From Humble Beginnings, Suhail Bahwan Became A Billionaire In Oman

Muscat, Sultanate of Oman - 11 April, 2016.

At 78, Suhail Bahwan is no longer the young merchant who once captained a wooden dhow on the Indian Ocean; nor is he the fledgling entrepreneur who once hawked fishing nets in Muscat's Muttrah Souq in Oman.

So last year, the chairman of Suhail Bahwan Group turned to his daughter Amal Bahwan, ceding to her much of the responsibility for managing the operations of an enterprise that generated 3.77 billion in revenue in 2016. It is one of the largest privately-owned companies in the sultanate of Oman (population: 5 million), with interests in fertilizers, oil and gas services, and car dealerships, among other sectors.

One could forgive Bahwan for wanting to step back and enjoy the rewards of a hard-earned fortune Forbes Middle East estimates at 3.86 billion. These days he splits his time between Oman, Saudi Arabia and Europe, traveling around in his Gulfstream jet.

He regularly checks in with his daughter, whom he entrusted to tell the family's story. "He likes to know everything," says Amal Bahwan, who's 45. From the windows of her elegantly furnished office in Muscat, her father's massive white stone villa is visible, perched on a hill overlooking the capital's modern Qurum district, its silhouette framed by the blue waters of the Gulf of Oman. "I learned everything from him," she says. "That's why today I am in business."

At heart is the story of a father-daughter relationship, played against the backdrop of a conservative society. She is Bahwan's sixth child out of a brood of 15. Amal's brothers Ahmed, Omar, Othman and Saad have senior managing roles in the group, but Suhail Bahwan had a soft spot for his second eldest daughter. "I was the closest daughter or member from the family," says Amal. "The family knows it."

She rose within the company at a time of discord between Bahwan and his one-time partner, his late brother Saud, to help modernize the family business and steer it from a licensed distributor for more than 500 foreign companies to a major producer of fertilizers and chemicals. Fertilizers are the group's biggest earners today.

The company has a plant in Oman producing roughly 1.3 million metric tons annually of urea, the raw material used to make fertilizer, feedstock and adhesives. Competing with Chinese producers, it exports fertilizer to the U.S., Latin America, Australia, Thailand, India and South Africa. In Algeria, the group has another urea plant on the verge of completion, developed through a joint venture with the state-owned oil company Sonatrach. (By comparison, OCI, run by Egyptian billionaire Nassef Sawiris, is capable of producing 3.2 million metric tons of urea per year.)

The growth of Bahwan's fertilizer business-encouraged by lower gas prices (natural gas is used to produce urea), comes as Oman's ruler Sultan Qaboos is attempting to diversify the economy by reducing its dependence on oil, like the rest of the Gulf countries. Austerity measures will most likely include cuts in government-funded projects, which could hurt the group's engineering and construction segments.

But, Oman is also embracing a privatization strategy that presents new opportunities. Amal Bahwan sees health-care as an area where the company can benefit. Bahwan re-cently signed a joint venture with a Portuguese firm to build a private hospital in Muscat.

The group's diverse assets can also serve as a buffer against the uncertain economic climate. "Some of the group's organizations will grow, others may prove resilient, and still others will likely take a hit from lower spending," says Robert Mogielnicki, an analyst at Oxford Strategic Consulting, which focuses on Gulf countries.

As Suhail Bahwan entrusts his legacy to the next generation, the business is far removed from its humble beginnings. But, everywhere there are small reminders of the past. In his private sitting room at the company's headquarters, antique muskets and oil paintings of dhows adorn the walls. On a table next to his reading chair is another relic: a small, aging photograph of Bahwan standing shoulder-to-shoulder with his younger brother Saud.

It's a snapshot of simpler times.

Bahwan was born in Sur, a small seaport along a barren stretch of coast one hundred miles southeast of Muscat. It's near where the Strait of Hormuz widens into the Indian Ocean, which made it for centuries a convenient waypoint for ships sailing between India, Iraq, Zanzibar and beyond.

Bahwan was born into a large family, so large that Amal Bahwan isn't sure how many aunts and uncles she has. He and Saud accompanied their father on sailing trips to sell dried dates and fish in exchange for rice, sugar and other sundries.

Bahwan attended primary school in India, but dropped out after sixth grade. His father put him in charge of a dhow. On voyages, he haggled with merchants from different corners of the world, picking up early lessons in spotting good deals.

By then, Sur was in the twilight of its golden days as a transportation hub. The world was changing. The Suez Canal, opened in 1869, upended traditional trade routes and modern, faster ships were making dhow traders largely obsolete.

Bahwan never made much money as a trader in Sur, but he was creative. "Business was in his blood," says his daughter. He took loans from Indian merchants, which he used to buy gold that he would then sell in Oman. Still, after paying back lenders, profit margins were slim. By the 1960s, he often made the sea voyage from Sur to Muscat, where there were more opportunities to sell his wares. In 1965, Bahwan and his brother decided to move to the capital permanently. They opened a shop in the labyrinthine Muttrah Souq, selling fishing nets and later building materials and tools.

Muscat was a world away from tiny Sur, but it was still a sleepy seaport. Oman was then ruled by Sultan Qaboos' father, Said bin Taimur, who actively shunned modernization. The country was isolated, practically unchanged from centuries prior.

The brothers immersed themselves in Muscat's small business community. Suhail Bahwan would drop by fellow shop owners and businesses around town, introducing himself and trying to sniff out opportunities. He attended social gatherings and befriended government officials, building a list of contacts. His efforts would serve him well.

