- Former Investcorp Co-CEO Hazem Ben-Gacem registered new asset manager called BlueFive in Oct. 2024 a week before technically leaving Investcorp
- A series of ambitious announcements and news items have followed, most featuring large dollar amounts but scant financial details
- Just a few days after his formal departure in November, Bloomberg reported Mr. Ben-Gacem aimed to raise $1 billion for a new fund with a target of $25 billion in five years
- BlueFive said on June 2nd it acquired Dubai-based Neo Capital, which is also run partly by former Investcorp executives and focuses on real estate
- No terms disclosed in Neo Capital deal, only that BlueFive has reached $650 million in assets under management
- A month later, BlueFive announced a “circle” round of investors at $120 million valuation for the asset manager itself, but didn’t disclose the amount funds raised
- Most recently, BlueFive Reef Private Equity Fund I was announced with a $2 billion raise but few details about terms or investors
- The new fund already announced a transaction on July 14 but with no financial details disclosed
When seasoned financier Hazem Ben-Gacem says he’s creating The Gulf’s next private-equity behemoth, investors should take it with a grain of sand.
Mr. Ben-Gacem, who was until last year Co-CEO of Investcorp after a 30-year tenure, began marketing a new firm called BlueFive Capital almost immediately after his departure. The wave of announcements reflect ambitions to be on equal footing with Investcorp, the largest non-sovereign private equity outfit in the region. However, the news flow raises questions and concerns about opaqueness and long-term goals, according to other former Investcorp executives interviewed by CorpGov who are watching Mr. Ben-Gacem’s moves closely.
The drama unfolded in earnest last October, when Investcorp announced a reshuffling that included Mr. Ben-Gacem’s departure from the firm. Before his scheduled exit date of Nov. 1, Mr. Ben-Gacem registered BlueFive Capital with Abu Dhabi Global Market on Oct. 23. A few days later, Bloomberg reported that BlueFive was seeking a $1 billion fund to begin and aimed for $25 billion in five years, citing an anonymous source who spoke to the news outlet. In an interview later in November on Bloomberg TV, Mr. Ben-Gacem himself said he intended to focus on financial services and digital assets across the “Global South” which includes the Middle East, Southeast Asia and Latin America, proclaiming “our ambitions are going to be substantial.”
While BlueFive remains much smaller than Investcorp and probably is not a serious threat for now, its positioning looks at least potentially competitive, making it hard to imagine Mr. Ben-Gacem was subject to any non-compete agreement. He also didn’t take garden leave, a period of time off customary for many senior investment professionals who leave positions, suggesting it’s possible his departure was contentious.
Mr. Ben-Gacem’s path to reach his ambitions also looks questionable. Rather than a traditional private-equity model of raising funds and developing a track record to attract more money from prominent investors, BlueFive has made moves to gather assets quickly by effectively taking over another manager’s portfolio.
On June 2, the company announced that it had “acquired” Neo Capital, a Dubai-based real-estate private equity firm founded in 2015 and subsequently had $650 million under management. “Neo…counts amongst its clients some of the most prominent investors from the Kingdom of Saudi Arabia,” BlueFive said in a press release.
There are several questions around the Neo Capital deal. First, it’s unclear how the $650 million figure was determined and if any third party gave an independent assessment. Neo has invested in some European commercial properties that struggled, according to people familiar with the matter, which could mean the market value of the portfolio has shifted downward.
It’s also unclear how much cash, if any at all, was paid for Neo Capital. Assuming a 1% management fee, those assets would generate $6.5 million of annual revenue. Generously assuming $3 million of that dropped to the bottom line (the company has staff and other overhead) and applying a multiple of 15, it might be worth $45 million.
But at the time of the announcement, BlueFive hadn’t announced any fundraising amounts. That suggests it may have effectively merged with Neo Capital, giving investors a piece of equity in BlueFive. (Companies that track M&A including Dealogic also had no further details on the transaction).
Above: Mr. Ben-Hacem and BlueFive’s Board Members from the Middle East, Southeast Asia and China
In fact, a glance at the shareholder register indicates Mohammed Abdulwahab Alshehri is an investor in BlueFive. According to multiple people familiar with the matter, Mr. Alshehri’s father has been an investor in Neo Capital and those BlueFive shares may reflect an equity swap rather than an additional cash investment from the Alshehri family. Neither of the Alshehris could be reached for comment.
Neo Capital CEO Babak Sultani, a former employee of Investcorp, declined to comment to CorpGov while Co-Founder and Partner Hani Obaid, also formerly of Investcorp, didn’t reply to a request for comment. Ibrahim N Partners, legal counsel on the transaction, didn’t respond to a request for comment.
Next came the announcement on July 8 that BlueFive had completed a “Founding Shareholders Circle investment round” that values the business at $120 million. The announcement included a reference to a high-profile investor group including “family offices, including some of the most prominent GCC merchant and royal families alongside renowned finance leaders from North America, Europe and Asia” but no detail on any amount of funds raised. The valuation has no bearing on the amount of funds raised, so it’s difficult to ballpark the size of the transaction.
Two days later, on July 10, BlueFive came out with yet another big announcement: It had raised $2 billion for BlueFive Reef Private Equity Fund I. But again, the announcement included minimal details about terms or investors who subscribed.
While $2 billion is an impressive figure, the way it was announced suggested it was an unorthodox deal. Investors in the Gulf region interviewed by CorpGov say they never heard about the process until the press release which is surprising given how close-knit the investment community is. Normally such a raise would involve an extended diligence process, access to a data room and a generally more formal structure. One possible explanation is that the raise included as few as one large investor – as opposed to a broad-based raise with dozens of parties.
If that’s the case, the terms of the raise would likely look very different. It’s possible that the funding is a long-term commitment without much cash upfront. BlueFive may also have had to offer reduced fees to convince the investor/investors to make such a concentrated investment at a newly-launched firm.
What’s more, the geographic concentration in the Middle East isn’t exactly what Mr. Ben-Gacem had targeted when he first launched BlueFive. Back in November, he spoke of consolidating insurance and other financial services companies across the “Global South” which includes a much wider swath from South America to Southeast Asia.
Monday morning BlueFive made yet another announcement without financial details – that BlueFive Reef Private Equity Fund I has acquired The Wusoom group, which has a diversified group of companies in the Gulf across the fast-growing real estate, technology, hospitality, aviation, and industrial sectors. The deal looks like it’s essentially part and parcel of the $2 billion transaction itself, given it was announced just a few days earlier. Contacted by CorpGov, Mr. Ben-Gacem referred to a media representative who didn’t respond to a request for more details beyond the contents of press releases.
Mr. Ben-Gacem has surely moved quickly to draw attention to his highflying ambitions. But with little substance and even less disclosure, he has his work cut out convincing savvy observers that BlueFive has left the ground.
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