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SPONSOR | EVOLUTION OF A BUSINESS BEYOND NUMBERS! Presented | LSE Third ANNUAL BUSINESS RESEARCH CONFERENCE ON MANAGING BUSINESS IN PAKISTAN | Apr15 Who Is Sponsor? ONE WHO HAS THE FINAL SAY! Why Sponsor Is Important? Sustainability Longevity [Competitive Standing] [Beyond Generations] WHENEVER A BUSINESS RUNS OUT OF SPONSOR, CHANCES OF SURVIVAL DIMINISHES! Fate of Businesses – Classic Example The 22 FAMILIES OF PAKISTAN [1968] Rest in Peace Jalil Fancy Valika Bawany Ispahani Winners Survivors Khyber Dawood Saigol Beco Arag Ali Adamjee Hafiz Habib Colony Milwala Nishat Crescent Karim Gul Ahmed Gandhara Dada Sustainability How to bring it to a business? Sponsor of a Sustainable Business CREATES A BALANCE Business • Consistent revenue generation Reward acumen • ABILITY Experience • Staying afloat in times of Knowledge & financial distress (related & Risk Understanding • ADEQUACY unrelated) Risk Reward ADEQUACY OF ABILITY Sustainability Cycle • Right Opportunity • Money • Risk & Reward • Ownership Identify Incubate Monitor Operate • Governance • Control • Alignment • Competitiveness Sustainability Longevity How to bring it to a business? Sponsor | Typical Lifecycle Strategic Entrepreneur Investor Shareholder Ownership Ownership Ownership Strategy Strategy Strategy Management Management Management What we loose along this lifecycle? • Willingness The Correct Approach Longevity Matrix IT IS POSSIBLE TO HAVE SAME SPONSOR STRENGTH WHILE MOVING ALONG THE LIFE CYCLE Succession planning Corporatize Sponsorship Challenges Business Management Let’s put our ownership in a Now Sponsor is a STRUCTURE LEGAL person Longevity | Pakistan Story House of Habib Engro Corporation Shirazi Investments [Habib Family] [Dawood Group] [Atlas Group] 150+ years 100+ years 50+ years Key Businesses Key Businesses Key Businesses Indus Motor [Toyota] Engro Fertilizer Honda Atlas [Cars] Habib Metropolitan Bank Engro Foods Atlas Honda [Motorcycles] Metro Cash & Carry Dawood Hercules Atlas Asset Management Sustainability Longevity Another Dimension Impact of Sponsor UBL | Profitability Trends 6 times HBL | Profitability Trends 5.5 times Sponsor | Bestway Group | Since 2002 Sponsor | Agha Khan Group | Since 2004 30 40 24 32 25 19 20 30 23 23 20 15 22 15 11 20 17 10 9 8 10 13 13 10 10 10 11 PKR bln 6 4 PKR bln 5 10 6 0 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20042005200620072008200920102011201220132014 The ABL | Profitability Trend 3.5 times K-Electric | Profitability Trend turnaround Key Sponsor | Mukhtar Family | Since Key Sponsor | Abraaj Group | Since 2008 2002 13 20 15 15 15 10 7 15 12 5 3 10 10 7 8 0 2007 2008 2009 2010 2011 2012 2013 2014 4 4 4 PKR bln -5 5 -10 -9 0 -15 -12 2006 2007 2008 2009 2010 2011 2012 2013 2014 -15 -20 -16 -16 Contact Muhammad Shahzad Saleem Samiya Mukhtar Nayab Shafique [email protected] [email protected] [email protected] Contact Number: +92 42 3586 9504 DISCLAIMER PACRA has used due care in preparation of this document. Our information has been obtained from sources we consider to be reliable but its accuracy or completeness is not guaranteed. The information in this document may be copied or otherwise reproduced, in whole or in part, provided the source is duly acknowledged. The presentation should not be relied upon as professional advice. .