Javad Marandi (sponsored interview) - Director magazine

Meet the investor: Javad Marandi

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Portrait of Javad Marandi in a light grey suit

Iranian born but brought up in London, Javad Marandi worked for Coopers & Lybrand (now part of PwC) and Coca-Cola before striking out on his own. Director talked to him about his current portfolio of interests, working in Baku, investing in London, and his next exciting project

The shifting political winds across Central Asia and Europe have largely determined the course of Javad Marandi’s life and career. Nowadays, the Swiss-based British entrepreneur has a burgeoning portfolio that stretches across the continent. However, it was the tumultuous events of 1979 that first brought Marandi to the capital.

Born in 1968, his family left Tehran after the Shah of Iran was overthrown by the Ayatollah Khomeini in what became known as the Iranian Revolution. What does he remember from those early years in the UK? Surprisingly his immediate reaction is to say “Arthur Scargill! Yes, I remember the miners’ strike and a lot of demonstrations.”

Well, he was clearly no stranger to civil unrest. But he adds: “My parents came to London because they felt it was the right environment to get a proper upbringing and education.”

Marandi studied to become a chartered accountant with what was then Price Waterhouse. During the 90s he worked for Coca-Cola Enterprises as business development manager in Central Asia and the Caucasus and would later become the area manager in that region for tobacco giant Philip Morris International. That experience left him ideally placed to understand the opportunities, and challenges, being created by the dissolution of the Soviet Union.

Birth of enterprise

The rise and fall of communism plays a pivotal role in Marandi’s story. His grandfather was from Azerbaijan but left in 1920 in the wake of the Bolshevik Revolution that brought the communists to the Caucasus. Some 70 years later the break up of the old USSR sparked a cultural and financial revolution that would see Azerbaijan rapidly develop from command to market economy.

If being in the right place at the right time is the key to being a successful businessman, then Marandi’s timing was impeccable. “When an economy is growing at the pace that it was, anything you do, even if you don’t do many things right will be successful because it was developing so quickly.”

Between 1995 and 2014 Azerbaijan’s GDP grew from $3.05bn to $75.2bn per annum. A nation rich in oil and gas with a government ready to invest its newfound wealth in the country’s infrastructure provided an extraordinary opportunity for investors. But whereas others took a cash, bang, wallop approach and saw Azerbaijan as a chance to make a quick buck, Marandi adopted a long-term strategy.

“The retail environment was growing but without a proper wholesale structure or a distribution environment that could service the retail industry.”

He was able to take his experience in creating distribution networks from his time with Coca-Cola. He invested in warehouses, property and transport, including over 1,000 vans serving 11,000 retailers.

“We made a significant amount of investment in people and the infrastructure required to do the work that we needed to do.

“That allowed me to have the competitive advantage versus the others that came to Azerbaijan much later.”

By 2002, Marandi was shifting his focus from retail to commercial properties and the leisure sector and in 2006 he became an adviser to Baku-based Pasha Construction. Now virtually every major luxury hotel chain has business in Baku.

It would be wrong to think this has all happened without any hitches along the way. Marandi ruefully recalls: “We started a National Lottery in Azerbaijan similar to Camelot. We had weekly draws live on TV. But there was a very high overhead cost in running a weekly operation.

“Also it seemed as if people weren’t used to or ready for the idea of a lottery where you could choose your own numbers.

The plan ultimately fell victim to the Azeri equivalent of a local pub running a ‘bonus ball’ lottery based on whatever number gets drawn live on BBC1.

He recalls: “What used to happen is that the local tea houses would run their own lottery but they would use my numbers broadcast on from national television!”

But it still proved to be a valuable lesson learned. “If you understand that it’s not working, and if you understand that you’re not going to turn this business around, it’s much better to sort of pull the plug earlier rather than later. You have to take the emotion out of it.”

And Marandi emphatically believes that there are still big opportunities available for foreign investors. It is worth noting that a report issued by the Government in 2014 stated that the ‘UK is already the single largest investor in Azerbaijan.

“There are currently more than 450 UK companies doing business in Azerbaijan. In addition to oil and gas, UK companies have been successful in areas such as construction management and design, retail and education,” says Marandi.

The country is also keen to make itself less reliant on finite resources. Last month a plan to freeze the production of oil was blocked by Iran causing prices to drop sharply. However, this summer offers Azerbaijan’s capital, Baku, a golden opportunity to further cement its status as a tourist hotspot when the city stages its first Formula 1 Grand Prix on June 19.

Crucially, rather than being held at a faceless, purpose-built track in the middle of nowhere, the cars will race through the streets of Baku, along the banks of the Caspian Sea – a moving advert for a city, to be broadcast around the world.

