus—who resists thematic mania, who balances barbell exposure between established managers and emerging talent—that allocator will win.
In a world that moves faster every year, staying calm becomes alpha.
Final Thought
Rajesh’s journey—from rural India to stewarding capital in the “Capital of Capital”—mirrors the region itself.
Humble origins. Long-term thinking. Relentless discipline.
The Gulf is often seen as capital-rich. What’s more interesting is how capital-mature it’s becoming.
And for managers looking east, the lesson is simple:
Don’t show up with a pitch.
Show up with patience.
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Chapters:
00:01 – Welcome & Rajesh’s Role at Ali & Sons
02:00 – From Rural India to Chartered Accountant
05:30 – UBS, 2008 Crisis & Credit Markets
10:00 – Entering the Gulf Family Office World
14:30 – Capital Preservation as Core Mandate
18:00 – GCC Misconceptions from Western GPs
22:30 – Ali & Sons Operating Empire Overview
27:00 – Direct vs Fund Investments Evolution
32:00 – Building a Disciplined Allocation Framework
36:30 – Inside the Investment Committee
41:00 – The 4 Ps: People, Performance, Philosophy, Portfolio
45:30 – Risk Mitigation & Key Person Clauses
49:00 – Overselling, Artificial Timelines & Equalization
52:00 – Trust Market vs Transaction Market
Transcript
Brian Bell (00:01:13):
Hey, everyone. Welcome back to the Ignite podcast. Today, we’re thrilled to have Rajesh Ranjan on the mic. He is the head of investments at Ali & Sons Holding, an Abu Dhabi-based family conglomerate with operating businesses across sectors like automotive, real estate, construction, and energy, and a global investment program spanning private equity, venture capital, private credit, and strategic co-investments. Rajesh has spent over a decade in the Middle East across multiple family offices and brings a rare inside view into how institutional capital allocators in the Gulf actually make decisions. Thanks for coming on, Rajesh.
Rajesh Ranjan (00:01:43):
Yeah, thanks, Brian. And thanks for having me. This is a very happy new year to start.
Brian Bell (00:01:48):
Yeah, yeah. I appreciate you taking the recording at nine o’clock at night. It’s nine in the morning here in California. So I would love to get your origin story. I would love for the audience to hear your background.
Rajesh Ranjan (00:01:58):
Sure, sure. I was born in a very humble background farming family in India. One of the eastern states. India is very big, so eastern states in India. I made my way through the initial problems. In terms of education, I picked up accounting. This is like equivalent of CPA in India is called Chartered Accountancy. And that’s my initial study into business and related verticals. And the reason I picked up accounting was because it was the cheapest course available for me. So it was like a great way to start and continue my education in terms of, say, economical burden that my family had. And so after initial continuation, although it was not my paper choice, but I continued my education there. And then working with you from, say, Guggenheim on the public equity side, where we worked on financial modeling, creating financial models for, say, US-based public equity companies. And they trained us well on, say, DCF and very detailed financial modeling and everything. So that was my initial training into public equities and all. And then I moved to UBS. I started with a European high-heeled credit desk. And that was my first role at UBS. Then during the crisis, a desk was closed. And then I moved to Asia Credit and all. And then continued there for a while. 2011, left to pursue MBA. Then I had some money to spend on my education. So I pursued MBA. And then after finishing MBA, I got back to India. I was working for a while and then I got a call from one of the recruiters from OMA. The biggest family office from OMA was looking to hire a few professionals and the family principals came to India to recruit and I was one of the candidates and to my experience, that was my fastest say interview and first when i when i said fastest it was like interview happened and next guy also so when you are working direct decision make and take time so if the lag it happens quickly that’s when i joined the family office world in the middle east back in say 2014 and in oman I stayed there for a while, around seven, eight years. And then I moved to Dubai in UAE when they moved their office there. And then briefly, I worked with a Saudi-based family office, but their office was in Dubai, so I was working for them from Dubai. That was a brief statement, and then I moved to my current role as head of investment for the early answers.
Brian Bell (00:04:59):
You know, it’s interesting, you know, you come from humble origins, so do I. I think there’s something about that where you start studying finance and accounting, because I studied finance as well. I think kind of the motivation for me growing up poor was, hey, I want to understand how money works. And I probably would have got an accounting degree if they offered it. They didn’t at the time at my university, so I got a finance degree instead. That was the next best thing, but I was kind of entranced by accounting at the time. Because it was like, okay, how do you account for money and cash and how it flows and how do you actually count it? Yeah, that’s great. So you’ve worked across multiple family offices in Saudi, Oman, and now the UAE. What’s stayed consistent across them and what’s differed dramatically?
Rajesh Ranjan (00:05:36):
So when I think of consistency, one thing is very common is like all the family offices has their consistency. legacy and they have their own cultural backdrop and it’s important for them to maintain that legacy and reputation so that’s very consistent across different family offices in terms of say investment preserving the capital so capital preservation is the prime goal across all these family offices I would say the way they differ is like in their experience of, say, investing into alternative or private equity or VC. In their investing journey, they are in different, say, cycle. Some are very experienced. Some have just started their PE or VC program. some are like operating models are also very different like some have very institutional process some are still going through the process and some are like still trying to establish the program so so while the core investment target in terms of capital preservation and growth is there and which is consistent across all these family offices the operating model and the investment journey for this family offices are very different.
