Interview by Merijn de Waard, words by Gemma Fottles
After founding energy conglomerate MB Holding in 1982, Dr. Mohammed Al Barwani’s business life has been full of carefully planned expansions and progressions, first through the energy and oil industries, then real estate, and now - or at least since the past six years - Dr. Barwani is enjoying a successful entry into the superyacht industry.
Though to some the purchasing of Dutch shipyard Oceanco and later, Turkish shipyard Turquoise Yachts, may appear just another fruitful business venture to add to Dr. Barwani’s corporate repertoire, heading two successful shipyards is actually, in part, the embodiment of a life-long passion for the sea. Growing up in Oman - a country famous for the capital port of Muscat as well as world class fishing and diving - Dr. Barwani’s connection to everything maritime transcends just business.
Following SYT’s visit to Oman, here Dr. Barwani delves into the story behind his shipyard ownership and shares his take on the yachting industry.
Have you always been interested in yachting?
I’ve lived by the ocean all my life. At a very young age I actually tried to build myself a boat. I think I was around 7 years old, and all of my friends helped me. We put it in the water and as soon as we did, it sank! In Oman I have several smaller boats; the 32 metre Sharifa is my biggest, a one off Hatteras with a fishing cockpit in the back. I love to fish here.
The 109 metre Y718 was my own project - well, it was my wife’s project! I was not planning to sell her but it happened that a client came and liked it. I personally think that when it is finished it will be ground-breaking. For me it was both a happy and sad occasion when it was sold. Part of the fun of owning a yacht is actually the process of building it.
In 2010 you bought Oceanco. What lead to that decision?
I was not planning on buying a shipyard. In 2010 I asked my banker if he knew a yacht for sale. He told me he didn’t, but he did know of a shipyard for sale. I went to look at it and I was very impressed by the company, its management and the work they were doing. I invested in it and went to work expanding it. I’ve been happy ever since.
The designs that have been started without an owner are mostly ground-breaking. Do they set the DNA of Oceanco?
The DNA of Oceanco is innovative. The designs are impressive and the quality of the build is very good. We have a very innovative sailing yacht which is under construction right now, the 106 metre Solar. The owner is trying a lot of new ideas on it. Solar is going to be a beautiful yacht. It’s a one-of-a-kind with a number of new innovative technologies, which has never been used in yachts before. It’s good to have innovative owners that want to drive the industry forward.
In 2015 you invested in Turquoise Yachts. How did that start?
I knew Mehmet Karabeyoglu and his partner for a long time. In 2014, Mehmet said to me, ‘Why don’t you invest in this company?’ It’s a good investment, Turkey is growing as a country and the company gets a lot of interest from the Middle East and the boats keep their prices very well in the second hand market.
We are currently building two yachts with Turquoise, a 77 metre and a 47 metre, and we have plans for more. Turquoise has excellent facilities – that rival many of the top yacht builders. They can build up to six yachts at the same time. We don’t want to go above 80 metres with Turquoise because once you get to that size the construction complications are larger and the risks become more complex. We would like to stay at a happy medium of 45 to 80 metres.
The large yacht market has been driven by clients from Eastern Europe, Russia and the Middle East. With the Russian sanctions do you think that the 80+ metre market will suffer?
I thought so but what I see is that the American market is picking up, and today, the yachting industry is very much driven by the American market. The Middle East, especially Middle Eastern royalty, are big drivers of the large yacht market and that will continue. The American market is healthy and I also think there is a strong market in India. We are also receiving enquiries for large yachts from new markets like Asia, Latin America and Africa.
What could be done better in the yachting industry?
A shipyard sells a yacht and after the warranty period has concluded, often the client and yacht are forgotten. If you look at Oceanco, we see the client as a client for a lifetime. We take care of all of them, even if he has a 25 year old Oceanco.
Are you also investing in the maritime industry in Oman?
Oman is a great place to have a large superyacht marina, so I’m trying to work with the government for that. I would like to start some kind of a marina not so much as a business, but to promote the country. Oman has a huge maritime history. It is a bit like the Netherlands, we’re a kingdom that has traded with Africa, Asia, India and the Middle East.
Do you think there is still a good inventory of boats on the market?
I think the biggest competition on the market right now is second hand boats. Oceanco doesn’t have the problem of competing with the second hand market, but Turquoise has more challenges in that field.
Turquoise have very competitive prices. Can you tell us about that?
The cost of materials are the same if you are building in the Netherlands or building in Turkey. The actual unit labour cost is less in Turkey compared to Northern Europe. In both regions a significant portion of the cost of the yacht is labour. Turkish builders tend to spend a lot more labour and time into building than perhaps builders do in Southern Europe. Certainly some of the yachts produced in Turkey are on par with some of the builds in Europe.
Do you have an exit plan?
No, I enjoy working with the shipyards. Oceanco has been and is a lot of fun. I’ve enjoyed it tremendously. I’ve enjoyed the designers, our industry colleagues and I’ve enjoyed the brokers. I’ve met a lot of interesting people that I might not have met in other businesses. My business model has never been to buy and sell companies. We’re not a private equity business who buys a company, builds it up, and then sells it. In a word, I have no thoughts of exiting this vibrant industry.
This is an extract from the full interview with Dr. Al Barwani. To read more, subscribe now and never miss another issue.