A conversation with our CEO Badr Jafar in the Annual and Sustainability Report 2019 – 20
Global growth in 2019 recorded its weakest pace since the 2008 financial crisis. What were Crescent Enterprises’ performance highlights of 2019 in light of such economic challenges?
Despite a decelerating global economy, Crescent Enterprises registered a robust performance in 2019, with our diversified portfolio encompassing multiple industries and geographies enabling us to build resilience and maintain our growth trajectory.
We invested $80 million during the year to expand the operations of our portfolio companies, deploying capital and growing our portfolio to a total of 39 companies and investments. Consequently, our total assets grew to over $1.3 billion and we saw revenues increase 9% to reach $296 million.
Our capital allocation across varied geographies, sectors, and verticals reduces our exposure to any single asset class or market. Our portfolio diversification remains a key pillar of our strategy, one that is embedded in our vision, enabling us to achieve longterm performance while minimising risks.
By strengthening and expanding our portfolio of subsidiaries, affiliates, and investments, we continue to pursue growth and ensure balance and stability in performance over the long term.
The four platforms under Crescent Enterprises represent the cornerstone of your diversification strategy. What are the key developments across these platforms?
Our four platforms have continued to deliver on their respective strategies during 2019. Gulftainer, our ports subsidiary under CE-Operates, commenced an ambitious programme of longterm investment in the Port of Wilmington in the US. We expect this to usher in a period of sustained socioeconomic growth in Wilmington and the wider region, and we remain committed to developing and enhancing the infrastructure of the port.
Our holdings under CE-Invests are maintaining their growth by capitalising on efficiencies and expanding into new geographies. With a clear focus on operational discipline, these assets continue to improve their ‘exit readiness’.
CE-Ventures has continued its strategy of investment in highgrowth companies and venture capital funds across MENA, the US, and Asia. To date, $112.7 million has been deployed across various sectors. Companies we have invested in increased their revenue by as much as 90% in 2019, and have raised $370 million in follow-on funding since our initial investments. In addition to capital, we also provide our partners with strategic and operational guidance to catalyse their expansion and growth, with the value of our portfolio increasing by 40% compared to 2018. Our investment in venture capital funds helps us further diversify our portfolio by gaining exposure to 131 additional companies.
In 2019, our purpose-driven incubator, CE-Creates, accelerated the development of Shamal, a manufacturer of heavy-duty sustainable workwear, while our sustainable mobility company, ION, focused on expanding within the UAE and investing in electric vehicle charging stations and autonomous driving.
Crescent Enterprises has long been embedding sustainability in its operations. How did this practice evolve in 2019 and what are the key initiatives implemented in line with your commitment to the UN Sustainable Development Goals (SDGs)?
Businesses cannot achieve sustainable success in a world stricken by fundamental issues such as poverty, inequality, and climate change. The SDGs provide a helpful framework for organisations committed to having a positive impact on the communities in which they operate around the world. At Crescent Enterprises, we believe the contribution of the international private sector is essential to accelerate the achievement of the SDGs.
As a responsible enterprise, we have woven sustainability into our operational fabric. We gauge our business performance based not only on financial results, but also on our contributions to environmental, social, and governance objectives. As shown throughout this report, our business strategy, operations, and investments currently contribute to 12 individual SDGs, and we are proud to report on our performance in support of these specific goals.
Our corporate citizenship strategy, built on four priority areas—entrepreneurship and employability, arts and culture, environment, and corporate governance—aims to foster cohesive communities around our operations. In 2019 alone, our corporate citizenship partnerships and initiatives have reached approximately 60,000 community members, including 22,000 women and more than 1,200 students and entrepreneurs.
To promote the conservation of scarce resources and environmental sustainability, we have also taken additional measures in the last year to further reduce our energy and water consumption at our headquarters in Sharjah. In addition to encouraging our staff to become recycling ambassadors, we recently committed to abolishing the use of single-use plastics.
The year 2020 marks the start of a challenging market environment. What focus areas and sectors are central to strengthening Crescent Enterprises’ business performance in 2020 and beyond?
As we continue to focus on high-impact investments that complement our existing portfolio, Crescent Enterprises remains well-positioned to benefit from the Fourth Industrial Revolution by investing in promising sectors and related verticals of the global economy.
As a family-run business, we are committed to creating an empowering, technology-enabled, and human-centric business environment. Our commitment to diversity and inclusion allows us to continuously adapt to changing market trends and channel our efforts to create long-term value for our stakeholders.
In tandem with expanding and diversifying our portfolio, we aim to intensify our corporate citizenship by advocating for better corporate governance practices, supporting local communities, and taking additional steps to safeguard the environment.
What is your outlook for 2020 in light of COVID-19 and how has the pandemic impacted your vision and global operations across the portfolio?
The disruptions caused by COVID-19 have helped us gain new insights and perspectives that will allow us to emerge more resilient and better prepared to face future challenges of such a global scale.
Our diversified portfolio has experienced a mixed impact as a result of the pandemic. On one hand, lockdown restrictions have disrupted global supply chains, leading to slower growth in some of our portfolio companies. However, our ports and logistics subsidiaries and portfolio companies have been relatively resilient considering the unprecedented scale of disruption. They have also been able to support local and international responses to the pandemic, enabling the timely delivery of life-saving supplies.
On the other hand, private equity and venture capital markets have been challenged with tightening credit and investment flow, declining asset values, and longer holding periods. Since the start of the pandemic, many investors have been adjusting their investment approach, triaging their existing portfolio as a priority before venturing into new opportunities. That said, we believe the next 12-24 months will be an opportune time for investments in companies who have shown resilience and emerged leaner and stronger, with more sustainable business models. Similarly, we have been working closely with our portfolio companies to help them identify opportunities that reduce costs and ensure their own business continuity, and we remain committed to deploying new capital in high-growth companies with robust business models and environmental, social, and governance (ESG) standards.
As we navigate these unprecedented times, we remain determined to bolster the resilience of our operations and maintain our commitment to sustainability across all aspects of our business. Thanks to our greatest asset, our employees, we will keep working to realise new investment opportunities across our platforms that support the growth of a purpose-driven economy.
I am grateful to all of our employees, subsidiaries, affiliates, portfolio companies, and partners, whose vision and talent have been integral to our sustainable growth from the very beginning. We look forward to building further on these achievements in the years to come.