Asher Noor is the chief investment officer and group CFO for AlTouq Group – a sophisticated Saudi Arabian family investment office – and a sought after public speaker. Asher has been based in Saudi Arabia for more than 14 years and has worked for PwC and Banque Saudi Fransi in the past. His last position was CFO for Morgan Stanley in Saudi Arabia.
Asher is or has been on the board of many companies, in sectors as diverse as aviation, energy, financial services, infrastructure, information technology and telecom amongst others, representing AlTouq Group’s global investments. His achievements include taking a company public, executing the first equity swap on Saudi stock exchange, several M&A transactions, trade sale exits as well as financial restructuring and advisory roles for subsidiary companies. He is also the chairman of the leading MENA alternative investments asset manager in the UAE.
Asher was recently named to Trusted Insight's list of the Top 30 Family Office Investors. He graciously spoke with Trusted Insight on November 29, 2016.
Trusted Insight: To set the stage, tell us a bit about your career progression thus far.
Trusted Insight: How does working for a family office differ from your institutional experience?
Asher Noor: Working for banks felt to be a very mechanized, impersonal process, and typically very hierarchical. While I cannot generalize for every family office, at least in most Middle Eastern family offices, it is much more personal and inclusive. Not every family member needs to be part of the process, but the key family stakeholders are committed to being a part of the investment decision-making process. For me, it actually helps, because in my banking days I could see that the front office did not really have their own skin in the game. They were just doing it as their job description. Here, in a family office, it is so real and personal that every dollar gained or lost is not merely a “client statement”. We all have skin in the game, and this is how it’s very tangible and different.
Trusted Insight: You have been working with AlTouq Group for several years now. How would you describe this transition into the family office realm?
Asher Noor: Gosh! Where do I start? I might not have their surname, but they have treated me like family from day one. Family offices, especially in our part of the world, are very choosy about who they hire, so I am incredibly grateful for having met their standards and hopefully continue to meet them. It was a leap of faith leaving my banking days and joining a single-family office. I also did not have the chance to benefit from the experience of anyone around at that time who had done something similar. Now, when I look back, I think it was a fantastically brave move which was made equally rewarding, welcoming and fulfilling because I chose a very well-regarded family to work for. The first and second generation of the family have really built an unrivalled class act.
The transition into a family office environment felt awkward at first, The transition into a family office environment felt awkward at first, because there was no bureaucracy and even lesser politics to deal with. What I found incredibly refreshing though, was that I could actually get things done without the proverbial “Chinese walls” at banks, which are only keeping red-tapism alive and porous otherwise.
Trusted Insight: Does the family take an active interest in the investment process?
Asher Noor: The AlTouq family is very much part of the actual investment decision making process themselves. As the chief investment officer, I report to the Investment Committee, which is very active, chaired by the patriarch, Sheikh Ibrahim AlTouq. We have family members from the first and second generation, including the second generation CEO Mr. AbdulMohsen AlTouq, who are part of the Investment Committee. The family’s investments are very important to them, so together we invest our time in analyzing the deal flows that come our way and deciding when to invest, where to invest and how much to invest. Post investment review and eventual exits are equally well debated in our Investment Committee meetings.
Trusted Insight: AlTouq Group is one of the most sophisticated single-family offices in the Middle East. What differentiates you from other single-family offices?
Asher Noor: AlTouq Group is, as you rightly said, is a sophisticated single-family office. It is focused on investing the patriarch’s investable net worth in both traditional and alternative asset classes on a proprietary basis. What differentiates us from many other family offices in the region is that we are principally a financial investor. We do have stakes in operating companies, but we are not necessarily operators. We do have board seats and help steer the strategy but we are not necessarily the management. Essentially, we are very good as a global financial investor, where the focus is on steady and healthy dividend yield or distributions as well as profitable capital gain exits in due course. While this model of passive financial investment in direct deals as well as funds may have its challenges, if structured right with good convictions, it plays out very well, and that’s what differentiates us from others.
Trusted Insight: Do you collaborate with other single-family offices?
