Samena Capital hopes to bring old-school merchant banking to the UAE

One of the region’s most prominent financiers is aiming to create a merchant banking culture in the UAE.

Samena Capital, the investment firm run by Shirish Saraf, is to take a big stake in Kleinwort Benson, once one of the best-known names of the London banking scene. Samena is to buy 31 per cent of Kleinwort, and to increase its holding to 40 per cent over the next three years, for an undisclosed amount.

Kleinwort is one of Europe’s oldest financial institutions, with a presence in London going back more than 200 years. It played a major role in Britain’s privatisation programme of the 1980s, which became the model for state sell-offs around the world. It is currently owned by the German private banking group BHF, which has a listing in Brussels.

Mr Saraf, who was a founding executive of Abraaj Capital in Dubai in 2002 along with Arif Naqvi, said the plan was to open a UAE arm of the London-based Kleinwort Benson Bank and run it as a traditional merchant bank.

London-style merchant banking was largely superseded by American investment banking when British banks were bought by international competitors from 1987 onwards.

“The past 30 years in investment banking I see as an aberration in the financial world,” Mr Saraf said. “Investment banks, which were all about transactions, replaced merchant banks, which were all about relationships. We saw the growth of financial engineering replacing relationship banking, which was all rubbish really.”

In the UAE Samena is best known as a major shareholder in RAK Ceramics, the global sanitary ware and tiles business based in Ras Al Khaimah. In India, it is a shareholder in the motorcycle manufacturers Mahindra Two Wheelers.

Mr Saraf said the KBB deal would give Samena a third pillar to its business, with merchant banking alongside private equity and credit provision, and would give it a global range. Samena currently operates in South Asia, the Middle East, North Africa and East Asia, but the KBB deal will give it capability in the UK, Europe and North America, where BHF also operates.

He added that KBB would probably be based in Dubai International Financial Centre, but no final decision had yet been taken. “We might decide to do it in Abu Dhabi. We don’t see much difference as long as we’re in the UAE,” he said.

The acquisition of the stake is subject to the approval of European regulators.

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