TMT talent pool

Delta Partners is a professional services company whose rise to prominence mirrors the evolution of the telecom sector as it has occurred in and from Dubai over the past five years. Having completed its start-up phase with the establishment of three distinct yet related TMT-focussed business lines – management consultancy, corporate finance and investments – Delta Partners’ group managing director Victor Font, details the next phase of the company’s progress

Victor Font, Delta Partners’ managing partner says that reverse innovation is seeing companies in emerging markets starting to export their practices and ideas to more developed markets

Delta Partners’ culture is inextricably linked to Dubai, the city in which a group of senior former Oliver Wyman management consultants decided to establish a business of their own, focussed on the telecom sector, and extended to incorporate corporate finance and investment opportunities alongside management consultancy. The company was established in Dubai in the second half of 2006, and has grown rapidly since, currently encompassing four additional offices (Barcelona, Johannesburg, Singapore, and Bahrain), with the headquarters remaining in Dubai.

And like Dubai, and economies and corporates around the world, Delta Partners also had to weather the global financial crisis that began in 2008, believing the downturn in fact reinforced its underlying ambition of becoming the leading niche TMT advisory and investment company in emerging markets.

“It [the professional services market] has certainly become increasingly competitive in the last two or three years,” confirms Font. “[However], relatively speaking we have been doing very well because the type of approach we have to advice is quite different to that of the traditional management firms. Our human capital and the scope of its knowledge and experience is what sets us apart.”

According to Font, the main challenge facing telecom operators across emerging markets has not been in the area of generating ideas to sustain their businesses; rather it has been in the execution of those ideas, and the acquisition of the human capital with the execution capabilities to implement such as ideas.

With over 150 professionals, two-thirds of whom are involved in the management consultancy side of the business, Font believes Delta Partners offers a depth of knowledge that matches if not exceeds many of the larger, more established management consultancy firms operating in emerging markets today. Add to this the company’s incorporation of corporate finance and investment activities, and the differentiated proposition the firm brings to the table becomes self-evident.

“In order to translate our concepts and vision to be the hub for know-how, capital, and people in telecom in emerging markets into businesses and services, we have a management consulting practice, which is differentiated from other consultancies because of the type of people that belong to Delta Partners,” Font says. “Investment and corporate finance are skill sets that are made available to our management consulting clients, so what we have on order is a much wider and deeper proposition beyond advice.”

Font accepts that as the company has gone about establishing its brand and reputation since 2006, it was initially more difficult for Delta Partners to start relationships with prospective clients because the firm was an unknown quantity at the time, and lacked the long-established brands of some of its competitors. However, Font says once his company has been given an opportunity to forge a relationship it often turns into a long lasting and trusting partnership.

Thus the unique opportunity to build a platform that becomes a hub for know-how, capital and people, connecting the West with the East, North with South, capital availability with places that require capital, focussed on the telecom sector in emerging markets, is a proposition that has been gaining a growing number of converts.

Early in its development Delta Partners took its first step away from traditional management consulting activities by establishing a U$75 million private equity telecom investment fund, which closed in April 2007 and was fully invested by March 2010. The fund is licensed and managed by Delta Partners through its office in Bahrain, and has made six investments, all within the TMT space. The geographical span of the investments include Tunisia, Russia, Egypt, Armenia, India, and Saudi Arabia, with Font suggesting the company is beginning to look at its first exits from the portfolio.

At the same time Delta Partners is in the process of raising a second fund of between US$350 – US$500 million. The company is targeting a licence from Dubai International Finance Centre (DIFC), with the aim to have the fundraising completed in 2011. Delta Partners expects the lifetime of the fund to span nine years, and intends to continue targeting opportunities across the TMT space, essentially in emerging markets.

Geoffrey Fink, a private equity veteran, was recruited as a managing partner and the head of Delta Partners’ investments business. Fink’s immediate responsibility is in assisting Delta Partners in building out its investment activity and helping lead the fund raising efforts for the second TMT fund.

