Grit: Key to Success
Ten days ago on a beautiful Saturday morning, I did something I had never done before. It was actually something I wouldn’t even have considered doing a year ago.
I participated in a 12 km run through the forest, rivers, and muddy ponds of Scotland whilst overcoming 60+ odd obstacles along the way. Did I mention the mud?
Considering I had never run more than 5 km’s prior to the event, plodding along in treacherous mud, was a physically demanding experience, to say the least. Successfully completing the run which is known as the Lanrick Challenge didn’t require much skill on my part. It was a pure test of resilience in the face of difficulty. It was all about grit.
Grit can be defined as our ability to persevere in the face of adversity. We often attribute talent as the key to success in but in fact, it is our grit and ability to persevere that enable us to succeed in business and life.
Professor Angela Duckworth at the University of Pennsylvania, who is the founder of a non-profit organisation called the Character Lab, and author of Grit: The Power of Passion and perseverance has done a wonderful explaining the power of grit over talent.
In her book, Angela demonstrates how our level of success in life depends not so much on talent but on our grit; “it isn’t how quickly or easily you get better at something but it’s the quality and quantity of your engagement. In a way, you can think of talent and effort being the two things that, in combination, create skill.”
So whether we’re doing a 12 km run through the Scottish backcountry, launching a technology start-up, or implementing a change programme in a large organisation; our success will not be determined by our talent alone but by our grit to make it to the finish line no matter how muddy it gets!
Ps. For the record, I wasn’t sponsored by the CME Group. Just my lucky cap from the good old investment banking days. Many thanks to my Managing Partner at Exolta Russell Dalgleish for inspiring me to take the challenge and also for the generosity of family and friends for the sponsorships which helped me raise almost £200 for Scottish Air Ambulance and The Sandpiper Trust.
Giving It Away
I applaud Mark Zuckerberg and his wife Priscilla’s announcement this week to give away 99% of their Facebook shares to a new charitable foundation. The news brought to the forefront the Giving Pledge initiative started by Bill Gates and my mentor Warren Buffett. The duo challenged the world’s richest families to join them in not hoarding their money but using it for the greater good.
Bill and Melinda Gates said in a statement after the Zuckerberg-Chan news said: “As for your decision to give back so generously, and to deepen your commitment now, the first word that comes to mind is: Wow. The example you’re setting today is an inspiration to us and the world. We can be confident of this: Max and every child born today will grow up in a world that is better than the one we know now. As you say, ‘seeds planted now will grow.’ Your work will bear fruit for many decades to come.”
Added Buffett in a statement: “A combination of brains, passion and resources on this scale will change the lives of millions. On behalf of future generations, I thank them.”
Now you don’t have to be a billionaire to pledge and make a difference. Each and every one of us can make a commitment to be more responsible with our money and making sure we give it away while we can.
To inspire us we have the likes of Zuckerberg and according the Generosity Index (calculated as the ratio of lifetime donations to current net worth in U.S. dollar figures), there are many unsung heroes who have truly made a sacrifice and given away the vast majority of their fortune during their lifetime.
Ranking in absolute dollar terms, they most generous as posted on Business Insider are:
1. Bill Gates
Co-founder of Microsoft
Lifetime donations: $27-billion
Net worth: $84.2-billion
Generosity Index*: 32%
2. Warren Buffett
Chairman and CEO of Berkshire Hathaway
Lifetime donations: $21.5-billion
Net worth: $61-billion
Generosity Index: 35%
3. George Soros
Retired founder of Soros Fund Management
Lifetime donations: $8-billion
Net worth: $24.4 billion
Generosity Index: 33%
4. Azim Premji
Chairman of Indian consulting and IT company Wipro
Lifetime donations: $8-billion
Net worth: $15.9-billion
Generosity Index: 50%
5. Charles Francis Feeney
Retail magnate
Lifetime donations: $6.3-billion
Net worth: $1.5-million
Generosity Index: 420,000%
6. Sulaiman bin Abdul
Aziz Al Rajhi
Co-founder of Al Rajhi Bank
Lifetime donations: $5.7-billion
Net worth: $590-million
Generosity Index: 966%
7. Gordon Moore
Co-founder of Intel
Lifetime donations: $5-billion
Net worth: $6.5-billion
Generosity Index: 77%
8. Carlos Slim Helú
Chairman of Grupo Carso
Lifetime donations: $4-billion
Net worth: $27.3 billion
Generosity Index: 15%
9. Eli Broad
Former CEO of SunAmerica
Lifetime donations: $3.3-billion
Net worth: $7.3-billion
Generosity Index: 45%
10. George Kaiser
Chairman of BOK Financial Corp.
