17 September 2014
DOHA: About four-fifths of Middle-Eastern businesses are seeking external finance, while three in five have previously offered equity in their business to external investors, according to a new KPMG International survey.
The survey found that globally, 58 percent of family businesses are currently seeking external financing to fund their investment plans, but finding the right strategic investment partner can be challenging. This is not the case in Qatar, where it has banks which are willing to lend to family business, however, the report identifies that High Net Worth Individuals (HNWIs) are an untapped resource in the region.
Survey results show that the top priorities of HNWIs and Family Owned Businesses align: HNWIs name long-term capital appreciation (37 percent) as their top driver for investment, while family businesses name long-term orientation towards investment returns as their top investor characteristic (23 percent).
Family owned and managed businesses (FOB) and Small and Medium Enterprises (SMEs) make a vital contribution to the national economy of Qatar. More than 75 percent of the companies registered with Qatar Chamber, are either family business groups or HNWIs. Qatar is currently enjoying the highest per capita income in the world, and this has built up a large number of HNWIs ready to finance and invest in any field that would maximise their wealth. Recently, the country has witnessed certain HNWIs are entering into partnerships with FOB and SMEs, which are very successful model where connections and relationships makes big difference in Qatar.
However, it seems the biggest challenge to family businesses in the Middle East is the thorny issue of management interference. All Middle East respondents felt that HNWIs would get heavily involved in management decisions.
A number of HNWIs in the region that have invested were interviewed and explained that they have had positive experiences and all are interested, to varying degrees, in future investment in family businesses. However, all respondents state that they would regularly express their views to management. Crucially, though, HNWIs view this as advisory rather than interference.
DOHA: About four-fifths of Middle-Eastern businesses are seeking external finance, while three in five have previously offered equity in their business to external investors, according to a new KPMG International survey.
The survey found that globally, 58 percent of family businesses are currently seeking external financing to fund their investment plans, but finding the right strategic investment partner can be challenging. This is not the case in Qatar, where it has banks which are willing to lend to family business, however, the report identifies that High Net Worth Individuals (HNWIs) are an untapped resource in the region.
Survey results show that the top priorities of HNWIs and Family Owned Businesses align: HNWIs name long-term capital appreciation (37 percent) as their top driver for investment, while family businesses name long-term orientation towards investment returns as their top investor characteristic (23 percent).
Family owned and managed businesses (FOB) and Small and Medium Enterprises (SMEs) make a vital contribution to the national economy of Qatar. More than 75 percent of the companies registered with Qatar Chamber, are either family business groups or HNWIs. Qatar is currently enjoying the highest per capita income in the world, and this has built up a large number of HNWIs ready to finance and invest in any field that would maximise their wealth. Recently, the country has witnessed certain HNWIs are entering into partnerships with FOB and SMEs, which are very successful model where connections and relationships makes big difference in Qatar.
However, it seems the biggest challenge to family businesses in the Middle East is the thorny issue of management interference. All Middle East respondents felt that HNWIs would get heavily involved in management decisions.
A number of HNWIs in the region that have invested were interviewed and explained that they have had positive experiences and all are interested, to varying degrees, in future investment in family businesses. However, all respondents state that they would regularly express their views to management. Crucially, though, HNWIs view this as advisory rather than interference.
© The Peninsula 2014