In the area of corporate finance, which is Delta Partners’ newest activity and was only established in 2009, the firm has been recruiting top talent from around the world in a bid to establish strong credentials. Font explains that the consulting business came first, and then the investment business was established on the back of the expertise, know-how and insight that Delta Partners generated through the consulting platform. The corporate finance unit was established last and was also as a result of the type of demand and needs clients and investors required

Thus taken together, Delta Partners’ progress in its three areas of activity is what Font describes as the completion of the first phase of the firm’s development.

Delta Partners headquarters in Dubai ties the company’s vision to that of the emirate, with the view to creating a hub for talent that can be accessed from anywhere in the world (Getty Images)

“We believe that we have closed the start-up phase of our growth. In order to have realised our vision of becoming the hub for capital, know-how and people in emerging markets in TMT we had to establish a consulting business; we had to buy our ticket into the investment world and set up our first fund; we had to receive our first mandates in the corporate finance space; and we had to bring on board the best possible talent,” Font says. “All that has now been completed and we are a diversified platform, which is a business that can be sustainable in the long term.”

In the second phase of the firm’s existence Font says the raising of up to US$500 million for the second TMT fund and increasing assets under management in a meaningful way is an important component. He says he would also like to see Delta Partners becoming less opportunistic in corporate finance mandates, instead building a sizeable business out of the platform that has been established thus far.

Font also has plans to diversify the business geographically having already established the Middle East, Africa, the Indian sub-continent, Asia, Eastern Europe, Russia and the CIS (Commonwealth of Independent States) as the base for ongoing operations.

Africa has been the busiest region for Delta Partners thus far, where the company has been most active. Font says a lot has been taking place there in the telecom sector and there is still much more left to happen.

“We believe with our second fund there will be lots of opportunities in Africa for investment,” Font asserts. “We are firm believers that Asia has a lot of potential. The region is huge and there are markets that are still untapped, where proper liberalisation has not occurred, or where it has gone too far and there is a need for consolidation.”

Font also sees Delta Partners’ second fund as having a relevant focus into Asian markets. Russia and the CIS region share many similarities with the way the Middle East markets looked some years ago with respect to there being countries with high potential given there are not too many companies that are established there, and this will also be a region of focus.

“We are starting to see that the telecom industry in the world is more connected and we are starting to see that some of our clients are making use of our services and want to know our views on markets we are in today, and asking whether we would be interested in markets such as Latin America,” Font says.

So while Delta Partners does not currently have a presence in Latin America, Font believes that this situation shall change in the coming 2-4 years. At that point he believes the company will be able to stand as a reference worldwide for emerging market expertise in telecom.

“We have started working with Telefonica recently to help them establish connections with operators in markets in which we operate. In the next 3-4 years Latin America will probably be our next move although we have no presence there today,” Font says.

Thus Font is reassured with respect to the market position Delta Partners currently occupies, both geographically as well as strategically. He believes that increased convergence between the developing and developed worlds is a relevant trend that the company is well-suited to respond to.

“Following the financial crisis prospects in more mature markets are not as positive, so there is a larger focus on emerging markets. Thus companies that have been focussed in the developed world are making more inroads into the developing world. What we also see is that this increased convergence is also triggering interesting dynamics, for example reverse innovations,” Font says.

The innovation and establishment of a new type of emerging market, boutique professional services platform geared primarily for the telecom sector appears to offer Delta Partners sufficient momentum to enter the second phase of development, and Font is more confident than ever that the company is on the right strategic path.

“To compliment clients and investors specialisation is critical and therefore we see ourselves expanding our activities more in media and technology, given that we are already particularly strong in telecom,” Font says. “And while we have been active with media elements that intersect with telecom the core media has not been a priority. However, given that those worlds are connected, we see ourselves becoming stronger and expanding our practice more into the ‘M’ and the second ‘T’ of TMT, but very much remaining focussed in this wider area.”