Brian Bell (00:06:54):
What’s the biggest misconception Western managers have about GCC capital allocators? And what does GCC mean?
Rajesh Ranjan (00:07:00):
So GCC is like a different market. And I think when I interact with many U.S.-based or European GPs, many times, like all the big names are very aware about, say, GCC, UAE, Saudi, or even Qatar or Kuwait. They are very familiar, all the big GPs. But when it comes to mid-market, lower mid-market or say emerging GPs, which has not stepped out from US or Europe or say China, India they are very like they don’t know much about the GCC region as a whole and they think like the investors are not very sophisticated many times they have that feeling and they think the process wise we are very slow which might be case in some sometimes because when you are sitting in US and we are working from here there are some operational challenges like we are one day ahead of US timing so that’s one of the very practical issue. You respond Tuesday evening there, right? Yeah. As I record this Monday morning in California, which is really strange. Yeah. In terms of, say, getting response and responding back, it gets you delayed by a day or so. So that’s kind of a personal challenge. But other than that, the GP is not trying to understand, like, what LP is really looking for from this market, at what stage are their investing journey, what’s their mandate. So these kind of issues are there to be addressed.
Brian Bell (00:08:37):
What’s the moment you realize that this region plays by different rules and how did it change how you operate?
Rajesh Ranjan (00:08:42):
So GCC, if you see the regional mindset, has come from the trading history for this region. So this region, UAE in particular, has been a trading hub where they used to trade oil before oil came into picture and then oil came. And even now Dubai has become a global hub for different purposes. So, I mean, when you look at UAE, trading mindset takes a key role. That gives like advantage because the GPs here or the people here have very good exposure across different geographies like they deal with the Asian on the one hand, European on the other hand. So exposure across different geographies are very much there. So very smart people and very good exposure across different geographies are there. So that’s their advantage. And the mindset in terms of say investing comes from that of
Brian Bell (00:09:45):
Yeah. So let’s talk about Ali & Sons. What kind of operating company is it and how does that influence the investment arms mandate?
Rajesh Ranjan (00:09:51):
So we are more than 45-year-old business conglomerate based here in Abu Dhabi. We operate across different verticals, primarily mobility, where we have, say, tailorship business for all the VW brands like Porsche, Audi, Skoda, Volkswagen itself, and few Chinese brands like Xpeng and Volkswagen. mj motors we have ancillary business into car leasing called eurostar then we have another vertical called energy and industrial way where we are into say oil supply and services water treatment waste treatment epc contracting facilities management and things like that and lastly we have real estate construction and development so we are one of the largest contractors for real estate working with all the big developers in the region. So that is our operating business. In terms of investment mandate, we think it’s from two perspectives. One is our mandate to diversify our portfolio globally, reduce risk. Our operating business doesn’t have exposure to say US or Asia, China, India or Europe. So if we want to take exposure to those geographies, we have to do through say investing into private equity or VC funds. And at the same time, we don’t have exposure to say many sectors or industries like say technology or healthcare, let’s say, as of now, AI or robotics and all. So when you want to take exposure to those sectors and industries and those different geographies where, say, our operating businesses cannot reach, then I think investing through these PE and VC funds becomes a very important diversifying tool for us. So that’s like one mandate. And then we also do direct investments where we see some synergy with our operating business. where we think like we can invest and at the same time we can add value or we can start a new line of business with that direct investment. So that becomes important in terms of doing direct. So pure financial investment for say diversification purpose and direct investment for synergy and strategic business investment.
Brian Bell (00:12:10):
So I have in my notes you shifted from roughly 50-50 direct in funds to around 90% in funds and 10% co-invest. What was the hardest lesson that drove that evolution?
Rajesh Ranjan (00:12:20):
So in the beginning when we started, the journey was like we already had a public equity book where we were doing a lot of direct investments, especially in the tech sectors. And when you start your private equity program, by default, you carry the same mindset. So you are investing in, say, Palantir, Nvidia, Google, Amazon. So you want to also feel like doing direct investment into private market. But that’s where, like a lot of people don’t understand, it requires a very different kind of infrastructure. When you want to do direct deals or direct investment in the private market side, first you need a lot of time to evaluate those deals. You need to be first called for all the deals, whichever is happening. This is usually not the case because if deal is happening in US and you are based in GCC, there are many investors getting called before you for those direct deals and you may be like the third or fourth stage people getting called for those investments. And then again, those are like a different kind of SPV structure, which is not very economic or terms friendly for LPs. So those kind of things were there. I noticed in many cases, the terms were like not at all good for investors. And when market is at peak, something like 21, those kind of things happen. So our learning was that since we have a small team, we are just starting private market program. Going big on direct investment was kind of a bit not right to start with. So I joined here a few years later and then we tried to make a formal decision. disciplined approach to the program, making asset allocation and say investment policy guidelines, trying to make a framework where we can allocate across the buyer, growth, venture and private credit infrastructure funds in a systematic way. So that’s how we tried to set up the program and then gradually change our allocation.