“Singapore, and obviously Monte Carlo, as well as Canada are the only other street races in F1,” Marandi notes. “Baku is an amazing location for the Formula 1 race. It is an historic city and an amazing mix of old and new coming together. It will be a spectacular occasion.

“It will generate a lot of attention and potentially a lot of tourism, along with investment.”

But unlike its other oil-rich neighbours, Marandi says that much of that past investment has remained in Azerbaijan. “A lot of foreign money came in but there was never any sort of a flight of capital from the country. Azerbaijan always prides itself in the stability it has created in terms of the currency, in terms of the economy, in terms of safety and security.”

London property

In parallel with his investments overseas, Marandi has over the past two decades been an active investor in prime London residential property. He bought and sold properties across W1 and SW1 including in Eaton Square, whose former residents include Sir Laurence Olivier, Roger Moore, Gianluca Vialli, and Baroness Thatcher. It is also the fictional home of James Bond.

He says growth in his investments in the London property market has been organic, culminating in one of his current projects, an ultra-high end apartment development in Cheval Place, Knightsbridge.

“There is no other city like London. I’ve never seen a city with so much energy which is open for business 365 days, 24-hours a day. Whatever your interest there is something for you to do in London.

“And this is probably why a lot of foreign investors and lot of potentially wealthy people are interested in coming to London because it’s such an exciting city.”

If the polls prove to be more reliable than last year’s general election, then, on 5 May, Sadiq Khan will become the capital’s new mayor. Whatever the outcome, Marandi is of the view that the new mayor will need to carefully consider any move to intervene in the property market.

“Foreign investment here in the property market has, in my opinion, been a force for good. The wealthier foreigners that own properties have employed people, spent money in the shops, paid VAT, dine in restaurants. They’re bringing in a lot more money than they are taking away.

“The UK has attracted significant foreign investment. Part of the reason behind the stability of the UK’s economy and the stability of the pound has been a negative trade balance.

“On the other side what has helped to stabilise the currency has been the scale of foreign investment.

“The other side of the coin is that foreigners can always invest elsewhere. They’re not British; London is not their hometown. They can move their money anywhere. They can move it into Switzerland or Dubai or back to South-East Asia who will take their money with open arms. The United States is open for business and one of the most attractive places for foreign investment.

“The point with foreign investment is that it can go anywhere where there’s an attractive environment.”

Stability and security may have contributed as driving forces for foreign investment in London but will the shifting political winds result in a seismic change for the capital if the country decides to leave the EU in June?

For now, he is a sanguine about the prime property market in London.

“In the short term there is a lot of instability in the market and people are afraid of the consequences of potential exit from the EU. In the long term I’m not really honestly sure whether it will make any difference.

“I don’t project a huge growth, but I don’t expect a huge decline for the market either. Unless something disastrous happens the London prime property market is still very attractive for the long-term investor. It’s still London, you know!”

While his investments in London and Switzerland offer a steady and secure return on investment he has turned his attentions to France for a major new project.

New beginnings

In 2014, Marandi purchased a derelict distillery – the Chais Monnet Cellars in Cognac. The plan is to transform the property into an upmarket development featuring a five-star hotel and luxury shops.

“For every investment opportunity you have to put away all the sort of emotions and all the – you have to look at it very logically and what we look for is a stable environment where we can get acceptable return on investment.

“We thought it an extremely attractive proposition because Cognac as a city is obviously known around the world.

A lot of premium brands are based there, including Courvoisier and Hennessy. Tourists visit from all the over the world. And yet there’s not a single five-star hotel either within Cognac itself or anywhere within a two-hour drive.

“We met with the Mayor and the people who live in Cognac and they always say there are a lot of tourists that visit, from countries such as China, and who are very interested in the history and heritage but they never manage to keep them there. They end up staying in Bordeaux.

“We bought the distillery at a very attractive price (said to be £2m), with the condition that we are planning to make a significant investment.

“A 100-room five-star hotel with spa and conferencing facilities which will allow the Cognac houses to hold some of their conferences within the region rather than in other countries and cities.

“I am very hopeful that we’re two years away from the completion of that construction. I’m very hopeful that this will be a very, very positive project both as an investor but also for Cognac itself to attract tourism into that city.

“It’s never been done before. So it’s a pioneering project. That’s the – that’s the sort of – the sexy bit. The element of the unknown is what keeps you awake, in a good way!”

And, of course, there is still plenty of work to be done in Azerbaijan.

“If you’re ready to come into Azerbaijan and invest for the long term, you are going to have an amazing return. This is a country which is still growing, it has needs in many, many sectors such as agriculture and tourism. If you are ready to put in your time and effort and money for the long term you’ll be very successful.”

http://search.knightfrank.co.uk/developments/KRD151390

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Director is the magazine for business leaders. Free to IoD members and available to purchase through subscription, each edition is full of insightful interviews with entrepreneurs and company directors.

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