In Jordan, a certain transportation logistics company is thriving. What’s more, Nafith logistics is headed by a woman, unusual in a conservative country and region where female employment figures are very low and women do not often rise to executive jobs. Operating in Jordan and southern Iraq and launching shortly in Oman, the 340-employee company manages freight-carrying trucks at ports and border crossings and is seeking to expand into more countries.
Nafith Logistics and its leadership are sources of pride for Leith Masri, JD/MBA ’99, founder and partner of Jordan-based private equity firm Foursan Group, the largest shareholder in the company. “Female empowerment and advancement are very important to us,” says Masri, adding that hiring women not only offers them economic opportunity but also positively impacts Jordan’s economic growth rates and traditional workplace culture in which women’s participation hovers at a rate in only the mid-teens.
Foursan’s reach extends far beyond Jordan. Because most of the areas the firm targets, including Palestine, Iraq, Egypt, Lebanon, and northern Africa, are relatively poor, “almost by definition much of the work we do has an impact angle to it,” says Masri.
“Our view has always been to positively impact our communities and that private equity alongside venture capital is the way to build and support businesses.”
– Leith Masri, JD/MBA ’99, Founder, Foursan Group
“One of his biggest accomplishments is the creation of a lot of jobs,” says Mutaz Nabulsi, chief executive of Estarta Solutions, a 700-employee information technology firm of which Masri is chairman. “That’s something he’s very proud of, along with the fact that Estarta’s female participation rate has remained in the mid-40 percent range since the beginning of the company’s partnership 15 years ago with Cisco Systems.”
Launched in 2003 as Jordan’s first private equity fund, Foursan has allowed Masri to invest close to home. Born in Lebanon to a Palestinian father and an American mother, Masri figured that he would return to the Middle East after graduating from Stanford Law. While studying, Masri lived in Palo Alto and in San Francisco, immersing himself in business and law classes and surrounding himself with friends bitten by the dot-com bug. But his own professional interests lay in finance, having worked as an analyst for two years at New York private equity firm Blackstone prior to coming to Stanford. Private equity appealed to Masri over other branches of
finance such as mergers advisory and restructuring.
“You’re getting your hands into companies, not just pitching for business and making presentations,” he says. Working at Blackstone was “a big eye-opener, seeing what a small group of people could do leveraging into their portfolio companies, and all the lives those portfolio companies touched.”
Masri says that he never intended to pursue a legal career but craved the intellectual stimulation of studying law. Besides taking the core courses in contracts and corporations, he signed up for electives in arts law and venture capital law as well as one comparing the U.S. and United Kingdom legal systems. Today he cites professors John Henry Merryman, and Mark Kelman as particularly inspirational.
Despite Masri’s plans for a business career, his studies at Stanford Law turned out to have practical value. Foursan in its early years didn’t have an in-house attorney, and Masri found a shortage of legal expertise in private equity and venture capital among local providers. His solution: Do it yourself.
“I remember very clearly dusting off that folder from the VC law class and putting it to work,” he says, first to write term sheets and later shareholder agreements, articles of incorporation, and other corporate governance documents. Masri and his Foursan colleagues also led the drafting of new laws in Jordan that allowed the creation of numerous new corporate instruments, such as employee stock options, preferred shares, and convertible debt and opened the door to international investors including Microsoft and Cisco Systems, which both invested in Jordan shortly after the introduction of the law. “All that background was critical to the challenges being faced.”
Today, Foursan’s investors are largely institutions aimed at achieving financial returns coupled with spurring economic development, such as the International Finance Corporation arm of the World Bank. Over the years, Foursan has managed multiple funds and invested in numerous companies in industries ranging from education and pharmaceuticals to financial services, aviation, and renewable energy. To evaluate potential investments, Foursan uses both traditional financial criteria and social criteria: It wants to support companies that aim to expand and create jobs. “Our view has always been to positively impact our communities and that private equity alongside venture capital is the way to build and support businesses,” says Masri.
Throughout, though, doing business in the Middle East has been difficult. “Every time we launch a fund, there’s a new crisis in the region,” Masri says. Foursan launched its first fund during the Iraq War, while its second coincided with the 2008 global financial crisis and early days of the Arab Spring. More recently, Foursan’s latest fund has operated during the Syrian War and humanitarian crises in the Middle East.
To manage during crises, Foursan often utilizes co-investors. Investing in Nafith Logistics, for instance, Foursan partnered with the International Finance Corporation in part for its experience in logistics and its ability to provide geopolitical support. When an outside entity tried to illegally encroach on Nafith’s activities, the IFC went to the Iraqi minister of economy to resolve the matter. Foursan also seeks highly resilient companies that are always ready with a “Plan B,” Masri says. When some regions were closed off to Nafith for security reasons, the company shifted its business to other geographic areas to keep operating.
Despite the geopolitical backdrops, says Masri, the firm has achieved a successful investing record with a gross realized internal rate of return of 23 percent and equity multiple of 2.8 on exited transactions since Foursan’s inception.
Leith is “always able to see the big picture,” says Nashat Masri, Foursan’s co-founder and Masri’s distant cousin. “He brings comfort in his ability to deal with the complexities of doing business” in the region.
With all the hurdles, why did Leith Masri leave what would have been a comfortable life working in private equity in the U.S.? Masri was determined to invest where it matters most to him—in his home region. “The Middle East has a lot of economic and political problems and it unfortunately has not had enough success,” Masri says. Achieving success, in financial and human terms, is “absolutely our goal with the companies and people we invest in.”
Louise Lee was a staff writer for The Wall Street Journal and is now a freelance writer and frequent contributor to the WSJ and the GSB’s Stanford Business magazine.