Lifetime donations: $3.3-billion
Net worth: $9.3-billion
Generosity Index: 35%
13. Mark Zuckerberg*
Founder and CEO of Facebook
Lifetime donations: $1.6-billion
Net worth: $40.7-billion
Generosity Index: 4%
Edinburgh Hosts GEF Forum 2015
“I am at peace. If you see graft and don’t speak out against it, you are part of the system that enables it. I was unable to let it continue to happen and weigh on my conscience.” stated HRH Muhammad Sanusi II, Emir of Kanoand former Central Bank Governor of Nigeria in an extraordinary live on-stage interview at the end of the Global Ethical Finance Forum held last week at the prestigious Balmoral Hotel in Edinburgh, Scotland.
The interview with the Emir of Kano was the perfect culmination for the two-day forum which gathered 300 delegates from across the ethical finance industry including Islamic Finance, Socially Responsible and Impact investing. The delegates included industry leaders, academics, students, and financial service participants from across the Middle East, Africa, East Asia, Europe and North America.
The candid and informal interview with the Emir of Kano describing his own personal experience as the former central bank governor of Nigeria during the credit crisis of 2008. His experience and advice for Islamic bankers was to install safeguards to eliminate corruption and to hold accountable individuals for their irresponsible actions. He feared that we were heading towards another global financial crisis as many of the issues from the previous banking crisis remained unresolved.
The Emir further clarified that ethical finance to fully be a leading part of the future of global finance; it must not only incorporate Islamic finance and other faith groups but also provide a real value proposition that puts the customers and depositors ahead of the equity stakeholders. A key issue in the current financial system as current banking and financial regulations favoured the equity holders of the bank which typically account for only 10% of the assets at the expense of the customers (deposit holders) that have contributed the remaining 90% of the bank’s assets.
The Emir also highlighted an underlying holistic issue for conventional banking which is also shared by most Islamic banks; failure to contribute to the good of the society with emphasis on fairness and social justice.
Almost certainly most of the delegates at forum shared the views of the Emir and even Keith Brown MSP, Scotland’s Cabinet Secretary for Infrastructure, Investment & Cities in his opening remarks stated, “Creating a fairer society is not just a good on its own, it is also essential for long-term prosperity.”
The renowned Dr. Zeti Akhtar Aziz, Governor of Bank Negara Malaysia, the leading voice of emerging markets stressed the need for sustainable economic development saying: “The value of financial intermediation includes mobilize savings, promoting the efficient allocation of resource, reducing informational asymmetry, and manage risks. Emerging markets have benefited from transformative role of finance in the development of emerging markets in the 21st century.”
So indeed the forum provided a great platform for discussion between Islamic finance and conventional finance on a unified platform of “ethical” finance. Panel discussions included investment screening processes, green bonds and sukuks, regulation, technology and the summary of the newly released Responsible Finance Report produced by Thomson Reuters and the Responsible Finance Institute. The forum reaffirmed the similarities between ethical and Islamic finance but also brought to light a key issue for Islamic financial institutions that is often overlooked; is it possible for a product to be “Shariah Complaint” and not ethical?
The answer is yes. One panel discussion highlighted this very issue and discussed ways to incorporate ethical guidelines in Islamic finance products to make the product not just be Shariah compliant on the surface but Islamic to the core.
A simple example helped delegates understand the issue at hand. A clothing manufacturer with no debt and meeting other generally accepted Shariah screening metrics which typically are financial ratios and business or product being of a halal nature would pass as being a Shariah compliant investment. However, the company is using suppliers in Thailand which are employing child labour or have exploitive employment practices. Shariah screening would fail to capture this issue which is clearly against Islamic or Shariah principles.
Socially responsible investing employing Environmental, Social, and Governance screening would be able to capture the issue of child labour as it would extend its screening beyond the surface of the company to look at the supply chain and practices of the company.
Shariah screening in most cases would fail to capture unethical practices of any business and would wrongly pass off businesses as being Shariah compliant despite their un-Islamic business practices. Panellists suggested Shariah scholars be given a broader mandate which would include assessment of the business operations. Perhaps even having Shariah scholars sit on the boards of financial institutions or companies so they can see that board and management decisions are being made in an ethical responsible manner.
Then we would surely solidify ethical and Islamic finance by ensuring that every Islamic finance product is truly ethical meeting the requirements of responsible Muslims and non-Muslims alike.