Asher Noor: The answer is both yes and no. The reason the AlTouq Group is a single-family office is because it wants to be a single-family office. We, and many other family offices, may end up doing club deals at times, but this is not necessarily the primary strategy. All the owners of these single-family offices out here, may know each other; from past business deals, common friendship circles or even inter-marriages. So they may thus end up piggybacking on the due diligence of others, and that’s how one may end up with a club structure, but it’s not really the same as becoming a multi-family office. Being a single-family office gives you tremendous flexibility – which we all possibly yearn for.
Trusted Insight: In terms of co-investment strategy, can you explain to me some of the opportunities and challenges of co-investing?
Asher Noor: You can park your money into any number of blind pool investment funds, which is how family offices usually start. However, when the family offices become more sophisticated they crave for greater control and visibility over their investments. Coinvesting has the incentive of improving returns, bringing the LP closer to the GP as well as getting them more access to information and the specific underlying asset. The obvious advantages of lower costs and a shorter J-Curve adds even more sparkle for LPs. When GPs are maxed out in terms of their allowed allocation, co-investment allows skirting this and it’s both good and something to be wary of. It would be fair to say co-investing is not as easy as it looks as well. In any case, I view it positively where GPs are able to offer co-investment opportunities to their LPs.
Trusted Insight: Are you investing in emerging markets?
Asher Noor: We invest in most sectors and geographies, including emerging markets when we feel the time is right -- but we are far from generalists. I do not subscribe to the idea of putting your money in every asset class and every geography, and hoping for a home run in at least some of those allocations. While my gripe with emerging markets remains that it is yet to be accurately defined, anybody excluding them from their portfolio allocation would definitely be shortchanging their returns in the years to come.
Trusted Insight: Do you see venture capital as a viable source of returns, given the current valuations?
Asher Noor: Historically, we have not been an active investor in venture capital, however, clearly right now it would be naïve to overlook VC. If we are to only look at this space from an accountant point of view, justifying the valuations is next to impossible.
However, as a chief investment officer, you have to look at it more holistically. Even if valuations are high, if someone is willing to buy it at a higher price, then that’s what it’s all about – ability to exit at an even higher valuation. Venture capital is therefore something that we are looking at right now and we have started allocating to as well. Nonetheless, in the current portfolio mix, VC is still a very insignificant, minority and possibly an opportunistic bet for us.
Trusted Insight: Do you see over-valuations as an issue in real estate too?
Asher Noor: We do allocate substantially to direct and real estate funds, but from a valuation aspect, yes, there are some concerns in real estate. However, there are so many different shades of assets and strategies within real estate that there are always good opportunities around. Between buyer demand and economic fundamentals specific to the region in focus, it is actually quite easy to determine if it’s a bubble or an opportunity. Wherever I see investor speculation driving up prices instead of income growth or traditional home buying, I try to determine the role of the regulator. I don’t expect them to be very good at curbing over-valuation, but as long as they are doing something, it is a more comforting situation than places where the regulators are still oblivious or frozen in time.
Trusted Insight: What is the recipe for the portfolio success of AlTouq?
We also spend a lot of time crystal ball gazing. That is a phenomenal exercise that has truly kept us ahead of the curve. But at the end of the day we live and breathe and invest in the same ecosystem as everyone else. Finding and working with the right managers is half the battle won. Unfortunately, finding those rare managers is not everybody’s forte or cup of tea.
Trusted Insight: Could you elaborate a bit more on your risk management process?
Asher Noor: What is benign or enticing today might be risky or toxic a few years down the road. This is what I mean when I say we do a lot of crystal ball gazing. Surely I don’t sit around a ball all day for insights. I read, travel, meet managers, source out conflicting views – and then I and our other investment committee members, having gone through the same within their own networks, distill our takeaways, especially focusing on where we think the market is being naïve. We do not necessarily have to agree, but our discussions at the investment committee level are really fruitful when we eventually allocate capital, because only we know our portfolio mix and thus are able to discern trends and its implications on our portfolio.
Coming back to risk management, I guess there are four ways of tackling risk embedded in any financial portfolio or investment. These are to (i) accept it, (ii) transfer it, (iii) reduce it or (iv) eliminate it. We don’t think anyone can truly eliminate risk, so we put our effort into simply focusing on the first three. So, from things as simple as the implications of signing an NDA to swings in public equity or currency markets impacting our valuations, we work on the premise that tail risks are no longer few and far between. We give equal weightage to all potential red flags and, most importantly, we put in extra hours on mitigating counterparty risk as much as we can. Historically, we have been shielded from a lot of market risk simply because of our due diligence and protectionist measures in curtailing counterparty risk. Surprisingly, many put in measure to battle “black swans” while ignoring the “neon swans” staring them in the face.
