Financier entrusted with Middle East billions eyes comeback

Financier entrusted with Middle East billions eyes comeback

THE INDIAN-BORN financier who helped open the floodgates to Middle Eastern wealth for Masayoshi Son’s $100-billion Vision Fund is attempting his second act. This time, he’s going solo.

At SoftBank Group Corp.’s splashy tech vehicle, Rajeev Misra helped secure commitments worth $45 billion from Saudi Arabia’s Public Investment Fund (PIF) and $15 billion from Abu Dhabi’s Mubadala Investment Co. Investments in high-flying startups ensued — Uber Technologies, Inc. and WeWork, Inc. among them — but many bets blew up as markets turned. Misra largely stepped back from that venture in 2022 after a tenure marred by internal clashes and investment writedowns.

Undeterred by those losses, Mr. Misra’s now attempting a comeback — this time in credit. He’s even leaning on the same Middle Eastern network to raise money. It’s a gamble that has shades of the kind of chutzpah he and Son displayed last time round, though Mr. Misra now says he’s determined to do better after watching the investment mistakes made in the aftermath of SoftBank’s scramble to hire people.

“I have learned my lessons,” Mr. Misra, 62, said in an interview with Bloomberg News. He’s already raised $6.8 billion for his One Investment Management (OneIM) from backers including Mubadala and Sheikh Tahnoon bin Zayed Al Nahyan’s Royal Group. Mr. Misra is seeking to boost the size of the fund to more than $10 billion, and hopes to get Saudi Arabia to invest as well.

While he’s vowing to deploy clients’ cash with a dose of caution, it’s an endeavor that will come with its own set of risks, particularly given his past history with Middle Eastern money. A global economy slammed by two wars and other geopolitical upheaval could once again bring market turbulence. And even Mr. Misra acknowledges there are limits to the region’s largess. “Endless well, bottomless pit? There is no such thing,” he said. “If you lose money, that pit is closed.”

Regardless of whether Mr. Misra succeeds or fails, it’s undeniable that he’s a rare outsider to be entrusted with the Middle East’s billions, reflecting astute maneuvering and an ability to maintain key relationships despite the blow-ups at the Vision Fund. He also stands out as one of few investors who’ve deftly sidestepped the economic rivalry between the United Arab Emirates and Saudi Arabia, drawing money from both sides.

The clearest sign of his relationship with Abu Dhabi’s ruling family is his UAE passport — one of the world’s most powerful travel documents and handed out to a very select group of foreigners. Mr. Misra travels to the region at least six times a year, staying at the swanky Four Seasons Hotel in Abu Dhabi and, in Riyadh, at the Ritz-Carlton — the site of Crown Prince Mohammed bin Salman’s 2017 crackdown.

Home to sovereign wealth funds that control over $4 trillion in assets, the Middle East is central to Mr. Misra’s plans. Five of the ten most active state-backed entities in 2023 were from the Gulf, even as global peers pulled back — the PIF alone spent $31.6 billion.

During the down years of Vision Fund, Mr. Misra kept in touch with its Middle Eastern backers and, over in-person meetings, appraised them about the status of investments. This, along with efforts to maximize their returns, helped him to retain their trust even when many bets by Vision Fund soured.

The Vision Fund was unveiled shortly after SoftBank’s Mr. Son had pulled off what was until then his biggest bet — the $32-billion acquisition of chipmaker ARM Holdings Plc.

“Masayoshi Son told me, ‘Rajeev, the next revolution is coming, AI. I need to invest, and we need to raise money,’” Misra said. That conversation, in mid-2016, was mere months before the Vision Fund launched.

The financier’s relationship with the Japanese executive dates back to the early 2000s. At Deutsche Bank AG, he helped Son finance the largest leveraged buyout in Asia at the time — the 2006 purchase of Vodafone Group Plc’s Japanese wireless business. At SoftBank, Mr. Misra was the architect of a loan package that helped Sprint Corp. — the US carrier Mr. Son acquired in 2012 — stave off bankruptcy.

Those deals earned Mr. Son’s trust, propelling Mr. Misra to the top echelons of SoftBank and placing him at the heart of Vision Fund’s origin story. “We put together a small presentation, and went to Qatar, Abu Dhabi and Saudi Arabia,” he recounts.