Brian Bell (00:14:34):
Yeah. So what does that annual allocation process look like? How far ahead are you guys planning commitments?
Rajesh Ranjan (00:14:39):
So we usually think annually, but obviously private market is not one year exercise. You might allocate annually in terms of budget, but you have to think three, four years ahead of your time when you look at allocation. Commitment is one thing and NAV is different things. We keep in mind both commitment and NAV and try to say every year when we go through that budget process, we see like how much is unfunded commitment in the book, how much time it will take to get those unfunded commitments called, how is the liquidity requirement looking like, like where the risk is underpriced in the market. where is a lot of capital overflow, in which strategy, which region. So we try to assess all those things. And we try to, say, tactically move our allocation a little bit, wherever we feel like there is a value from, say, a strategic allocation. While a strategic allocation is within a certain range, in terms of yearly, say, tackle shift, we are very open to move around and be very flexible and take advantage.
Brian Bell (00:15:53):
So walk us through the investment committee set up in Cadence. Who’s in the room? What does approval actually require?
Rajesh Ranjan (00:15:59):
So investment committee happens is almost one meeting every month. And if there is a need for additional meeting for anything urgent, we are flexible to call urgent meetings separately. There are many committee members. A couple of them are from the family side, so representatives from family. And then you have external advisors as well on the committee. Whenever we look at any deal or fund, we do our initial due diligence and everything and then present it to committee and they approve or they ask for additional information or they reject.
Brian Bell (00:16:39):
Gotcha. So you mentioned you have a short memo and a long memo. What’s typically in the two or three page version versus the 20 to 30 page version?
Rajesh Ranjan (00:16:47):
Yeah. So short memo, I can think of two ways. One is when we are screening through many funds or deals in the beginning, we don’t want to go in detail. So first we want to do say just couple of pages on those funds just to see whether it makes sense for us and to whether it cuts through our superiority list. If it cuts through, we do the detailed work and we prepare the detailed memo. This is like 20, 30 pages, but obviously everybody on the committee doesn’t have time. to go through, say, 30 pages. So we make a short form, maybe just one or two pages, saying what’s the ask, what’s the, say, manager track record, what’s the key rationale for investing, what’s the key risk, how it is getting mitigated, and all those things.
Brian Bell (00:17:37):
Speaking of managers and evaluating deals, what do IC members consistently care about that managers like myself underestimate?
Rajesh Ranjan (00:17:44):
so one thing is very consistent is like what can go wrong with this manager or this fund so that’s like obvious ask at every meeting what can go wrong how is the risk getting mitigated if there is any risk associated with it Is there any key man risk? Can the fund survive for next 10 to 15 years? Because that’s the time horizon we are investing in. And especially on the venture side where you have a lot of mortality rate, it becomes very important to be able to assess The VC fund will continue to stay in the business for long.
Brian Bell (00:18:22):
So you described in your memo framework, four P’s, people, performance, philosophy, and portfolio. What is the most misunderstood P in venture?
Rajesh Ranjan (00:18:31):
I think it’s philosophy. In terms of people, it’s very obvious. Everybody lays out who are on the team, what’s their background. So... It’s very much available. Portfolio is, if they have done investment in past or they have current portfolio investment, they give all the details on that. If there is a performance or track record, they give that details as well. But I think philosophy gets sometimes misunderstood because they explain the investment thesis. But sometimes they think like this, the investment thesis is the investment philosophy. This is not the case. So I think in my view, investment philosophy is where like the things get difficult. And many times we look at, say, every now and then more than 10, 20 funds at a time. And when every funds are saying that we are investing into AI and the next fund is also telling we are AI specialist. So it becomes very difficult for us to understand like why this fund is different from the last one. And that’s where like a spelling of investment philosophy distinctively becomes very important.
Brian Bell (00:19:40):
Yeah, I love that. So back to risk and mitigation, is there an example you can think of that didn’t kill a deal because you could genuinely mitigate it?
Rajesh Ranjan (00:19:48):
I think one example I can think of is key person risk. So usually you have key person risk because if there is a solo GP in the fund and something happens, then there is a risk. How that will continue. Much more important than the first three or four years during deployment, I would say, than kind of the latter half of the fund life.
Brian Bell (00:20:08):
But yeah, I can imagine, you know, I raise a huge fund, I get hit by a bus, you know, 12 months later, or call it a third deployed. That’s a huge risk now. Versus, you know, I get hit by a bus in four or five years, you can hire some other GP to come in and sort of manage the harvesting period. But yeah, that deployment period is a big, big deal.
