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Monday, 19 November, 2018

'I want to compete at the highest level and position us at the top'

Amer Abdulaziz talks to Mark Scully about how Phoenix Thoroughbreds works

Amer Abdulaziz: determined to build a global breeding empire
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While 2017 was the year Phoenix Thoroughbreds became imprinted on racing's collective consciousness, extensive groundwork was being undertaken many years earlier.

Amer Abdulaziz has left no stone unturned in setting up the thoroughbred arm of Phoenix Fund Investments and it is hard not to be impressed by the depth of his knowledge and understanding, combined with an insatiable appetite to learn all the time.

The rise of Phoenix Thoroughbreds on the race track has been impressive but as far as the group's CEO is concerned, it is the least they deserve.

"People are envious of us at the moment but considering the sort of money we've invested, I think we deserve it," he says. "There has been $55 million invested by us at the moment, which is a huge amount of money."

Money, of course, is no guarantee of success in this game but when put to good use it has a habit of delivering results and Abdulaziz could never be accused of shirking his homework.

The Phoenix Thoroughbreds fund is registered in Luxembourg and is, according to Abdulaziz, a first of its kind. This meant authorities needed plenty of convincing before stamping it with their seal of approval, something that in fact only came a little earlier this year.

Abdulaziz explains: "The authorities were not aware of how to register a horse fund, so there were a lot of things we had to put together to convince them.

"It was a lot of hassle really but we had to explain that we wanted to register a fund in order to bring people together to invest in horses. They want to know how do you value the assets? How to do you manage the assets? So many things. So our legal team put everything together, our finance team was also very busy and my job was to market the fund and explain to the authorities what we wanted to do."

On why the decision was taken to regulate the fund in Luxembourg, he adds: "The transparency there is 200 per cent. We don't want people to have doubts about us and where our money is coming from. We are a proper set-up and we want to be different. We want to come and play a major role in this industry."

'I wanted to do it big'

Playing such a role takes plenty of cash and this is where things start to reach the eye-watering stage. The fund, which will be liquidated in its fifth year as a second is launched, is worth a staggering $250m and the plan is for future funds to be much bigger.

"I want to give confidence to my investors and I didn't want to just do a small syndication, where I go and bring two or three people in," says the Bahrain-born businessman.

"I wanted to do it big, so instead of investing $5m and managing ten horses, I wanted to have $250m to invest in what I call the full product, from stallions to broodmares to yearlings, to two-year-olds, all under one roof.

"This is the first fund but, of course, the second fund will be a lot bigger. Since we managed to win races, people know who we are now. We have a winning track record and people want to do business with us.

"Because of this, my life has become a lot easier. It's easier to go to potential investors and say 'this is who we are, this is our track record'."

Therein lies one of the problems encountered by Abdulaziz. For all his meticulous planning, he can never guarantee success but he takes comfort from the fact the reality is not all that different from any other investment.

He explains: "You might succeed or you might not succeed - it's like any other business opportunity. Some investors like to take risks, where the higher the investment, the higher the return. Some are very conservative and we have met both.

"Sometimes, with the conservative people, we say 'it's ok, you don't need to put in a lot of money. Just put in half a million, a million and wait and see'. That's what we've managed to do, those small investors are happy, they can see what we're doing and their appetite is increasing."

The business model sets a target of no more than 50 investors worldwide and, thanks to the authorities in Luxembourg, Abdulaziz insists he can have complete faith that the money coming in will not lead to any headaches for him further down the line.

"We are open for people from all over the world if they fit the criteria and meet our compliance procedures," he says. "If somebody wants to come and invest, they have to go through all the compliance issues with all of the authorities and only then will we say to somebody that they tick all the boxes and that we are happy to accept their money.

"I'm very proud of the fund. Nobody had thought of this before, it's a cool idea to bring investors from all over the world to invest in this unique fund. It's a great achievement for us."

Minimise risk

What can those investors and others who join in the future expect? For Abdulaziz, the direction of travel is clear: breeding is the way.

"In any business, you have to have objectives and targets and for us, we want to be one of the leading breeders in the world," he says without a moment's hesitation. "That's my objective.

"If you are managing a fund and promising a return for your clients, you want to minimise your risk and the best way to do that is to have many products under your portfolio. A stallion will give you a good return if you manage him well and he can cover your mistakes on the track. The broodmares are a must because you want to support your stallions with top quality broodmares and be able to flip them from time to time.

"Hopefully, if we reach the number of stallions we want to, we'll have revenue coming in on a quarterly basis, shuttling them between hemispheres. You also have the yearlings and weanlings that you're selling, which creates a cashflow. Flipping the broodmares creates a cashflow and then your two-year-olds start winning, which increases their value. If you get the right offer, you want to sell some of those. It gives you a constant cash flow, that's what we're trying to achieve.

"Advertise, for example, helps minimise risk for us because now we don't have to spend money acquiring a stallion - a stallion has been made within Phoenix by winning a Group 1. Even if he does nothing else now, he's already a stallion prospect, so that's what we'd call an appreciation in your assets

On the big stage: Abdulaziz photographs his daughter with Frankie Dettori

"I want to compete at the highest level, to position us at the top with Coolmore, Darley, Juddmonte. That is the model we look at, we see their success, study them and try to copy their strengths, while avoiding their mistakes."

What mistakes does Abdulaziz believe he has made so far?

"In any organisation, we all make mistakes," he reflects. "Hiring the right people is the most important thing. Sometimes, you might hire people thinking they are the best but then you get disappointed with them and they would be the biggest mistakes we have made so far.

"At the moment though, we have a strong team with amazing experience."

Earlier this week, Abdulaziz posed for pictures beneath a giant picture of Advertise back where he purchased him, at the Goffs UK sales ring. Given the scale of their ambition, it is hard to imagine that being the last time the white and orange will loom large over the industry.


Read the first part of our interview with Amer Abdulaziz:

'I'm passionate about racing. Horses have never disappointed me, people have'

 

We don't want people to have doubts about us and where our money is coming from. We want to play a major role in this industry
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