Trusted Insight: How do you go about selecting your managers?
Asher Noor: The reality is that we are fortunate to already have a good roster of credible managers with whom we have spent decades. But if you ask me about embracing new managers, I would definitely like to understand their track record and hard numbers performance. More crucial, however, is discovering their commitment and ability to let the relationship blossom over an extended period of time instead of pushing us into a business relationship from meeting number . In the part of the world I live in, it’s all based around personal relationships before the business relationships happen. It’s not about going on holiday together. It’s about knowing each other’s successes and failures, desires and vision and the passion to build a mutually productive and lasting relationship.
Trusted Insight: Is there something you think in the investable universe that people are not giving due attention to?
Asher Noor: Within the investable universe, some of us work in corporates, others in endowments, family offices, financial service industry and elsewhere. The one common thread amongst it all is that we are always chasing alpha. We are always looking for the “home run” deal. We are trying to make money out of money or putting money to good use or parking it for an unknown future. But some of the real winners in this game are the ones who have stepped off the treadmill. They are not chasing anything. It has nothing to do with their net worth or AUM. What they have achieved is the ability to curb their enthusiasm and say no, even if the economics of the deal appear juicy but it is not something their portfolio needs. They have instilled discipline in their investment strategy. I am seeing many going too fast, too soon. Discipline within investing is not some warm, fluffy, philosophical abstract. Discipline is the key to a stable portfolio. Clearly, not everyone is giving this the due attention that it merits.
Trusted Insight: You recently completed your MBA in family business from EDHEC Business School in France. How does that tie in with your role as the chief investment officer at a family office?
Asher Noor: This is a fantastic question at this juncture of our conversation. My CIO and CFO hats are my job description, and I spend my majority of time on them. However, if I were to step back and determine who I serve, obviously I serve a family and so does everyone else, regardless of which corporate entity they work for. At the helm is always a family or a group of families. This pioneering EDHEC Business School MBA in family business provided me with unrivalled access to not just academic learning, but also brought me in contact with next generation family members. They ended up becoming not just my class fellows, but lifelong friends from varied continents all around. Talking to them and the classroom lectures opened up new vistas for me, such as issues in governance and succession planning, which are equally crucial while playing the daily roulette of capital preservation versus capital appreciation in the financial markets. I am really appreciative of my CEO who encouraged me in this endeavor. The learnings are so crucial to the otherwise cut-throat role of a CIO that I would really encourage others to arm themselves with this wisdom as well, if possible. That’s where the chance to not just stand apart from the crowd lies, but also gives one the ability to see and serve the family in a more meaningful manner.
Trusted Insight: Is there anything I failed to ask that you would like to highlight in general?
Asher Noor: Let me follow up on my “neon swan” comment earlier. Some CIOs are asleep at the wheel and missing the neon swans all around them. In the investable world, products and strategies are changing at an unbelievable speed. Just as the private banking model is suffering because it was not receptive to change, I believe that the CIO’s of today will need to get out of their comfort zone. Allocating capital to managers and harping on diversification mantra, while simply rebalancing from one sector or geography to another is no longer the hallmark of active or profitable investing. The future of investments may well be in pure play with some of the unicorns of today, that many are loathe to add to their portfolio as being too exotic or risky.
To learn more about the top 30 family office investors, click here.
Asher is or has been on the board of many companies, in sectors as diverse as aviation, energy, financial services, infrastructure, information technology and telecom amongst others, representing AlTouq Group’s global investments. His achievements include taking a company public, executing the first equity swap on Saudi stock exchange, several M&A transactions, trade sale exits as well as financial restructuring and advisory roles for subsidiary companies. He is also the chairman of the leading MENA alternative investments asset manager in the UAE.
Asher was recently named to Trusted Insight's list of the Top 30 Family Office Investors. He graciously spoke with Trusted Insight on November 29, 2016.
Trusted Insight: To set the stage, tell us a bit about your career progression thus far.