Rajesh Ranjan (00:20:31):
Right. And that’s where I think some of the good favorable terms on the LPA becomes very important where you give LPs right to decide without putting too much condition on like what will happen if something like that happens. So I think in some cases, if you ask GPs to add some conditions there or make it more favorable, then that can be mitigated.
Brian Bell (00:20:56):
Yeah, that makes sense. What are reasons a deal can still get rejected even when you think it’s a sure thing?
Rajesh Ranjan (00:21:01):
Sometimes, like overselling becomes a problem we have seen in some cases like manager was really good but he was trying to oversell and somehow that didn’t go down well as members or other people on the committee and then many times
Brian Bell (00:21:17):
what does overselling look like it’s just like like emailing you every day calling you every day like hey i you know i need you to commit by friday you know kind of creating artificial timelines and stuff
Rajesh Ranjan (00:21:31):
Yes. I mean, you are putting, say, a strict timeline and we come to know that that timeline was not actually the timeline and fundage is still open and very much in the market for next three or six months. And you’re trying to squeeze us saying that you have to decide by this weekend or this month, something like that. And if you try to make, say, meeting every month or month, meeting different people, trying to get recommendations from different people. Recommendations and references are very important, but when it comes like too much, then a red signal also becomes very much visible.
Brian Bell (00:22:13):
One method that I heard from another GP that he said worked for him was Don’t create the artificial timelines, just create an interest rate. Like, you know, usually we’re fundraising for, you know, six months, a year, 18 months. And a lot of LPs will wait until the end of the fundraising to kind of see how it’s going. Right. He said what he did for one of his funds is he put actually an 8% interest rate from the first close. And so, yeah, like try to come in on the first close. That’s beneficial. But if you don’t, there’s kind of this like interest rate penalty for coming in later. What do you think of that? Have you seen that with other GPs?
Rajesh Ranjan (00:22:43):
Yeah, that’s very much common in practice in many VC fund and PE funds. So they call it equalization rate. So this is only 8%. And it’s very fair practice if somebody is committing very early. 12 months later, you should pay 8% more into the fund to all the other LPs. Right. Because all the other LPs have been in the partnership for a year. Right. And we have paid those kind of equalization charges in many funds where we have come in very late around the close of the fund while the first investor invested 18 months before us.
Brian Bell (00:23:22):
What is the single biggest process failure you see for managers pitching family offices?
Rajesh Ranjan (00:23:27):
I think process failure would be trying not to understand the investment mandate of the family office. Like what is actually their mandate? How many funds are there in the portfolio in terms of yearly investment? allocation, how many funds they allocate to, how many funds are coming for years from existing portfolio. Is there a space for new manager in the portfolio? Is there a space for say, there might be a case where say we are allocating to venture to all the allocation is getting to just manager only. We don’t have a space for new manager. Even though we like you a lot, we might not be able to allocate because of those reasons.
Brian Bell (00:24:10):
Sometimes, yeah, it’s just out of your control. It’s like, hey, I like you. I like your thesis. I like everything about you. If we had room in the portfolio, we would probably invest. But we just don’t have room for your particular type of fund, sector, DO, whatever the characteristics are of the fund. We just cannot fit you into our allocation model at this time. And sometimes you just have to find that out. Like I’m an early stage investor and you might go, hey, Brian, like you, but we’re over allocated in early stage VC right now. We’re actually looking for growth stage or late stage or whatever it is.
Rajesh Ranjan (00:24:45):
Yeah, to give you an example, we allocate most of our money to US, plus the 60-70% is in US and 20-25% is in Asia. So we like one Indian manager very well. The track record, everything, they look very good. And we thought like that would be a good addition to our portfolio. But in that year, we didn’t have any location for India, like all our location to US and North American managers were like full. So even though we did like the manager and it was very good, like fund for us, we couldn’t do it. But I mean, in those cases, even if we don’t do the current fund, we are always on keep tracking those kinds of funds for the next vintage when we have capacity.
Brian Bell (00:25:33):
Right. Right. And that’s kind of the benefit of being an LP. You can kind of see over years how the GP interacts with the market, how they deploy. Right. what kind of drift they have on their thesis and how they execute. And you’re able to kind of say, hey, like last time you came, you said you’re a crypto fund and now you’re an AI fund. What happened? Right, right. You were all Web3 five years ago and now you’re all about AI. So you said Middle East is a trust market, not a transaction market. What does trust actually mean in behavior, not words?
Rajesh Ranjan (00:26:05):
So trust is actually, when you think of transactions driven, GPs trying to come here, what you think of is like, and they are raising the fund and they are like three months into closing their fund, they come here, meet 10 people and they’re trying to see like whether they can close the transaction or fundraise in just three months. This is really not the case because it’s like when we are allocating capital, think about your child. You send your child to boarding school. Can you give your child to anyone? No. You have to evaluate how the school is, who is taking care of my kid, how it will turn into next 10 years. You will do a lot of reference check. So it takes time to do all those things. Similarly, when you come to raise money and trying to close the transaction in three months, it will not work because we need to do a lot of work on the background check and then to understand your philosophy, thesis, if it makes sense in the initial cut. Because Trust becomes important because we don’t know you. We have to validate whatever you are saying is correct. We need to be familiar with your behavioral aspect. We need to validate all the philosophy or whatever data you gave us and how that took safe. And that’s why when some existing managers are spins out from the existing fund where we know them very well, even though their own fund is the new fund, we are more comfortable because we know them from their past life and we have seen them. We are familiar with their approach, their investing. And it doesn’t require that much time to understand their fund because of that history or background, because trust has been established through last many years. And if you are making a first contact or interaction and expecting to build a trust, I mean, it might happen, it might not happen. So you have to be open for both cases.
