Presentation on 'Developing Investment Potential in the Halal Sector' at the World Halal Forum Europe, Nov, 2010, London, UK

1. Developing Investment Potential
in the Halal Sector
Presented at:
Nov 10th 2010
London, UK
By: Rafi-uddin Shikoh
E: rafishikoh@dinarstandard.com
W: advisory.dinarstandard.com
Growth Strategies for Emerging Muslim Markets

2. First…lets define the ‘Halal Sector’
Most comprehensively, the Business of Halal is Muslim Lifestyle driven
The large and demographically This lifestyle translates to unique …whose appeal
attractive Muslim consumer Muslim consumer opportunities transcends the Muslim -
lifestyle, at varying degrees, is and supporting B2B infrastructure -based on shared values
driven by faith-based values
God consciousness
Family values
Modesty
Dietary law/ healthy
Just and equitable
financing
Just business
Charity
Social
responsibility Business to Business Infrastructure
Logistics - Infrastructure - Reach (Media)
Developing Investment Potential in the Halal Sector © DinarStandard 2010 2

3. Large gap in ‘Halal’ market potential vs. brands/suppliers
Within the existing market opportunities, SME’s form a large part of this space
1.8 bill
Halal market consumer reach
Muslim Gap
Number of Companies/ Organizations
OIC* major players
Multi-Nationals
Small and Gap
Mid-Sized businesses
Industry Orgs
$ 2 trillion +
Government
(min market size)
Halal market $ size realized
Developing Investment Potential in the Halal Sector © DinarStandard 2010 3

4. Focusing on developing SME Investments
Halal Sector SME’s/ private companies offer the greatest opportunities
Because, SME’s are…
• engines of economic growth; a
Halal market consumer reach
big part of this emerging market
• highly fragmented/ inefficient
(e.g. UK est. $ 4 billion in Halal
food market ; France $7.5 billion
– how many $100+ mill pure
plays? None)
• high energy/ committed
OIC* major players • Innovative and creativity
Small and Multi-Nationals
Mid-Sized
Industry Orgs
businesses
Government
Halal market $ size realized
Developing Investment Potential in the Halal Sector © DinarStandard 2010 4

5. Levels of Investment Opportunity
SME’s are not on the public markets; private financing means will help migrate
CAPITAL MARKETS OR
RETAIL INVESTMENTS
Migrate
For-- Institutional and SME’s to
individual investors – Capital
markets
SME Focus
Approx. 90% of base projected
Halal market not on the Public
markets
(Rushdi Siddiqui, Thomson Reuters– MERGERS/
Islamic Finance Global Head,
ACQUISITIONS, AND
estimates $99 bill in market
capitalization from OIC food
companies . Compared to the global CORPORATE
Halal food est. potential of $640 INVESTMENTS
billion annually) ANGEL/VC
For--Halal Sector
Where’s the rest?.. companies (OIC and multi- For--or other such
nationals) for growth & investments in individual
MNC’s and within the SME’s entities
(specially in Western markets)
expansion and Private
Equity firms
Developing Investment Potential in the Halal Sector © DinarStandard 2010 5

6. Halal Lifestyle Sector - SME Investment Examples
A few transactions are taking place – but still very much rare
Mergers/ Acquisitions:
• AlIslami could sell up to a 30% stake in Al Islami to drive its international growth. Had
already acquired halal fast food chain Al Farooj Fresh *
• Canada based Premium Brands Holding Corporation’s USD 2.1m acquisition of the
Vancouver-based halal meat distributor South Seas Meats
Corporate Investments:
• “GHANIM International Food Corporation Sdn Bhd, which manages and markets “Brunei
Halal Brand” is in negotiations to buy shares in one ofthe largest distribution networks
based in United Kingdom and Europe.”**
Angel/VC:
• Saffron Road (American Halal Company) US based premium organic Halal packaged food
brand
• Muxlim: largest Muslim lifestyle online network attracting European investors
* Megamarket 27 Oct, 2010
** Brunei fm, March 4th 2010
Developing Investment Potential in the Halal Sector © DinarStandard 2010 6

7. Saffron Road: Halal Lifestyle Sector SME Case Study
A rough road to investment for an early hit in the Halal Sector
• US - premium and organic Halal food line by a food industry
and investment veteran, Mr. Adnan Durrani.
• Distributed across “Whole Foods Markets” in US, the largest
organic products supermarket chain. “Historical launch.”
• Mr. Adnan Durrani , built:
• Crystal Rock (2nd largest bottled water co. in NE - US),
• Built Stonyfield Farms, Inc from $25 mill to $75 mill
and sale to Danone. Today at $300 mill in rev.
• Principal of Delicious Brands Inc – build it to 5th largest cookie brand in the U.S.
Investment: Challenges: Opportunities:
• 2009 – targeted $5 million • First went for Islamic • Two key food segments:
raise; was oversubscribed Capital – very disappointed High-end premium brands
and closed at above target. • Islamic capital investors building and Logistics and
• Investors: 60% Swiss/ 40% US were seeking quick return, management.
• More capital raise no investment in brand, • Food industry is very
anticipated 2012 ($10-20 apathy toward Ummah. attractive.
mill) Ended up with success with • Current quality is low. Eg in
non-Muslim traditional UK. Focus on shelf-life and
food industry investors. freshness needed
Developing Investment Potential in the Halal Sector © DinarStandard 2010 7