Here, in a family office, it is so real and personal that every dollar gained or lost is not merely a “client statement”. We all have skin in the game, and this is how it’s very tangible and different.Asher Noor: Well, I started out by qualifying as a chartered accountant while working for four years at PwC in Pakistan. My first job thereafter was at Banque Saudi Fransi in Riyadh, Saudi Arabia. It was a French JV bank, which was recruiting expertise, as the famous IAS 39 standard on financial instruments was being implemented. I worked on that and served the bank on several other major initiatives as well, including leading the bank in its Basel II implementation. My next job was as CFO for Morgan Stanley Saudi Arabia. I helped secure the full bouquet of licenses from the Saudi Capital Market Authority for the bank, and executed the first equity swap on the exchange. After that, I joined AlTouq Group, which is where I now serve as the chief investment officer and group CFO.
Trusted Insight: How does working for a family office differ from your institutional experience?
Asher Noor: Working for banks felt to be a very mechanized, impersonal process, and typically very hierarchical. While I cannot generalize for every family office, at least in most Middle Eastern family offices, it is much more personal and inclusive. Not every family member needs to be part of the process, but the key family stakeholders are committed to being a part of the investment decision-making process. For me, it actually helps, because in my banking days I could see that the front office did not really have their own skin in the game. They were just doing it as their job description. Here, in a family office, it is so real and personal that every dollar gained or lost is not merely a “client statement”. We all have skin in the game, and this is how it’s very tangible and different.
Trusted Insight: You have been working with AlTouq Group for several years now. How would you describe this transition into the family office realm?
Asher Noor: Gosh! Where do I start? I might not have their surname, but they have treated me like family from day one. Family offices, especially in our part of the world, are very choosy about who they hire, so I am incredibly grateful for having met their standards and hopefully continue to meet them. It was a leap of faith leaving my banking days and joining a single-family office. I also did not have the chance to benefit from the experience of anyone around at that time who had done something similar. Now, when I look back, I think it was a fantastically brave move which was made equally rewarding, welcoming and fulfilling because I chose a very well-regarded family to work for. The first and second generation of the family have really built an unrivalled class act.
The transition into a family office environment felt awkward at first, The transition into a family office environment felt awkward at first, because there was no bureaucracy and even lesser politics to deal with. What I found incredibly refreshing though, was that I could actually get things done without the proverbial “Chinese walls” at banks, which are only keeping red-tapism alive and porous otherwise.
Trusted Insight: Does the family take an active interest in the investment process?
Asher Noor: The AlTouq family is very much part of the actual investment decision making process themselves. As the chief investment officer, I report to the Investment Committee, which is very active, chaired by the patriarch, Sheikh Ibrahim AlTouq. We have family members from the first and second generation, including the second generation CEO Mr. AbdulMohsen AlTouq, who are part of the Investment Committee. The family’s investments are very important to them, so together we invest our time in analyzing the deal flows that come our way and deciding when to invest, where to invest and how much to invest. Post investment review and eventual exits are equally well debated in our Investment Committee meetings.
Trusted Insight: AlTouq Group is one of the most sophisticated single-family offices in the Middle East. What differentiates you from other single-family offices?
Asher Noor: AlTouq Group is, as you rightly said, is a sophisticated single-family office. It is focused on investing the patriarch’s investable net worth in both traditional and alternative asset classes on a proprietary basis. What differentiates us from many other family offices in the region is that we are principally a financial investor. We do have stakes in operating companies, but we are not necessarily operators. We do have board seats and help steer the strategy but we are not necessarily the management. Essentially, we are very good as a global financial investor, where the focus is on steady and healthy dividend yield or distributions as well as profitable capital gain exits in due course. While this model of passive financial investment in direct deals as well as funds may have its challenges, if structured right with good convictions, it plays out very well, and that’s what differentiates us from others.
Trusted Insight: Do you collaborate with other single-family offices?
Asher Noor: The answer is both yes and no. The reason the AlTouq Group is a single-family office is because it wants to be a single-family office. We, and many other family offices, may end up doing club deals at times, but this is not necessarily the primary strategy. All the owners of these single-family offices out here, may know each other; from past business deals, common friendship circles or even inter-marriages. So they may thus end up piggybacking on the due diligence of others, and that’s how one may end up with a club structure, but it’s not really the same as becoming a multi-family office. Being a single-family office gives you tremendous flexibility – which we all possibly yearn for.