Brian Bell (00:28:21):
Yeah. You said that a short cycle is six to 12 months and a long cycle can be, you know, four plus years. Why does it take that long and what typically speeds it up?
Rajesh Ranjan (00:28:29):
So it takes long because as I was telling, it takes time to validate the fund manager, people behind the fund. Who are those people? Because you are sitting in US, you are sitting in China, you are sitting in India. We are not there. While many people in US in your class, which you might know, we might not. So we need time to do those, to learn more about you. We need time to understand how you actually do investing. Are you aggressive? Are you disciplined? Are you honest when to tell your LPs when things doesn’t go according to plan? So we need to judge all those things. And when we don’t know you, we need time to do all that work. Even though like in today’s time, a lot of say data or presentations are becoming faster, more organized, but the things which takes time is the softer aspect, which is not into data. So going beyond those data points, understanding the psychology and the person or the mindset behind those funds is where the time goes.
Brian Bell (00:29:38):
Yeah. You said discount everything you hear by 70 to 80% because culturally people don’t say no directly in the Middle East. What are subtle signals that actually tell you whether interest is real?
Rajesh Ranjan (00:29:50):
So, when we say it looks good, let’s sustain touch, it doesn’t mean we are saying, okay, we’ll right-way check. We are saying it looks interesting, we’ll do more work on it. Many GPs take it differently. They think like we like it and we are going to write a check and it’s a done case. But it’s not that. It simply means like we are okay to do more work. And when we are interested, obviously, we will ask more detailed questions, more information. We will go into market, we will talk to different people. So when you think like I talk to this LP and he’s asking more information, then there are genuine interest because you get a signal that we are working on that. And if like for some reason, like for this year, we were very busy with, say, our phone transfer process because we were creating a new entity and we were doing those transfers. So for a specific LP, there might be something going on within their phone and due to which they might not be able to respond or say start working immediately on the phone. So you have to understand those kind of situation as well. And that’s where it takes longer to hear back from LPs on what might be happening next. But I think if you hear something like more detailed questions and more work getting done, then yes, there is an interest and in due course it will happen.
Brian Bell (00:31:21):
Yeah. So it’s a small ecosystem with sovereign wealth funds and family offices intertwined. How should managers leverage the, you know, kind of the second order references without looking like they’re name dropping?
Rajesh Ranjan (00:31:31):
So that’s very important. Like every day we get emails or calls saying that I know this people. And because when you refer someone and you name someone, then it becomes even more important that you are right. because you are putting at a stake the reputation of that person. And whatever you are saying is not true, then the reputation of that person is also at stake. So you have to be very careful when you do that. And I think it’s Abu Dhabi or even UAE or GCC where that way is very close market. If you do well, you get to know in the market very easily. If you do something wrong, The same thing happens. You get to know everyone very easily as well. We interact with all the sovereign wealth points in the region. We talk to other family offices. So it’s a very close ecosystem. Geographically, it’s a very small market in terms of the amount or money to be allocated. That’s very big, but in terms of geography, it’s a small, very tight-knit community. So if you are naming someone and giving reference, you have to be very careful that it is right. And many times we don’t even ask references from the fund. We try to do our own reference check because most of the time when we get, say, a reference list from the manager, it’s always positive. So we try to break through that pattern and try to do our own reference check to understand truly what is happening
Brian Bell (00:33:10):
speaking of what’s the ideal update cadence for someone a gp you’re not invested in yet and what makes a update from them generally genuinely valuable rather than just noise
Rajesh Ranjan (00:33:21):
so i think at least two three times in a year is good cadence you don’t have to send every month because At least in private equity, we see a space that changes don’t happen at such a fast rate that you have to inform every month. Unless some exit has happened or some big deals you have done. event is happening then it obviously makes sense but other than that i think two three times in a year maybe twice by email or written communication maybe twice a short call one face-to-face meeting in a year something like that works very well for say staying in touch on regular basis
Brian Bell (00:34:11):
You said you meet hundreds of funds a year, but only track the best 15 in any given category. What gets a GP onto the tracked list?
