Capital markets: Burj Capital thrives against the tide

The firm plans on becoming a full service emerging markets investment bank.

KARACHI:

While most capital markets firms have struggled to make money with sluggish volumes on the Karachi Stock Exchange and deal flow of mergers and acquisitions that has all but dried up, Burj Capital was able to turn a profit in its first year and is poised to grow its bottom-line even further in the fiscal year ending June 30, 2012.

“The key is to have a full suite of products,” said Burj Capital Pakistan chairman Zafar Masud and one of the two key partners of the firm at the global level. “The firms that had only product have sunk. Those that had multiple product lines have survived.”

Both Masud and Zaman spent much of their careers at Citibank Pakistan during the 1990s and early 2000s, the era when Citi was responsible for revolutionising the Pakistani financial services industry.

In Pakistan, Burj Capital is a full service capital markets firm, offering investment banking, financial advisory, equity research, as well as brokerage services for equities, fixed income, currencies and commodities.

The firm began by acquiring Crosby Market Pakistan, a subsidiary of the UK-based Crosby Capital, in December 2010. It is already one of the largest brokerage firms in commodity trading, accounting for as much as a quarter of all trading on the Pakistan Mercantile Exchange.

Internationally, Burj Capital currently serves primarily as an investment bank and is in the process of acquiring a licence to operate at the Dubai International Financial Centre. Through partnerships, the company also has a presence in Zambia and Turkey.

A growing clientele

While Masud talks about building a firm with multiple service lines, the core offering of Burj Capital is clearly investment banking, which Masud refers to as ‘the crown jewel’ for the company. Burj’s client roster suggests why that may be the case.

The firm appears to have become the adviser of choice for Pakistani firms looking to raise capital for international expansion. The Yunus Brothers Group – majority shareholders in Lucky Cement and Yunus Textile Mills – have appointed the firm as their advisers to raise debt for a new cement factory the group is planning in the Democratic Republic of the Congo to take advantage of the rapid build-up of infrastructure in sub-Saharan Africa.

“We are impressed with their [Burj’s] comprehensive knowledge and links in the African and GCC region, coupled with their excellent turnaround time,” said Abid Ganatra, finance director at Lucky Cement.

The company has been appointed financial advisers for the restructuring of the Dewan Yousuf Group’s debt. The local conglomerate, with interests in automobiles and textiles, has about Rs43 billion ($500 million) in outstanding loans that need restructuring.

Perhaps what is most impressive, however, is Burj’s ability to secure mandates for raising capital for firms that have no connection to Pakistan or the UAE whatsoever. For instance, the firm is in the process of raising about $150 million for Chimsoro Sugar, a company based in Zambia.

Competing in a niche market

When asked if the firm will be able to compete with other emerging markets investment banks, Masud was circumspect. “The Indian firms are heavily focused on serving their domestic market. Most of the larger investment banks are not interested in operating in the same space that we are. So we think we have a niche that we can work in.”

Burj had initially planned to expand to Dubai within three years, but having achieved its goals early, is now already looking to establish a presence in London or South Africa to serve other emerging markets.

Published in The Express Tribune, December 26^th, 2011.