“We’ve never managed any money, we don’t have any people and he wanted to raise $100 billion,” Mr. Misra said.

The PIF committed $45 billion over the course of a 45-minute meeting — attended by the crown prince and set up by the fund’s Governor Yasir Al Rumayyan. Abu Dhabi came in with a $15 billion pledge of its own.

“Then we scrambled to hire people ,” Misra said. The investment decisions that followed culminated in a markdown of more than $16 billion for the first Vision Fund in the year to March 2023.

The fund has now returned almost 70% of the money raised to investors and even at a conservative valuation, is worth 1.2 times the capital raised, according to data provided by SoftBank. A similar investment in the S&P 500 Index would have doubled in value during the period.

Mr. Misra says he no longer has an active role in the Vision Fund, though he’s still on the investment committee. He’s also involved in employee compensation and in ensuring maximum returns for the fund’s limited partners, the largest being PIF and Mubadala. He considers his stint the best education he could have received in investing.

He says he’s still close with Son, but acknowledges they met just twice last year and mostly catch up on the phone.

Part of the reason for his decision to step back from the Japanese vehicle, Misra says, was to avoid a conflict of interest as he started to chart out his next act. The new venture will deploy capital across asset classes amid turmoil in markets around the world, focusing on credit — an asset manager that goes beyond investing in the technology sector. 

Mr. Misra was born in 1962 in the Indian city of Jamshedpur, named for the founder of Tata Group, where his father worked at the time. He studied at the prestigious Indian Institute of Technology in Delhi before transferring to the University of Pennsylvania. From there, armed with an MBA from MIT’s Sloan School of Management, he embarked on a career that took him from Merrill Lynch and Deutsche Bank to UBS — and briefly Fortress Investment Group, which was acquired by SoftBank.

He still spends a few weeks every year in his sprawling villa on a four-acre plot close to the heart of New Delhi — a city where his family was once forced to rent a single room on a rooftop amid a cash crunch after his father unexpectedly died of a cardiac arrest.

Mr. Misra started to build his Middle Eastern connections in 2013, sensing an opportunity in a pocket of wealth that was a black box to many investors. Gulf state-backed funds didn’t have a major foreign presence at the time.

He quickly understood the importance of face time with the key people to get access to the large checks, and started to make frequent trips to the region. Over time, he’s strung together a Rolodex that includes the PIF’s Rumayyan, with whom he’s often spotted at the kingdom’s annual flagship Future Investment Initiative.

In Abu Dhabi, Misra works closely with the inner circle of Sheikh Tahnoon, who’s at the helm of a $1.5-trillion empire. His key contacts in the UAE capital include Syed Basar Shueb, chief executive officer of the $246-billion International Holding Co; Sofia Lasky, a prominent executive who sits on the boards of multiple local companies; and Peng Xiao, CEO of G42 — a firm that’s at the heart of Sheikh Tahnoon’s push into AI.

At his new fund, Mr. Misra is eyeing returns of 20%, acknowledging the days of 30% returns on large pools of capital may be over. He believes credit has at least another year to play out and may look to foray into private equity after that, pledging  to take fewer risks this time around. That’s a break from the past when the Vision Fund injected billions into a range of startups at soaring valuations and shook up the venture capital industry.

OneIM is low key by those standards. A website set up recently has few details on operations or investments. Mr. Misra plans to keep it that way, while his handpicked team of 25 investment professionals — led by trusted long-time lieutenants Munish Varma and Yanni Pipilis, both of whom worked with him at Deutsche Bank and Vision Fund — scour for opportunities primarily in US and Europe.

Last year, it provided loans to WeWork, according to securities filings by the now-bankrupt office company. It’s also supported Apollo Global Management, Inc.’s leveraged buyout of Wagamama owner The Restaurant Group Plc, Bloomberg News reported this month.

In another departure from what he’s described as a chaotic approach at his previous job, OneIM has invested only $1 billion of the $7 billion it’s raised so far, Mr. Misra said. Once alliances, platforms, and a bigger team are in place, deploying capital faster is going to be easy, he said. “You can’t force me to deploy faster unless odds are in my favor.”

When asked about his career trajectory and what the future may hold, Misra quotes from an astrologer that his family has consulted for decades.

“It will go upwards and upwards,” he says with a smile. — Bloomberg