Article by Suhail Ahmad, published in the Islamic Finance News – Sep. 09, 2015
Love “Alpha” Bet Concept
I don’t like surprises. Especially as an investor. The Google restructuring news yesterday was a shocker. But I love it!
For one thing, it’s got “Alpha” and I live for Alpha. The holding company name is a hallmark of Google creativity and innovation. Look at the web-site address: https://abc.xyz/
The new company is essentially a technology version of the industrial and consumer product conglomerate Berkshire Hathaway run by Warren Buffett. Alphabet is the Berkshire for the 21st Century!
Here’s what Larry Page, the co-founder of Google and the CEO of Alphabet Inc had to say in the press release:
As Sergey and I wrote in the original founders letter 11 years ago, “Google is not a conventional company. We do not intend to become one.” As part of that, we also said that you could expect us to make “smaller bets in areas that might seem very speculative or even strange when compared to our current businesses.” From the start, we’ve always strived to do more, and to do important and meaningful things with the resources we have”
“For Sergey and me this is a very exciting new chapter in the life of Google—the birth of Alphabet. We liked the name Alphabet because it means a collection of letters that represent language, one of humanity’s most important innovations, and is the core of how we index with Google search! We also like that it means alpha‑bet (Alpha is investment return above benchmark), which we strive for! I should add that we are not intending for this to be a big consumer brand with related products—the whole point is that Alphabet companies should have independence and develop their own brands”
You can read the full press release here:https://investor.google.com/releases/2015/0810.html
Congrats to Sundar Pichai also as the new CEO of Google. Well deserved.
Look forward to being a shareholder of both AlphaBet and Google. Not investment advice and no position at this time.
Thank you Larry.
Saudi Arabia Welcomes Foreign Investors
Tadawul, Saudi Arabia’s stock exchange, opened up to foreign investors. The Tadawul is not only the largest stock market in the Middle East with a total market capitalization of over US$550 billion but is one of the largest of the emerging market exchanges.
Foreign investors interested to trade on the Tadawul must fi rst register with the Saudi Capital Market Authority (SCMA). At this time only the larger financial institutions with at least US$5 billion in assets and fi ve years of investment experience will be provided access. Even then, foreign investors will not be permitted to own or control more than 49% of any Tadawul-listed company.
So clearly, the SCMA is targeting established institutional investors for the Saudi market. This will help promote market stability and reduce volatility as the SCMA stated last month that it hopes to “…raise their performance by improving the level of transparency, financial information disclosure and governance practices”.
Saudi Arabia’s Tadawul All-Share Index (TASI), since being made accessible to foreign investors, has made litt le progress as global markets have been ratt led with the Greek debt crisis and the collapse of the Chinese stock markets. Despite the global pressures, the TASI continues to be one of the best performing indices in the world with a solid 13.2% return year to date.
The relatively strong performance of the TASI may help the Saudi market attract foreign investors. However, investors will likely be cautious given the depressed petroleum prices which will continue to put a strain on regional economic growth. In addition, the civil unrest and Saudi military action in neighboring Yemen adds increased geopolitical risk to Saudi markets.
Several firms including the world’s largest asset manager, Blackrock, are already planning for a Saudi Arabian exchange-traded fund to be listed either in Europe or the US. This would enable smaller financial institutions and retail investors to participate in the Saudi markets. It is also just a matter of time before the MSCI benchmarks add Saudi Arabia to its emerging market indices and direct billions of dollars in investment assets to the market.
By Suhail Ahmad, published in the Islamic Finance News Issue 29, Volume 12 on July 22, 2015
Identity Crisis for Gold?
Gold prices hit a five year low yesterday. Many gold shares on the other hand hit decade year lows or in the case of one of the largest gold miners in the world, Barrick Gold Corp. of Canada share prices fell to levels not seen since the 1990’s!
Yesterday’s sell-off can conveniently be blamed on the Chinese who revealed less then steller gold holdings on Friday. Followed with an investor dumping $1.7 billion worth of gold shortly after market opening in Asia causing a “flash crash” of a kind in gold prices which dropped 4% in a matter of seconds.
Gold has traditionally been a good hedge against inflation and a weaker U.S. dollar. Unfortunately neither scenarios are at play with the U.S. dollar acting like a runaway train and Europe battling deflation risks.
But you would think the EU/Greek debt crisis and the Chinese stock market sell-off would have diverted some assets to the safety of gold over past few weeks. Especially considering gold prices are 40% off their peak of $1,900 seen in 2011 and represent good relative value.