8. The 99: Halal Lifestyle Sector SME Case Study
A successful investment pitch of an offering with global positioning
• Comic book series and superhero brands based on
Islamic culture and traditions
• Creation of Dr. Naif Al-Mutawa, founder and C.E.O.
of Teshkeel Media Group and a team of comic book
industry veterans from Marvel and DC Comics.
• Licensing deals with e.g. Nestle and theme parks and
merchandise.
• Launching an animation series, with global market
launch including U.S.
Investment: Challenges: Opportunities:
• Vision round: $1 million from • Local market acceptance / • To make and market
classmates from Columbia religious rulings products that apply to and
University • Had to see it as a global have a global appeal and not
• Total of $40 million raised product, one that has just limited to Muslims.
thus far. ‘Muslims’ as one of its
• Expecting in a few week audience. No overt Islamic
closing of 3rd round of mention of identity.
double-digit million dollar 3rd
round.
Developing Investment Potential in the Halal Sector © DinarStandard 2010 8

9. Investors to-do: A few key lessons
Halal sector companies are worth taking a good look, but with a long-term view
• Islamic capital needs to look at key ‘Halal’ sectors, especially food and media.
• Needs long-term (5-10yr) investment horizon to build sustainable brands (5x-
15x returns/ 25-50% IRR in food industry)
• Investors need to do homework and due diligence (visit plants/ operations) and
have industry specialist on team.
DinarStandard consultancy is to launch a Emerging Muslim markets corporate
database for investment community & marketers - God willing - May 2011
Developing Investment Potential in the Halal Sector © DinarStandard 2010 9

10. SME’s to-do: A few key lessons
Strong management, sustainable branding focus and quality are key
• Look at having great management team to be attractive to investors
• Build sustainable brands (rather than private-label) strategy
• Pursue global positioning within Halal values system. Makes the market size
larger and attractive for investors.
• Focus on quality.
• Innovate with a global halal view: solve the problems of the world
Developing Investment Potential in the Halal Sector © DinarStandard 2010 10

11. Values driven global business opportunities for SME’s
Expanding the perspective - variety of profitable sectors exist with social impact
Financial Hunger Climate Ignorance Health Management
CRISIS
• Collapse of major Wall • Increased food prices in • Global carbon emissions • One in five children in • 14 million people in • Inaccurate financial
Street institutions leading 2007/ 2008 has increased rose 3 percent last year. developing countries does developing countries die reporting; executive pay
to a worldwide recession. malnourished people Could result in large-scale not complete five years of from infectious diseases. excesses; bribery; labor/
worldwide by 119 million. melting of glaciers. With a basic education; one Mostly due to expensive employee abuse. Enron,
Total to nearly one billion dangerous rise in sea billion illiterate adults. medicines. No Insurance. Tyco, WorldCom,
people . – Oxfam level. - NowPublic – PBS, Wide Angle - Oxfam Satyam scandals.
Islamic Finance
• Sector investment focus • Sector investment focus • Sector investment focus • Sector investment focus • Management practices
• Unprecedented
Sustainable Tech. Education sector Healthcare sector Management
OPPORTUNITY
Opportunity to take Agriculture
global leadership
sector Leadership Leadership Leadership Leadership
• A new guide to the Leadership • Renewable energy • World-class education/ • Healthcare management • Lead by example with
Global Finance initiatives – solar; wind research institutes development ethically conscious
industry • Egypt, Bangladesh, power, other. • Thought leadership • Medical research management practices
Pakistan, Sudan, leadership
• Take ownership of Nigeria - are some of
real-economy sectors the most agriculturally
with biggest human endowed in the world
development impact. however with dismally
low productivity.
*Based on DinarStandard analysis © DinarStandard 2010 11

12. How Industry bodies can nurture Investment Potential
Collective industry initiative on a broader concept of Halal brand development
Industry Bodies
• Visionary leadership
• Support enforcement of
standardizations and quality
benchmarks
• Build the ‘Halal’ reputation. Drive a
common Halal lifestyle campaign
backed by the industry. Eg Milk
Industry in the US
Got Halal?
Developing Investment Potential in the Halal Sector © DinarStandard 2010 12

13. Conclusion: Developing Investment Potential
Envisioned Future: Investors
A global
Halal Lifestyle
Sector
• Needs real leadership
• True opportunity to
Innovate
• Not tentative; Not
tactical; not siloed
• Else, risks failing in
realizing true potential
• Biggest risk of all is to Industry SME’s
our collective reputation
and divine
accountability
Developing Investment Potential in the Halal Sector © DinarStandard 2010 13

14. Growth Strategies for Emerging Muslim Markets
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CONTACT:
Rafi-uddin Shikoh
Managing Director
DinarStandard
80 Broad Street, 5th Floor,
New York City, NY 10004, USA
T: 1-347-624-7454
F: 1-201-526-8404
E: rafishikoh@dinarstandard.com
W: advisory.dinarstandard.com
© DinarStandard 2010 14