Salam International, a Doha-based conglomerate, has come a long way since it was founded by a Palestinian photography enthusiast in 1952.
AbdulSalam Mohammed Abu Issa converted his interest in photographing Qatar and its people into a business. He opened Doha’s first studio and film processing laboratory called Salam Studio.
The business has since grown to become one of Qatar’s biggest companies, worth more than 1.5 billion Qatari riyals (Dh1.51bn), according to the group. Its operations now span the contracting, energy, technology, retail distribution, hospitality and property sectors.
Salam International has remained a family affair. Abdul Salam Mohammed Abu Issa passed the business on to his sons in the early 1980s. The eldest, Issa Abdul Salam Abu Issa, is the company’s current chairman and chief executive, while Hussam AbdulSalam Abu Issa is vice-chairman and chief operating officer. Their brother, Bassam Abdul Salam Abu Issa, is a board member and oversees Salam International’s retail business.
After several decades at the helm, the company’s second generation of leaders will soon make way for the next generation. As the chairman’s eldest son, AbdulSalam Abu Issa, 32, is in line to take over. He currently works as the deputy chief operating officer.
The company has undergone many changes in the past 15 years. “We were 17 companies that were almost totally independently run,” says Suleiman Al Khateeb, an executive director at the company.
“Each reported to one of the brothers. These companies did not see any sense of co-operating at all sideways. They saw themselves as working for the family, not the group.”
After conducting a review, the family decided to restructure and grouped different parts of the business together according to the sectors in which they worked.
In 2000, the company decided to list on the Qatar Stock Exchange. It was the first family-run business to do so and it experienced some challenges in the early stages. “We have been the guinea pig of going public because, as you would expect, the rules and regulations in Qatar were not really geared towards a family business going public and also the financial sector wasn’t really prepared,” says Mr Al Khateeb. “It was an education to say the least.”
Salam International’s reorganisation was also intended to prepare the business ahead of the arrival of its next generation of leaders. “Third generations are typically fragmented so we worked on transforming the company from a family company to more of a structured corporate business environment,” Mr Al Khateeb says.
While the family continues to hold more than 50 per cent of the company, the decision to go public has changed how the company operates.
“As much as Salam International is a family company, it’s also a publicly-listed company,” says AbdulSalam Abu Issa. “We have to answer to boards, financial authorities and shareholders. It has the spirit of a family company but with good corporate governance.”
Becoming a public company was a difficult process.
“We had to deal with a lot of aches and pains going through the system,” says AbdulSalam Abu Issa. “When we went public there wasn’t enough clarity … [For instance,] the processes and regulations were not clear on whether we could acquire companies. “Going public was not an easy process but we think we made the right decision to do it. It was a challenging couple of years but we would do it all again if we had the chance.”
Qatar’s other family-run firms have largely shied away from listing. There are several reasons for this, says AbdulSalam Abu Issa: “Some people see going public as a sign that you’re not doing well or you’re putting your family heritage out to the public. Also, it involves telling people how much money you earn. It’s a big psychological factor.”
Like other exchanges in the region, Qatar’s bourse is still very young by international standards, founded in 1997.
“Most of the stock exchanges in the region are 10 to 15 years old. They are not very mature markets,” says Suleiman Al Khateeb. “I think it has evolved … I think that the regulations are becoming more and more mature.” Suleiman Al Khateeb expects Qatar to apply its corporate governance initiative more strictly in future.
The relative youth of the stock exchange (together with the fact that less than half of Salam International is held by non-family shareholders) may have helped to keep the company’s share price relatively stable. Its stock has moved very little in spite of mixed financial results in recent years. Salam International is yet to fully recover from a 58 per cent drop in annual profit in 2012. The company experienced another tough year in 2014 when it posted a profit of 86.8 million riyals, still far below its high of 159.6m riyals in 2011.
“What happened was that we had a very tough time in contracting over the last two or three years,” says AbdulSalam Abu Issa. “This sector pulled us down – particularly in two or three companies. It’s really quite sad but all of the profit that we made in some of the other businesses was sucked away by a few businesses that did quite badly.
“Market conditions were partly to blame but also we had internal management issues.”
Despite a challenging couple of years, Salam International has continued to hold on to its investors. Being a family-run company may have helped, says Suleiman Al Khateeb. “We like to think that the individual investors are keen on the company because of the continued involvement of the family. There is a psychological attachment. “The family still has its wealth in the company so people are more comfortable investing in it.”
Salam International looks set to remain a family business. AbdulSalam Abu Issa is being prepared to take the top position when his father steps down. His sister is the corporate communications manager. His brother may decide to join the business in three or four years’ time.
While AbdulSalam Abu Issa’s other siblings and cousins have their own businesses, they continue to be shareholders in Salam International.
“[My] eldest sister decided that she wanted a corporate role outside of the business [and] another one decided to open her own business,” says AbdulSalam Abu Issa. “There was some talk of my three cousins joining the business at one point but they decided to open their own holding company.
“It was very smooth. It all just worked out. We’re all very close.”
Q&A
AbdulSalam Abu Issa, the deputy chief operating officer of Qatar’s Salam International, talks to The National about the family-run business.
Where did you work before Salam International?
After doing my bachelor’s and master’s degrees in Newcastle [north-east England] I came back to Qatar to work for Dolphin Energy, an oil and gas company. Then I went to Qatar Islamic Bank for a very short period. Then I moved to a road construction company called BOTC. I joined Salam International, which is our core family business, just over three years ago.
Why did you work for other companies before joining the family business?
There was always the understanding that I should get outside experience before joining the [family] business. I applied to banks and oil and gas companies after university. After two and a half years at Dolphin Energy I realised that I wanted a different experience and then the banking job came up. I moved to the road construction business because we had a big stake in the company and so it required a lot of attention. They wanted someone from the family involved. We sold our stake in 2012 and that’s when I joined [Salam International] … To be honest, I always knew that I wanted to join the family business and, being the eldest boy, there was lots of pressure.
What has been your experience of working for the family company?
I feel very lucky that the second generation was very welcoming to the third generation. That’s not always the case. Everyone wants their children to join but most people are not ready to start handing over responsibility. Often, the founding members want to keep control and can’t trust the younger generation. It’s called ‘founders’ syndrome’ … In our company it’s been different. It couldn’t have gone better. There was full trust and mentorship …[Salam International’s employees] did not see the amount of mentoring that was going on behind the scenes in the early days.
How do you find reporting to your father and uncle?
We have different opinions but we all respect each other … They allow me to have my opinion, style and vision [for] how the company should develop … The key is that the chairman and vice-chairman were strong believers and supporters of the third generation. They haven’t tried to impose their views and ways of doing things. This has really helped me excel, enjoy my work and be more dedicated to the company. Being part of the family means that you always talk business. You live it and you dream it.
When will you take over?
There is no specific timeline for transferring to the third generation but they are gradually preparing for this … Slowly our chairman and vice chairman are handing over the daily responsibilities. Personally I don’t see a reason for them to retire or step out of the business completely. It’s something I don’t really like to think about because I’m happy with the responsibilities that I currently have. I think the day that they decide that they want to exit I will be ready – with their guidance – to take over.
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