Could there be a more serious underlying issue for gold? As an equity investor in gold miners and explorers, I’m concerned about the long-term supply demand for gold. I’m been underweight gold in our portfolios but haven’t abandoned the sector (yet). I see a great short-term trading opportunity in gold shares for active investors. But I also see cracks in the long-term viability of gold as a safe-haven.
Canada’s First Impact Angel Network
“Reason often makes mistakes, but conscience never does.” – Josh Billings
Earlier this week, Canada witnessed first of its kind partnership between government and private sector as Province of Ontario is making it easier for businesses that have a positive social or environmental impact to get funding needed to grow and succeed in the competitive angel investing market.
The province, in partnership with the Network of Angel Organizations-Ontario (NAO-Ontario), is launching the Impact Angel Alliance. The Alliance will encourage more investors to help kick-start promising, high-growth social ventures in Ontario. This will be Canada’s first impact investing angel network.
The Alliance will work with NAO-Ontario to:
- Raise awareness of social ventures among established angel investor groups.
- Help diversify angel group membership to help bring in more women, visible minorities, and new Canadians.
- Bring together angel groups and non-traditional funding partners to increase co-investment into social ventures in priority areas, such as community health and sustainable craft industries.
- Research emerging trends, challenges and opportunities in impact investing to reduce risk, save time and attract better opportunities.
Supporting investment in businesses that have social or environmental benefits is part of the government’s plan to build Ontario up. The four-part plan includes investing in people’s talents and skills, making the largest investment in public infrastructure in Ontario’s history, creating a dynamic, innovative environment where business thrives, and building a secure retirement savings plan.
Source: Ministry of Economic Development (Canada)
Private Equity and Venture Capital Investing in the Islamic World
Article featured in the IFN 2015 Guide (pg.44) and feel free to download the complete guide from our web-site at http://wp.me/p3PTEh-bQ
IMPROVING GLOBAL MARKET FOR ISLAMIC PRIVATE EQUITY AND VENTURE CAPITAL
Islamic private equity (PE) remains a very small component of the global PE marketbut showed signs of strength last year with an increase of mergers and acquisitions(M&A) activity in the Middle East hitting a four-year high. Islamic venture capital(VC) continues to face an uphill battle in the region but demonstrated signs ofimproved market perception and attention. SUHAIL AHMAD writes.
Global alternative investment assets reached US$7 trillion in 2014 according to Preqin’s 2015 Global Alternatives Report. PE including VC was the largest component of alternative assets with US$3.8 trillion under management, an increase of 12% over the previous year.
Review of 2014
Aggregate capital raised by PE and VC firms worldwide in 2014 was a strong US$495 billion, with 85% of the activity in North America and Europe. PE returns as measured by public pension fund holdings reviewed by Preqin Performance Analyst remained strong at just under 20% for the year and clearly beating other alternative asset classes such as real estate and hedge funds with the latter closing out 2014 with a measly 2.9% average investment return as measured by the Barclay hedge fund index.
The Middle East witnessed some strong deal-making with publicly announced M&A across the Middle East increasing 23% to reach US$50.3 billion last year, the highest amount since 2010. Despite the strong M&A activity in the region, international private equity firms were not as aggressive as expected and inbound M&A activity declined 30% last year to US$4.2 billion, according to Thomson Reuter’s data.
One of the region’s largest PE firms, Dubai-based Abraaj Capital had an active year teaming up with the US-based TPG Capital to bid for Saudi fast-food chain Kudu, although it lost out to multinational cereal giant Kellogg in a bidding war for Egyptian biscuit maker BiscoMisr.
The sector in 2014 also saw the successful fundraising of the largest PE fund since 2011 with Gulf Capital of Abu Dhabi closing its largest and third private equity fund; GE Equity Partners Fund III with a US$750 million raise. Although Gulf Capital is not a dedicated Islamic PE firm, the closing is a positive development for the region and should spur more activity in PE in the coming years.
In the VC space we expect 2014 investment levels to improve over the US$29 million in funds raised in 2013 according to the MENA Private Equity Associations 4th Venture Capital in Middle East and North Africa Report. Similar to the regional PE data, it is unclear how much of the VC deal flow was Islamic but nevertheless the VC sector in the region continues to remain embarrassingly low compared to the rest of the world which had total VC investments of US$86 billion last year including the closing of 273 new VC funds!