Not content with fishing nets, the Bahwans were eager to obtain foreign licenses. It was with Japanese watchmaker Seiko that they scored their first major license in 1968, followed by electronics maker Toshiba. Amal Bahwan doesn't recall exactly how the Bahwans connected with the Japanese companies, but it was good timing.

In 1970, Sultan Qaboos ousted his father in a coup. Once in power, the new ruler opened Oman to the outside world, initiating a program of modernization and economic liberalization, which created demand for consumer goods and industrial projects.

Another Japanese company, Toyota, was looking for partners in the Gulf, an opportunity too good to pass up for the brothers. They were not the only ones competing for the tender. To the north, in the recently established United Arab Emirates, the old merchant family of Al Futtaim was bidding for the contract not only in their country, but in Oman as well.

To win the bid, the Bahwans had to show they had the money to invest in a Toyota dealership. In 1974, they partnered with an Omani businessman, Omar Zawawi, to create Amiantit Oman, a pipe manufacturing company. Within a year, they were able to generate enough revenue to raise the necessary capital.

Still, Al Futtaim was the favorite until Sultan Qaboos intervened. The ruler wanted an Omani company to operate Toyota in his country.

That royal intervention helped seal the deal. The Bahwans got the coveted license in 1975. That year ships began offloading brand new Toyotas on the quays of Muscat. Within three years, the carmaker would become the automotive market leader in Oman. The Bahwan brothers had wind in their sails.

Over the next decade, they secured a variety of licenses from foreign companies, including Ford and equipment manufacturers Komatsu, Kubota and Bomag. They set up a travel agency, netting deals with Thai Airways, Pan Am and Air France, and started a car rental company. In 1977, they began working on infrastructure projects in construction and oil and gas. In 1984, they bought a firm that developed desalination and power plants across Oman.

By the late 1980s, the company had grown to more than 4,000 employees. It had interests in telecommunications, shipping and logistics, electronics, foods and more.

As a child, Amal Bahwan tagged along with her father at work. She would sit on the floor near his desk, playing with toys as her father took calls and met with company executives. "I am the only girl who came to the office with father," she says.

Her father and uncle were by that time already operating largely independent of one another. Her father devoted his time to the group's newer segments, such as construction and engineering, while her uncle was primarily focused on the car segment. At the end of the year, they divided the profits.

Trouble was brewing. She won't divulge the exact cause, but in 1990 a disagreement broke out between her father and uncle. Like all siblings they clashed, but the wounds from this one festered. While Bahwan grew apart from Saud, his daughter embarked on a path to join him.

Amal Bahwan graduated from Sultan Qaboos University in 1993 with a degree in education. Her family wanted her to become a teacher; she wanted to study abroad. Her mother, a conservative woman, forbade it. She notes ruefully that her younger siblings were even-tually allowed abroad. She worked briefly as a secondary school teacher in Muscat, but quickly grew bored. In 1995, she took a job training students for a government-run vocational program. She worked there for two years before returning to Sultan Qaboos University to earn a master's degree in administration.

After graduating, she decided to join the family business in 1998, first working in the services department. She didn't have a title or a salary.

The company was in disarray. In addition to the family dispute, the group was an organizational mess. The finance and human resources departments were poorly run. There was also little corporate oversight. The general managers of each segment answered to either Suhail or Saud Bahwan, but beyond that had broad autonomy.

Amal Bahwan began auditing divisions, introduced a computerized HR system and established standard company policies. Impressed, her father gradually gave her more authority and eventually a salary, after realizing he had neglected to compensate her for two years.

Bahwan was laying the groundwork for a chemical and fertilizer business, which materialized in 2000, when he opened a sulphuric acid production plant in the port city of Sohar. "He'd had enough of trading," says Amal Bahwan. And, the margins were better.

Growth had been stagnant since 1990, a direct result of the spat between the brothers, who had once been like twins. It was hard to sign new contracts when doing so required the signature of both men and they weren't cooperating.

By 2002, they were fed up. Saud Bahwan picked up the phone and called his brother. They agreed to part ways. The price for ending it was Toyota. "We had to move forward," she says.

The newly-formed Saud Bahwan Group took Toyota, while the Suhail Bahwan Group kept the original Seiko and Toshiba licenses, among other businesses; it would later win the right to distribute Nissan and BMW cars.

Saud Bahwan passed away in 2008 at the age of 68. His son Mohammed, who's worth an estimated 0.94 billion, now runs the company. In a statement to Forbes Middle East, the Saud Bahwan Group says "the family remains very close-knit."

Suhail Bahwan's urea plant was an expensive venture. It took years to secure permits from the government and negotiate favorable rates for natural gas. He financed the 1.22 billion project with a loan from the Japan Bank for International Cooperation and contracted Mitsubishi Heavy Industries to build the plant. It became operational in 2009. He targeted Qatar as his next location, but unfavorable natural gas rates squashed the project.

Bahwan settled on Algeria, where a partnership with Sonatrach made it easier to access natural gas at an affordable rate. Suhail Bahwan Group owns 51% of the venture. He finalized the deal in 2008, but the project was beset with delays, as the country grappled with instability. Nine years on, the Algerian plant is finally nearing completion.

While her father focused his energies on fertilizers, Amal Bahwan continued tinkering with the company's organization. Proving a knack for administration, she helped consolidate the group's divisions. As her authority grew, she ran at times afoul of senior executives.

She remembers being called into her father's office one day. He angrily read off a list of complaints against her. One of her brothers was present in the room, so she sat quietly stewing, until he left. She then let loose. "I shouted back," she says.

That's a privilege she's earned.