Trusted Insight: In terms of co-investment strategy, can you explain to me some of the opportunities and challenges of co-investing?
Asher Noor: You can park your money into any number of blind pool investment funds, which is how family offices usually start. However, when the family offices become more sophisticated they crave for greater control and visibility over their investments. Coinvesting has the incentive of improving returns, bringing the LP closer to the GP as well as getting them more access to information and the specific underlying asset. The obvious advantages of lower costs and a shorter J-Curve adds even more sparkle for LPs. When GPs are maxed out in terms of their allowed allocation, co-investment allows skirting this and it’s both good and something to be wary of. It would be fair to say co-investing is not as easy as it looks as well. In any case, I view it positively where GPs are able to offer co-investment opportunities to their LPs.
Trusted Insight: Are you investing in emerging markets?
Asher Noor: We invest in most sectors and geographies, including emerging markets when we feel the time is right -- but we are far from generalists. I do not subscribe to the idea of putting your money in every asset class and every geography, and hoping for a home run in at least some of those allocations. While my gripe with emerging markets remains that it is yet to be accurately defined, anybody excluding them from their portfolio allocation would definitely be shortchanging their returns in the years to come.
Trusted Insight: Do you see venture capital as a viable source of returns, given the current valuations?
Asher Noor: Historically, we have not been an active investor in venture capital, however, clearly right now it would be naïve to overlook VC. If we are to only look at this space from an accountant point of view, justifying the valuations is next to impossible.
However, as a chief investment officer, you have to look at it more holistically. Even if valuations are high, if someone is willing to buy it at a higher price, then that’s what it’s all about – ability to exit at an even higher valuation. Venture capital is therefore something that we are looking at right now and we have started allocating to as well. Nonetheless, in the current portfolio mix, VC is still a very insignificant, minority and possibly an opportunistic bet for us.
Trusted Insight: Do you see over-valuations as an issue in real estate too?
Asher Noor: We do allocate substantially to direct and real estate funds, but from a valuation aspect, yes, there are some concerns in real estate. However, there are so many different shades of assets and strategies within real estate that there are always good opportunities around. Between buyer demand and economic fundamentals specific to the region in focus, it is actually quite easy to determine if it’s a bubble or an opportunity. Wherever I see investor speculation driving up prices instead of income growth or traditional home buying, I try to determine the role of the regulator. I don’t expect them to be very good at curbing over-valuation, but as long as they are doing something, it is a more comforting situation than places where the regulators are still oblivious or frozen in time.
Trusted Insight: What is the recipe for the portfolio success of AlTouq?
...there are four ways of tackling risk embedded in any financial portfolio or investment. These are to (i) accept it, (ii) transfer it, (iii) reduce it or (iv) eliminate it. We don't think anyone can truly eliminate risk, so we put our effort into simply focusing on the first three.Asher Noor: I doubt if the recipe should be public knowledge. However, I think there are a few things that AlTouq Group, under the able command of our CEO, Mr. AbdulMohsen AlTouq, has clearly gotten right that others might not consider as important in their quest for alpha. Our CEO believes in hiring and retaining the right and best talent. So the recruitment process might be onerous and a challenge, but then we end up with zero churn once we onboard staff. We have the ability to not only know the difference between absolute and relative returns, but also the intelligence to know that we cannot eat relative returns. So our goal is mostly to find absolute return-worthy managers and products. This focus also naturally helps rein in low-volatility within the portfolio to some extent. But I would like to qualify that nonetheless by saying that in the low-return environment, successful portfolio management requires embedding more humility and patience too. We really do take the four letter word – “risk” – very seriously.
We also spend a lot of time crystal ball gazing. That is a phenomenal exercise that has truly kept us ahead of the curve. But at the end of the day we live and breathe and invest in the same ecosystem as everyone else. Finding and working with the right managers is half the battle won. Unfortunately, finding those rare managers is not everybody’s forte or cup of tea.
Trusted Insight: Could you elaborate a bit more on your risk management process?
Asher Noor: What is benign or enticing today might be risky or toxic a few years down the road. This is what I mean when I say we do a lot of crystal ball gazing. Surely I don’t sit around a ball all day for insights. I read, travel, meet managers, source out conflicting views – and then I and our other investment committee members, having gone through the same within their own networks, distill our takeaways, especially focusing on where we think the market is being naïve. We do not necessarily have to agree, but our discussions at the investment committee level are really fruitful when we eventually allocate capital, because only we know our portfolio mix and thus are able to discern trends and its implications on our portfolio.