Rajesh Ranjan (00:34:19):
So it depends. It’s a function of what we want to allocate to. And in terms of, say, a strategy like buyout, growth, venture, or other strategies, and in terms of reason. So you have to fit that allocation mandate. That’s the prime first criteria. If you fit that and... You come through that, then obviously you have to beat other managers, your competitors in the market. Say, for example, I have, say, 20 names cutting through that list in, say, VC funds in US. I have 20 names, but I can’t spend time on all 20. Then I have to filter through, say, top three, four names, which looks good. Obviously, a lot of factors come into picture in terms of, say, track record, how old is the manager, what the fund size. like how comfortable we are with say fund two, fund three, or I’m looking at say very well established fund at 500 million fund or 50 million dollar fund. And whether I’m looking at solo GP or a good team of two, three GPs put together. What kind of sector exposure we are looking at thematic or say generalist, whether we are looking at say something like secondary fund or primary fund. So a lot of things goes into that criteria or filtering through top two, three, four names. And then we make a list of, say, 34 names where we want to spend time in detail. Just to give an example, in 22, when we were thinking about venture, mostly 21 market was at peak. And then when interest rate increased, a lot of market adjustments were happening in the VCS space. That year, we redirected all of our commitment to secondaries. We see secondaries rather than putting to primaries. Given that so much dislocation was there, we thought like it’s the right time to allocate to secondaries. And that worked out well in last three, four years. So we do make those kind of adjustments. And obviously, if you’re a primary fund for that year, even though you are good, you are cutting through all the list, we might not be able to look at you in that particular year.
Brian Bell (00:36:34):
Yeah, that makes sense. How should an emerging manager pitch differently than a big brand name fund or maybe a team of GPs spitting out from a big brand name fund?
Rajesh Ranjan (00:36:42):
So again, it comes to like what LP wants to do. There are LPs who just focus on big brand names. They don’t want risk in the portfolio. They want... the very good risk adjusted return they want some certainty in the result even though it comes at lower return potential there are LPs who are like very much coming from tech background they understand technology they understand venture better than say someone coming from say old economy or industrial kind of businesses family and they might be able to underwrite more riskier bit or a smaller fund, more technology oriented, early stage VC fund compared to someone who doesn’t have a background coming from tech or technology or health care for that matter. So one is the context of the LP, how is their experience so far and then what they want to do. Like for us, we think of allocation in terms of Barbell approach. So while we want to mitigate risk by locating to some well-established one. We are also looking to allocate to emerging manager because we see like we want to pick up say managers with whom we can grow over next three, four ventages and where the fund size is say 50 million, 100 million and I think like venture early stage, unless you’re a big platform, that kind of fund size is the sweetest spot. And it becomes very important to, say, take risk by investing into, say, early stage emerging manager and ensuring, say, better return potential. And at the same time, investing into, say, well-established manager and managing risk. So for us, that Barbell approach works better. But yeah, there might be LPs who just want to do it. say emerging early stage manager or there might be LP who just wanted to establish fund.
Brian Bell (00:38:46):
Makes sense. So many great insights here. Let’s talk about what you’re seeing now and what’s looking ahead. Abu Dhabi is obviously a very happening place. What’s the big shift you’re seeing right now that feels underappreciated there?
Rajesh Ranjan (00:38:56):
So I don’t know if you read through the recent FT article on Abu Dhabi. They published something in last December, Capital of Capital, where they talked about Abu Dhabi.
Brian Bell (00:39:09):
I like that phrase, capital of capital. I like that.
Rajesh Ranjan (00:39:11):
So that’s what we call it, Abu Dhabi. So Abu Dhabi Finance Week was going in the second week of December here. And that was like you had Milken Abu Dhabi, then you had Formula One, and then you had Abu Dhabi Finance Week. So very busy first half of December here. And I think FT published that article around the same time. So I think if you look at just capital, Abu Dhabi itself is around $2 trillion. take a whole week, it’s over like two and a half trillion dollars. Huge, huge amount of capital. What we have seen recently that government is working through different ways. One, like you can think of regulatory framework. So ADGM, like Abu Dhabi Global Market, is now one of the preferred places to set up companies, fund, set up family offices. And we were working through some consultant where we were looking at global jurisdictions where to set up it’s a new fund or new family offices and all most of the time the feedback we got is like ADGM is at par with any other jurisdiction globally and sometimes even better than other jurisdictions so and we have seen many global managers like BlackRock, BlackStorm and Golub Pamira, many of them setting up offices here. So there are a huge list on both his fund side, pretty equity side.
Brian Bell (00:40:36):
Are there tax incentives on the ground? What is it about the region that just makes it so attractive? Obviously, there’s lots of money in the region from all the resources and stuff. But is it what’s the tax scheme there that makes it so attractive? Like, you know, I know in Singapore, I think I don’t think there’s capital gains there. And there’s some states here in the US that don’t have capital gains. What is the tax scheme there in Abu Dhabi? And why is so much capital?
Rajesh Ranjan (00:40:58):
So ADGM, your tax benefit is there in ADGM jurisdictions. In UAE as a whole, you don’t have personal income tax. So for professionals coming here, that’s especially coming from Europe or Asian countries where you’re not taxed on your global income, that becomes very good. It’s very attractive if you’re coming from California, where like half of the money I make goes back to the government, both the state and federal. I mean, that’s pretty significant.
