"Technology is not a sector it's an enabler" – Q&A with Gateway Partners' Huda al-Lawati

Huda a-Llawati, Gateway Partners

Originally from Oman, Huda al Lawati (pictured) has earned degrees in both Business Economics and Neuroscience from US-based Brown University. Having joined Saudi-listed consumer conglomerate Savola as chief investment officer in 2015, she was responsible for portfolio management, M&A, investor relations and strategy there.

Al Lawati later joined Gateway Partners, a private equity manager investing in Africa, Middle East, South and South East Asia, with offices in Singapore and Dubai. Private Equity Wire caught up with the private equity expert for a Zoom chat on developments she is seeing within the intersection of the private equity and EM space right now. 

What’s your outlook on the private equity sector?

“The outlook for private equity is quite positive, especially since people are on the lookout for higher and higher yields. With interest rates being so low, you are always looking for outsized returns.

During the the pandemic, public market companies maintained high valuations and Fed actions resulted in a lot of liquidity. That creates difficulties for private equity in terms of price negotiations with quality businesses, but M&A activity was still broadly healthy. There will be a continued search for yield and growth, which bodes well for emerging markets broadly.

Covid proved that there’s a blurring of lines. Technology, to me. for example, is not a sector, it’s an enabler. Today, investing in any business, even if it’s a very basic factory – if they’re not technologically enabled that’s not an investment I want to make.

You will see more PE and VC lines blurring going forward and we’ve already seen some of that. Another interesting trend is the SPAC trend which is quickly coming into emerging markets. 

How do you see the SPAC trend pan out?

The SPAC trend is interesting and coming to emerging markets as well, you’re already hearing about Singapore making itself a promising jurisdiction for that. Asia-based bankers are seeing a lot of demand from clients. SPACs are hunting for targets in the US so expanding beyond those markets creates a broader universe to choose from.

Where do you see growth going forward?

In the Middle East in terms of sectors; logistics and manufacturing, and consumer -especially tech-enabled- is going to be very interesting, as well as infrastructure. 

Within healthtech there will be a focus on at home diagnostics and care, and modular health applications. In emerging markets, we still also have an incredible demand in terms of providing hospital beds, doctors and nurses, medical universities and training.

We also have a bigger need for impact investing within the healthcare sector because to get a doctor or a nurse to the rural part of India or Bangladesh is important, so I think you’ll see impact driven investment go towards that. The challenge in some of our markets is that innovation is not there yet, so hopefully funding will go towards driving that too.

What implication does the increase in digitisation have on portfolios?

Digitisation creates opportunities for people to create value. It could lead to an increase in capacity, or an increase in margins. Suddenly there’s an opportunity to create value that previously you didn’t have. It also means that, while previously there might have been reluctance from management or owners to go online, implement automated maintenance and so on, Covid forced everybody to accept the need for these changes. It enabled people to adopt and look for technology in a way that they hadn’t in the past across their businesses.     

What are some of the changes that you would like to see within emerging markets going forward?

In order to thrive the private sector needs sustainable costs of operations; and ease of starting a business. Bankruptcy laws, for example, are not as well developed in emerging markets as in the West and these need to be developed within our region.

Educational systems need to be more flexible, to equip children and young adults with the skills required to start their own businesses. Those are areas that could help entrepreneurs. The role that the government plays should change over time. Historically in the GCC region the government has been the main spender, but it needs to move more into a facilitator role for diversification to happen.