Coming back to risk management, I guess there are four ways of tackling risk embedded in any financial portfolio or investment. These are to (i) accept it, (ii) transfer it, (iii) reduce it or (iv) eliminate it. We don’t think anyone can truly eliminate risk, so we put our effort into simply focusing on the first three. So, from things as simple as the implications of signing an NDA to swings in public equity or currency markets impacting our valuations, we work on the premise that tail risks are no longer few and far between. We give equal weightage to all potential red flags and, most importantly, we put in extra hours on mitigating counterparty risk as much as we can. Historically, we have been shielded from a lot of market risk simply because of our due diligence and protectionist measures in curtailing counterparty risk. Surprisingly, many put in measure to battle “black swans” while ignoring the “neon swans” staring them in the face.
Trusted Insight: How do you go about selecting your managers?
Asher Noor: The reality is that we are fortunate to already have a good roster of credible managers with whom we have spent decades. But if you ask me about embracing new managers, I would definitely like to understand their track record and hard numbers performance. More crucial, however, is discovering their commitment and ability to let the relationship blossom over an extended period of time instead of pushing us into a business relationship from meeting number . In the part of the world I live in, it’s all based around personal relationships before the business relationships happen. It’s not about going on holiday together. It’s about knowing each other’s successes and failures, desires and vision and the passion to build a mutually productive and lasting relationship.
Trusted Insight: Is there something you think in the investable universe that people are not giving due attention to?
Asher Noor: Within the investable universe, some of us work in corporates, others in endowments, family offices, financial service industry and elsewhere. The one common thread amongst it all is that we are always chasing alpha. We are always looking for the “home run” deal. We are trying to make money out of money or putting money to good use or parking it for an unknown future. But some of the real winners in this game are the ones who have stepped off the treadmill. They are not chasing anything. It has nothing to do with their net worth or AUM. What they have achieved is the ability to curb their enthusiasm and say no, even if the economics of the deal appear juicy but it is not something their portfolio needs. They have instilled discipline in their investment strategy. I am seeing many going too fast, too soon. Discipline within investing is not some warm, fluffy, philosophical abstract. Discipline is the key to a stable portfolio. Clearly, not everyone is giving this the due attention that it merits.
Trusted Insight: You recently completed your MBA in family business from EDHEC Business School in France. How does that tie in with your role as the chief investment officer at a family office?
Asher Noor: This is a fantastic question at this juncture of our conversation. My CIO and CFO hats are my job description, and I spend my majority of time on them. However, if I were to step back and determine who I serve, obviously I serve a family and so does everyone else, regardless of which corporate entity they work for. At the helm is always a family or a group of families. This pioneering EDHEC Business School MBA in family business provided me with unrivalled access to not just academic learning, but also brought me in contact with next generation family members. They ended up becoming not just my class fellows, but lifelong friends from varied continents all around. Talking to them and the classroom lectures opened up new vistas for me, such as issues in governance and succession planning, which are equally crucial while playing the daily roulette of capital preservation versus capital appreciation in the financial markets. I am really appreciative of my CEO who encouraged me in this endeavor. The learnings are so crucial to the otherwise cut-throat role of a CIO that I would really encourage others to arm themselves with this wisdom as well, if possible. That’s where the chance to not just stand apart from the crowd lies, but also gives one the ability to see and serve the family in a more meaningful manner.
Trusted Insight: Is there anything I failed to ask that you would like to highlight in general?
Asher Noor: Let me follow up on my “neon swan” comment earlier. Some CIOs are asleep at the wheel and missing the neon swans all around them. In the investable world, products and strategies are changing at an unbelievable speed. Just as the private banking model is suffering because it was not receptive to change, I believe that the CIO’s of today will need to get out of their comfort zone. Allocating capital to managers and harping on diversification mantra, while simply rebalancing from one sector or geography to another is no longer the hallmark of active or profitable investing. The future of investments may well be in pure play with some of the unicorns of today, that many are loathe to add to their portfolio as being too exotic or risky.
To learn more about the top 30 family office investors, click here.