It was a cold morning of December 22. in Sulaymaniyah, a city in Iraq’s Kurdistan region, Shwan Taha was sitting in the airport lounge with a bag full of gifts for his wife and children ready to go back at home in Istanbul.
He got a phone call on his mobile phone just before boarding from Rabee Securities, Baghdad based brokerage he owns. The manager was on the line. His manager reported him that a car bomb had exploded at the government ant-corruption agency besides Rabee Securities.
Mr. Taha hung up for a moment. None of Rabee’s employee was there because Rabee had decided to close their last trading day two days before the schedule day. He sent an e-mail to all the employee of Rabee said: “All client information is safe in multiple locations inside and outside Iraq.”
After six month of the incident, he says these type of incidents creating problems doing business,”making money”, in one of the world’s most dangerous market.
He spreading his arms to indicate explosion and says, “I’ve always told people the major risk of running Rabee is, one day it may blow up, not Lehman style but physically”,“What can you do?”.
Rabee Securities: the biggest brokerage
Shawn Taha, 43, 6’2”, dark curly hair sitting in his cabin in his office in Istanbul. He spends a third of his time there. He says, “Keep calm and carry on” by pointing to his iPhone case with a smile in his face.
He was born in Baghdad and raised in Kurdistan. He bought Rabee in 1998 when it was a small size company to handle his own personal trades in Iraqi stocks.
Now, Rabee is the biggest brokerage in Iraq which handles more than 80 percent of the foreign share transactions on the Iraq Stock Exchange (ISX), Taha says. Clients have faith on him because he is an Iraqi with a huge experience about ISX and have working experience of different times for investors George Soros and mark Mobius. He is the biggest broker of Iraq deals mostly with foreign clients. Other brokers mostly deal with Iraqi clients.
Geoffrey Batt, an Iraq-focused hedge fund from New York says, “Rabee stands out from all Iraqi brokers because Shwan understands how things work with Western investors”. They invested about $27 million for Iraq.
Rabee Securities had funnelled about USD 200 million investments since 2008 when it was just start attracting foreign investors through Iraqi Stock Exchange (ISX). Normally a broker earns 2 percent commission for a two way trade in Baghdad, Iraq.
“It was not easy to start with”, Taha says to reporter. “People got scared just hearing the word Iraq. Now, we see more and more smart money coming”.
Taha says Rabee is on the edge of biggest deal ever.Rabee along with HSBC Holdings Plc (HSBA) and Morgan Stanley (MS) managing the intitial offerings of first Iraqi mobile phone service provider, Asiacell Communications PJSC and one of its largest companies.
Asiacell had 10 million customers and their revenue in 2011 was USD 1.8 billion. According to two people having knowledge of the IPO, USD 1 billion could launch any time at the end of this year. After that Asia cell would valued about USD 4 billion which will double the Baghdad exchanges’ total capital.
HenrikKahm, investment analyst at Stockholm- based Fund Management Group says, “Asiacell’s IPO will be a milestone for Iraq and its believers”. This fund operates around $20 million.
Taha was a believer earlier, he has faith on him. He worked for Mobius’s Templeton (TEM) Emerging Markets Group and then for Soros’s Quantum hedge fund as a money manager between the years of 1997 to 2008. He says he is attracted by Iraqi economic potential in 2008 when he noticed that most of the Iraqi trading at a half rate of their book value whereas stock markets were booming in other countries.
He knew that Iraq has nothing to lose after three devastation war, Iran-Iraq war, the Gulf War and the Iraq war. Hence, the chances were high for Iraqi market rising.
Market hitting the ground
His timing was very good. Iraqi market was hitting bottom line in 2003 when US and UK coalition forces invaded Iraq. Last year, it grew 10 percent to USD 108.4 billion, it is expected that the market will grow even faster in the year 2014, according to International Monetary Fund and the Washington- based Brookings Institution.
According to the Brookings Institution the violence has now lower in Iraq as compared with the year 2006. The rate of civilian deaths was 95 a day in 2006 fell to four a day last year.
Iraq is the world’s ninth largest oil producer, according to the International Energy Agency. Iraq’s oil industry reached 2.6 million barrel oil production per day in 2011.
In 2003, it was just 1.3 million barrel per day, less than of its peak production 2.9 million barrels per day in 1989.
Iraq’s Construction and Housing Minister Mohammad Saheb al-Darraji said that Prime Minister Nouri al-Maliki plans to double the governments’ 2012 budget USD 100.5 billion by the end of 2016. He also planned to spend USD 9.8 billion on roads, bridges and housing.
Rabee Securities also grown by trading foreign investors. According to ISX Iraqi equities also tripled to USD 147 million in 2011.
New York based world’s largest asset management company BlackRock Inc. (BLK) invested 3.4 percent of their investment or about USD 4 million in Iraq.
Iraq Stock Exchange (ISX)’s market capitalization is sixteenth time lower than Istanbul’s benchmark ISE National 100 index. The economy of UAE is three times stronger than Iraq. But the population of Iraq is 33 million whereas in UAE only 5.1 million. Not only that Iraq is not also a stable country!
Iraq is surrounded by dangerous activities. To the east, Iran pursuing nuclear developing program, to the west, civil war in Syria, home to more than 750000 refugees.
Emma Sky, a visiting professor in the War Studies Department at King’s College London and a former adviser to the U.S. military in Iraq says, “Iraq is further hobbled by an underdeveloped legal system and overdependence on oil”.
Taha says he witnessed Iraq beyond the image of bloodied and bombed Iraq with smile. He praised Baghdad for its developing attitude. He addressed Baghdad as a careless child before.
In 1970, increasing oil prices made many Iraqis rich and he didn’t feel any sign of war until 1980s. Taha was a teenager at that time. Iran Iraq conflict was at its high at that time.
There was a wrong turn in Taha’s life. He took a wrong turn into an unfamiliar neighorhood and wounded.
Taha says, “There was one house with four banners”, “These things you don’t recover from”, “War forces you to grow up. You are not surprised by things any more, death or whatever. It happens”.
In 1986, Taha went to Case Western Reserve University in Cleveland to study biomedical engineering after completion of high school.
When he was in university, he worked as a waiter at La Dolce Vita Bistro in Cleveland in 1990. Saddam Hussein invaded Kuwait at this time. United Nation cancelled sanctions on Iraq. The economy became weaker. Taha was informed by his father to stay in United States.
After that the bad time gone and his fortune get better in the early 1990s. he borrowed money from family friends for master degree in business administration at George Washington University.
He launched a website when most of the people even didn’t have any knowledge about it. He launched a website named pmena.com which now gathered information about privatization in the Middle East and North Africa.
Ha always had a potential to earn money. He opened his office in 1997 in Dubai above a children’s store called Mummy & Me.
Taha Says, “Some brokers, after seeing my address, called up Templeton to see if I was for real”.
In 2006, he worked for Soros. At that time, he managed a hedge fund out of Istanbul. When he was travelling this year on a Jet, the jet was landed in emergency and rescued by coast guard.
He said remembering this incident, “I felt my life could go away any minute”. “If I want to do something,”, “I better start now”.
He returned to Baghdad to make Rabee bigger as it is now.
Taha says, he may move his Turkish wife IpekCemTaha, two daughters and a 4 year old son into his birth place someday.
He says, “It’s not because of the bombs that I wouldn’t want my kids to live there; it’s the mentality.”
“There’s one thing that takes a long time and real effort to repair: the hate brought by the war, between Shiite and Sunni, Kurds and others, rich and poor, you name it.”
Source: [Business Week]