1. Has the Gracia Group represented first time funds in the region?
Yes, we have brought several first-time funds on US Commerce Department certified trade missions to the Middle East in 2013, 2014 and 2015. We plan to continue to bring them in the future. While many LPs in the region are wary about investing with first time funds, several have found success and others are happy to start building relationships that will pay off down the road. Generally, those GPs that take a long-term approach to relationship building in the Middle East do the best.
2. What types of investments are Middle Eastern LPs interested in?
The 200+ LPs we work with in the region have a wide range of interests, including real estate, hedge funds, private equity and venture capital. There are regional differences as well as differences between sovereign funds and family offices. The Gracia Group works with GPs to identify exactly where there is the most interest for each fund type and strategy. If you are interested in determining exactly which LPs are most appropriate for your strategy, we recommend the Virtual Mission.
3. We've gone to events / conferences in the region before, how is this different?
This is an official U.S. government certified trade mission, and in the past invitations have been sent by U.S. embassies. Because invitations often come directly from the U.S. ambassador, we generally expect senior decision-makers to attend. On past missions, Secretaries General, CIOs, Chairmen, and other ranking officials who would normally not attend conferences, have joined us. You can learn more about U.S. government involvement here.
4. Shouldn't this be a free program if it's government sponsored? Can my firm join for free?
The U.S. government is forbidden by law from subsidizing any one U.S. GP over another, and the program is tax-payer neutral. Therefore, all costs of these missions are borne by the GP participants themselves. The fee covers embassy expenses, travel and lodging for the support team, fees for the principals and researcher team (both in the US and the Middle East) and all other costs associated with the year-long project of researching, interviewing, and screening LPs in the region so that we can introduce you to the most up-to-date group of active LP allocators in the Middle East.
5. Can I contact previous attendees for a reference?
Unfortunately, we can't provide contact information for previous attendees. We receive hundreds of such requests each quarter and the GP attendees -- like you -- are extremely busy. If each agreed to even a short chat, they would be overwhelmed with calls. Thus, we asked several to write testimonials here. Of course, if you have any contacts at any of the more than 100+ firms that have joined the missions, you are free to call and ask them how valuable they found them. You can also listen to a U.S. Commerce Department teleconference for more information.
6. Which LPs have successfully raised capital through these missions?
Since we don't act as placement agents and don't take any commissions on successful raises, we are generally not involved with negotiations that take place after the trade missions occur and don't have access to statistics on success rates. In addition, nearly all investment contracts in the region contain confidentiality clauses and both GPs and LPs are wary of violating these agreements.
However, I can say from my conversations in the region that tens of millions have been invested by LPs that GPs met exclusively on these missions. In my private work as a placement agent, I have raised nearly $1 billion for my clients, from the same LPs that we visit on traditional and virtual missions. These LPs - from well known sovereign funds to smaller family offices - have invested tens of billions with U.S. fund managers, and all of them have taken part in our missions. No one can ever guarantee you success, but if you have a compelling product and a desire to expand your LP base abroad, there is no more cost effective and time-efficient way to embark on this effort.
7. Are your programs open to non-US funds?
The annual US Commerce Department Certified Private Equity & Real Estate trade missions to the Middle East are open only to American funds. However, we provide the Virtual Mission and bespoke placement services to non-US funds. Also, we have acted as a regional advisor to EMPEA for their trips to the Middle East and are happy to help arrange for any emerging markets funds to join these trips and meet our LPs.
8. What are the marketing regulations in the Middle East?
Neither The Gracia Group nor Chad Gracia are legal experts, nor can we provide legal advice. On each mission, the delegation receives a briefing from our legal partners on shariah, cultural, and marketing regulations in the region. Each country in the GCC has evolving regulations on marketing, most aiming to prevent the sale of securities to non-accredited investors. Those who attend our missions are in country as guests of the U.S. Embassy and do not initiate marketing discussions with any investors. We also ensure that all LPs you meet are accredited and sophisticated, who are already investing in international funds. Due to the governmental nature of the trade mission, we have never had any issues in any city. Virtual Mission participants receive access to a videotaped overview of marketing regulations provided by our local legal experts, King & Spalding.
9. Are the LPs we meet Shariah compliant?
90% of the LPs we introduce our GPs to are not-shariah compliant. Most strict shariah-compliant investors do not generally invest in international private equity, venture capital, or real estate funds, so they do not receive invitations to our trade missions. Those few that do pass our screen are generally "shariah-light," which means that they may refuse to invest in a hotel development that serves alcohol for example, or may refuse any portion of profits from a deal that originated from interest. However, these types of investors are quite rare at our missions and embassy cocktail receptions, and virtually none of the institutions (pension funds, banks, sovereign wealth funds) that we introduce are shariah-compliant.
10. How can I successfully build relationships with LPs in the region?
The first step to building a relationship with LPs in the region is to start with an introduction from a respected mutual colleague, organization, or institution. You may find common contacts on LinkedIn or perhaps one of your current LPs will make an introduction on your behalf.
Ideally, an introduction from a respected institution is best. One of the reason that the U.S. government created the certified trade mission program is so that GPs can be introduced to LPs under the auspices of the U.S. government and in many cases by embassy officials in person (see photos from past missions here).
Once you've been introduced, the first step is to learn as much as possible about the LP. Backgrounders are provided by all clients of the Gracia Group, but you can also find some information on the web for larger institutions. The best way is to ask about the goals of the LP when you meet them on our trade missions, and truly listen to their needs and look for ways that your firm can help them achieve them. Provide them with professionally crafted materials on your product (it's unbelievable to number of presentations I see that unprofessionally formatted, unclear, or full of boilerplate, meaningless text). In addition, offer to act as an on call "expert" on the area of your fund or firm's focus, and provide them with background as needed.
Whether or not an LP has agreed to a preliminary call (something you should gently suggest; done presumptuously demand that they choose one or two times for a call when they haven't yet agreed to do so), I suggest sending quarterly updates on your firm. Always include the dates that you'll be in the region and an offer to do a call to update them not only on your product, but also your industry, geographic focus, or other trends that might be of value to them. Some LPs are loathe to schedule far in advance, so you may need to shoot an email just before or after arriving. Offer to show them your offices or portfolio companies if they are ever in your area.
Also, keep your communication alive and useful with timely information. If a Kuwaiti-based LP prospect mentions an interest in clean energy technology, make yourself a google news alert "Kuwait clean energy tech," then when a news item about a new solar project opens down the street from that LP, you can write a quick personalized note mentioning this and perhaps adding your insight. Be creative, be patient, always keep the interests of your LP in mind, and in the end, potential LPs will become true partners.
11. Which LPs will we meet on these missions?
We can never guarantee which LPs will attend any event, because sometimes those who RSVP do not appear, and others who did not RSVP do appear. Having said that, we have had great turnout in the past, particularly because the invitation comes directly from the US embassies (and in Oman, we will be having cocktails after the presentation at the US Ambassador's residence). Every sovereign fund in the region, every large pension fund and bank, and nearly every active large family office has sent delegates. So in short, we expect and generally find that every active LP allocator joins our trade missions.