Brian Bell (00:41:23):
Yeah.
Rajesh Ranjan (00:41:26):
So it becomes a good point to attract global talent, but on corporate side, I think even on the main land UAE market tax rate is around 19%. which is like compared to other countries, it’s very low. ADGM is obviously you have the zero tax or tax advantage there, but that is just one part of the story. Apart from that, other changes happening is like government is trying to promote local economies, trying to set up different business clusters to say healthcare, AI data center, like one of the biggest data center project is coming in UAE Abu Dhabi because You don’t have energy constraint here. You can easily set up a big data center in the region. AI University, which is doing very well on the research and creating a community of AI-related products in Abu Dhabi. So then you have, say, food and agri-tech cluster. Then you have supply chain, logistic cluster. So government is trying to promote different type of cluster, which in long term, maybe in 4, 5, 10 years, will start generating their homegrown entrepreneur talent from this market. So in terms of say making system very vibrant and strong in terms of pipeline for investment and both from the LP and portfolio investment perspective.
Brian Bell (00:42:53):
Speaking of which, you know, looking forward, you know, three, five, 10 years out, what will the Gulf capital ecosystem look like? And what do managers need to do differently to win there in the future?
Rajesh Ranjan (00:43:02):
So in terms of amount, Gulf ecosystem is already very big, like If you add like UAE, Saudi, Qatar, Kuwait and all, you have a huge, huge amount of capital available in the region. So capital is never a problem. But I think each country is trying to promote their own ecosystem, inherent talent in that country, trying to attract both people and businesses globally. So they are trying to compete on global stage. They are trying to bring the biggest sporting event in the country like Formula One is happening in Abu Dhabi. FIFA going to say Qatar and then Kingdom of Saudi Arabia. So there is a desire to compete globally in terms of different sectors and that in long term will create a good ripple effect across the different verticals, businesses. And ultimately, the aim is to decouple from, say, a wild-based economy, a oil and gas-reliant economy, and trying to diversify into other sectors and geographies.
Brian Bell (00:44:09):
Well, let’s wrap up with some rapid-fire questions. What’s one investment mistake you’ve seen repeated across family offices, and why does it keep happening?
Rajesh Ranjan (00:44:16):
One investment mistake, say, I could think of is... Primarily tempting to do direct investment. So even though you try to restrain yourself, sometimes you feel like you are more in control there when you do direct investments. It’s like buying in media directly versus doing, say, that triple Q ETF. So you feel more in control and even though you try to implement discipline and everything, that mistakes I think sometimes behavioral carryover.
Brian Bell (00:44:51):
I see a lot of, it’s funny you mention this because I see it at a, you see it at a macro level, I see it at a micro level as a GP. who also ran a syndicate for years, and I still run a syndicate. I’ll hear, I’ll go to pitch my fund to an angel investor, some executive, and he’ll be like, I’m just going to do angel investments. I’m like, great. You know, like how many deals you’re looking at per day, week, and month, you know, and per year? And, you know, how many times are you saying no? And, you know, I think a lot of angel investors, they don’t appreciate how much work it is to be a GP, right? To go through thousands of deals per year and say no 99.9% of the time, and then have to support those founders for years and years to come. I think you’re kind of describing this cognitive dissonance, right? That lps need to appreciate is oh yeah i’ll just go make direct investments there’s so many reasons so many ways you can get it wrong when you try to go direct versus investing in just a really good gp or having a portfolio of really good what’s one thing you believe about venture that most allocators get wrong i think venture when people try to invest into technology which they don’t understand at all uh is one of the issue we think at least for us becoming generalist becomes important because Technology, anything like healthcare, fintech, edtech, consumer tech, everything goes into cycle. And if thematic things doesn’t work, then you are in trouble. That’s exactly why I like to be a generalist investor. Because when I became a GP five years ago, I led AI at Amazon. I could have done an AI-focused fund. Team Ignite could be like AI blah-de-blah capital or whatever. And as I thought back, because I have the finance degree and the CFA, at least the level one, worked on Wall Street, I kind of looked at the asset class and I said, okay, if I was investing in funds, what kind of funds would I want to invest in? And what’s the best asset allocation strategy for me to return money to LPs? Well, it’s to have a diversified strategy across stages, sectors, and geos. And you can do that as an LP by picking lots of little thematic and focused funds. But as a GP, the way I looked at it was, well, I kind of want to do a generalist fund. I can’t do biotech because I don’t know anything about it. But I really wanted to do a generalist fund because I wanted to widen the aperture and create a diversified fund inside of just the fund. Yeah. Any thoughts on that?
Rajesh Ranjan (00:47:08):
Yeah, I mean, when you invest into different upcoming technology and different sectors, you have to keep in mind that fund has 10 plus maybe one plus one kind of fund life. So your investment thesis and the bet has to come true in that time frame. If your bet or investment doesn’t become true or technology doesn’t get proven in that time frame, Then it doesn’t work for LPs and it doesn’t work for you as well. So I think many times you are much ahead of that technology or say whatever you are trying to do, you are very early in that timeframe.