Preview of 2015
PE firms will be increasingly interested in the Middle East region as investors look at diversifying geographically, better valuations than in the US, and capitalizing on the growth opportunities of the young demographics of the region.
Interestingly, a series of interviews of 75 corporate executives across the Gulf Cooperation Council (GCC) in the GCC Investment Outlook report late last year revealed only 45% of respondents think that the opening up of GCC stock markets to foreign direct investments will be one of the main drivers for investment in the region. However, 51% of respondents do believe PE transactions will increase significantly in 2015.
Small mid-sized enterprises (SMEs) and start-ups that do not have access to traditional Islamic banking credit options for a lack of collateral or operating history are desperate for an increase in venture capital options in the region. The 10th World Islamic Economic Forum (WIEF) held in Dubai last year had a lively panel discussion on the role and future of crowdfunding to fill the VC void in Islamic finance. The discussion and increased interest in crowdfunding is a positive step and will help increase awareness of VC as an important tool for positive socio-economic development in the region.
Conclusion
Islamic PE and VC have an opportunity to substantially contribute to the economic growth in the region by supporting businesses of all sizes reach the next level. However, it will continue to be a challenge for the industry to differentiate itself from conventional PE.
However, there are encouraging signs for VC with the growth of crowd equity funding which is inherently compatible and mutually reinforcing with Islamic values of building and supporting local communities, encouraging risk and wealth sharing, promoting real economic activity, and equity ownership over debt. These goals should be near and dear to all investors and participants in Islamic PE and VC.
RBS: Global to Gone in Ten Years
On thursday The Royal Bank of Scotland (RBS) reported another disappointing earnings and formally took itself off the global stage.
“This is a plan for a smaller, more focused, but ultimately more valuable, bank with the vast majority of its assets in the U.K., and for RBS marks the end of the stand-alone global investment bank model,” stated Ross McEwan, Chief Executive Officer of R.B.S.
I don’t invest in banks or insurance companies.Haven’t worked under a bank since 2004 when I left a member of the Royal Bank of Canada (RBC) group to join an independent. And usually don’t comment on the banks unless it has to do with investment strategies, innovation or ethics. All three of which are often lacking in good measure at banks these days.
However having lived, studied and worked in and around Edinburgh for most part of the past five years. I still scratch my head when driving by the RBS Gogarburn headquarters or walking by the historical RBS offices across St. Andrews Square; How did an iconic institution with almost 300 years of history get it so wrong!?
Here is a glimpse of how the bank went from being at one of the largest financial services group in the world to a small U.K. bank. Erasing tens of billions in shareholder value during the process:
March 6, 2000: RBS offer for NatWest is declared “unconditional”. Fred Goodwin replaces Sir George Mathewson as chief executive and shares close at £2.70.
May 4, 2004: Charter One bought for £5.8bn. RBS launches £2.5bn rights issue to fund takeover of US bank. Deal fails to hit income targets, prompting investor criticism. shares still higher at £4.81.
September 14, 2005: Queen opens new £350m headquarters building at Gogarburn. Yeah!
May 28, 2006: Sir Fred, having been knighted in 2004, is voted most powerful businessman in Scotland for the fourth year in the Scotland on Sunday Power 100 list. Share price hasnt’ move much in two years and sits at £4.74.
April 16, 2007: Consortium led by RBS enters bidding war for Dutch bank ABN Amro, which was already in advanced talks with Barclays for a friendly merger. Shares climb to £5.78.
October 10, 2007: RBS declares takeover of ABN “unconditional”, just as market value of assets plummet in midst of credit crunch.
April 22, 2008: under pressure from Government, RBS announces £12bn rights issue to shore up its weak capital base. shares still holding up surprisingly at £3.
October 13, 2008: a week after accepting emergency funding, RBS receives multi-billion pound bailout as it comes close to collapse, leaving taxpayer as its majority shareholder. Shares hit 65.7p
November 2008: The Government takes a 58pc in RBS for £15bn, with a further £5bn of preference shares.
February 26, 2009: RBS reports a loss of £24.1bn for 2008, the biggest in British corporate history.
February 10, 2009: Sir Fred and former chairman Sir Tom McKillop appear before MPs. Sir Fred and Sir Tom apologise for the near collapse of RBS and the “distress” it caused. Shares 23.8p.
I’d like to get some comments from the bankers out there and particularly with any that may have had the pleasure or pain of working at the bank. How did it RBS. get it so wrong, so many times?
Disclosure: I do not have any position in RBS shares.
Source: RBS Investor Relations, The Telegraph