Brian Bell (00:47:51):
It can be too late and too early. Like if you’re a cybersecurity fund, like maybe you’re in a down cycle and then you have a really bad fund or two, one or two really bad vintages and you’re out of the industry and you can’t raise any more money because you had a thematic cybersecurity fund. Right. And you only had 20 or 30 investments in each of those funds and it just happened to be a down cycle on cybersecurity or, you know, pick your favorite thing, health tech, medical, whatever. So I think it’s, for me, as somebody who really loves investing, it’s super risky to go really focused. Like if I did an AI focused fund, I might have been too late to the party. I missed the foundational model layer. I’m kind of working on the network and platform and application layer. But if I would have had an AI thematic VC firm, I might have been too late and had subpar returns. Anyway, that’s interesting that you had the same thoughts. Speaking of AI, what’s your strongest conviction about how AI will reshape private market investing? Not startups, but for you, for allocators.
Rajesh Ranjan (00:48:46):
So I think for us as an allocator, I could be one of the tool which will make our job bit easier. in terms of reporting, in terms of, say, cutting through the data across different funds, understanding, say, documentation or fund documentation. So that operational work, I think, will get easier with the help of AI. Obviously, we have to wait for the time funds start allowing us to use those documents on the LLM. or any district tool we want to use because there are a lot of confidentiality clause and we have to be careful about that. But I think sooner or later it will come into practice for all kinds of work. So that’s one obvious advantage in terms of using AI to enhance productivity on our part. In terms of pure investment, obviously, it will cut through, I think, different sectors. It’s not about safe intake or health tech. It will go through every sector sooner or later. Saying that like a few years back, we were thinking like every other VC used to pick like we are doing data-driven investment. Like this is not really as in this market because everybody’s looking at data. Everybody’s analyzing data. And if you’re not doing that, then I think something similar will happen to AI related. Like if you’re not doing, then it’s an issue. If you’re doing it, it’s not like a very positive attribute.
Brian Bell (00:50:25):
I heard somebody say on a podcast, actually there’s this YouTuber I really like to listen to, he’s kind of a futurist, that AI is the next great general purpose technology. The last great paradigm shifting general purpose technology was electricity. And it kind of infiltrated every sector, every facet of our lives. And it’s one of the greatest general purpose technologies we’ve ever invented as humanity. And now AI is probably on par or equal to the impact electricity had 100 years ago, 150 years ago. It’s just a great time to be alive and be an investor. What’s a relationship building behavior that immediately earns you respect, even if the strategy is not yet a fit?
Rajesh Ranjan (00:51:08):
I mean, I have seen many funds coming maybe 24, even two, three years in advance of their fundraising cycle. They just come, they try to understand the mandate and they try to stay in touch. Every six months they drop a note, what they are doing, what has been good, what is going wrong. So there are people who are genuinely trying to do that. I think from an LP perspective, if you are trying to establish that relationship and trust very early on maybe two three years ahead of your fundraising cycle then by the time you come to actual fundraise it becomes your real asset
Brian Bell (00:51:48):
yeah so a good time to reach out it’s like hey i just closed my fund and i’ll probably raise another one in three years but let’s you know what’s your mandate and let’s get to know each other that’s that’s that’s uh which kind of leads into the next question what’s a question every manager should ask in the first meeting but almost nobody does Sounds like it’s the mandate, right? Like what’s your strategy and your mandate, but anything else come to mind?
Rajesh Ranjan (00:52:08):
I think obviously that’s the mandate and a strategy. I will drill down further on that. Maybe how many funds you have them in the portfolio, how many re-ups you are looking to do from the existing portfolio, how much space you have for new manager in your portfolio. Are you even looking at new manager to do in next one or two, three years? If yes, what kind of manager you would be looking at? Which strategy you would be looking at? Which geography you would be looking at? So I’m just trying drilling down further on that so that you’re crystal clear like where this LP will fit in my scheme of them.
Brian Bell (00:52:46):
Yeah, makes sense. Last question. What do you think will define the best allocators over the next decade? Skill, access, discipline, or something else?
Rajesh Ranjan (00:52:53):
I think discipline, because I think with advent of AI and a lot of information was already there due to geopolitical and other resource market is going to be with volatile in future. And obviously, you have a lot of information coming at very fast pace. This was not happening before. and we don’t know whether like recession or anything else which used to come for say two three years will really happen like that in future so you have to react very fast and at the same time you have to stay disciplined so in a time where you have like very short-term attributes very fast attributes coming from the market You have to keep your long-term focus intact and stay disciplined. So that will be the real challenge for LPs.
Brian Bell (00:53:45):
Amazing. Well, I learned a ton. Rajesh, thanks so much for spending time on a Tuesday evening. I really appreciate it. I learned a lot.
Rajesh Ranjan (00:53:51):
Yeah, thank you. Thank you for your time and great to talk to you and the listeners.
Brian Bell (00:53:56):
All right.
