Managing Arab Millions From the Towers of Tel Aviv

Israeli-American Tal Keinan handles some 6 billion shekels, part of it from the Gulf.

Tal Keinan seems divided between two worlds. Born and raised in the United States, the 44-year-old investment manager immigrated to Israel after completing high school and served as a fighter pilot in the Israel Air Force. His next stop was a career in finance back in America, and seven years ago he returned to Israel to establish the KCPS Clarity investment house. Today he manages a 6 billion shekel ($1.7 billion) portfolio, much of it comprising endowments for academic institutions and museums throughout the world.

But part of the money managed by Keinan comes from a rather surprising source for an investment house located in Tel Aviv’s Azrieli Towers – wealthy individuals in Arab countries. With his diverse background, Keinan has business contacts that other Israeli investment managers don’t. He chalks up his familiarity with financiers from Arab countries to working with the same financial centers around the world as they do. Persian Gulf customers generally work with financial institutions in Switzerland that refer them to us, he says.

Is working with Israelis actually an option for them?

“It’s true that there are families in Arab countries who won’t do business with us, but there are also those who have nothing against us as Israelis. I recently met a high-ranking businessman from Saudi Arabia who wasn’t embarrassed to tell me that there is only one nation whose people he trusts if he ever needed a cardiologist, lawyer, or financial manager.”

Keinan says he’s active in the World Economic Forum’s 700-member Young Global Leaders, and when the organization held its meeting in Tanzania everyone came with the understanding that the Zionism issue would remain out of bounds. He notes that on his first night there he stepped into the hotel elevator with the chairwoman of Saudi prince Waleed bin Talal’s investment fund who proceeded to address him in Arabic, apparently thinking “Tal” on his nametag was short for “Talal.”

“She asked me where I’m from and I told her I’m from Israel,” he recalls. “I immediately saw a look of discomfort on her face. She asked me if I’m an Israeli-Palestinian and I said in Arabic something I still regret: ‘No, I’m Israeli-Israeli.’”

What should you have said?

“I should have said ‘Jewish Israeli.’ On the second day of the conference she kept her distance. I told the story to a good friend who was also attending the conference, and she decided to bring us together so I could get to know the woman. She got the three of us together and then stepped aside, leaving the two of us talking alone. We spoke about our children and families, and established a rapport.

“After several minutes she said she needed to get something out, and proceeded to tell me: ‘You’re a nice person but you’re not part of the Middle East. I want your people to live, but for my part you have no right to sovereignty here. You are sitting on our land and I don’t accept you as a sovereign entity.’ Then she went back to talking about photos of the children as if nothing had occurred.”

Keinan says he replied that he couldn’t accept what she said, but suggested that the region could work together in searching for growth opportunities to help the Middle East catch up with the rest of the world economically.

Word of mouth

Why have clients from the Arab world chosen you?

“Most of my clients have come on the recommendation of others. On meeting clients from the United Arab Emirates, they hardly care that we’re from Israel,” says Keinan.

How do you communicate?

“Activity with our clientele is done through an entity registered in the Cayman Islands or in Ireland and everything is in English.”

What about business connections with the Palestinian Authority?

“One of the only countries in the Middle East being built up rather than falling apart is Palestine. We do business there and have many personal relationships there. I feel safe today sitting in Ramallah with people who speak Hebrew and know who I am. There are few places in Israel where real estate prices are higher than in Ramallah, and there, as well as in Nablus, is a critical mass of people who have much to lose if the quiet isn’t maintained. The Palestinian Authority now has a business community investing heavily in building the state.

“We also have holdings in Palestinian companies, including energy companies and the stock exchange in Nablus. These are holdings arising from pure financial considerations. The field of gas, for instance, is about to seriously take off in the PA because while in Israel there is already penetration of the gas infrastructure, the PA doesn’t have any at all and this is an opportunity for us.”

When a new Arab state is established it will only have one economic partner – Israel, says Keinan. There was a big fuss made about Bashar Masri not using material from Israeli settlements in building the new Palestinian city Rawabi, he explains, but Masri told him he couldn’t tell his public that he’s working with the settlements, and in any case had a problem with 70% of his suppliers being Israeli. The Palestinian business community isn’t Zionist, Keinan says, but most are pragmatic and, if asked, will say they want Israel to continue existing. “This is a strong statement that is overlooked by us,” he says.

It isn’t quite certain that the average Palestinian wants Israel to continue existing.

“True, but the average person doesn’t understand where his bread and butter come from. It’s exactly like Israelis who put down the U.S., saying we don’t need it. They don’t understand that the F-16 (fighter jet) comes only from there.”

Keinan says he believes in what President Shimon Peres terms the “Jordan-Palestine-Israel Benelux,” not necessarily as something political but economic. Israel’s isolation from its neighbors limits its export opportunities in the field of software, he says, and dairy products can’t be shipped abroad, but the PA economy is too small to change Israeli’s economic situation. Keinan envisions the possibility of penetrating the Egyptian market, where Israeli innovation could have a strong effect and sees the current period as presenting an opportunity to do so.

Keinan says he feels a generational transformation occurring in the Arab world, and that is made up of people under 50, and the further from Israel members of the Forum of Young Global Leaders come from, the less they care about the Arab-Israeli conflict. These countries have an older generation with entrenched opinions that remembers the humiliation of the Six-Day War, but for the younger generation being Israeli is of no consequence, he says.

With the Palestinians the opposite holds true, Keinan points out: Whereas the older generation worked in Israel and speaks Hebrew, the young generation grew up behind the wall and has never seen Israelis except in uniform. In Ramallah there is a group of 40 people involved in startups, says Keinan, who should have every economic interest in meeting Israelis but isn’t willing to, and it is this generation that will be making all the decisions in the PA 10 years from now.

The anti-normalization card

Keinan recalls a conversation he had in the United States with an Egyptian publicist who explained to him her attitude towards Israel. She said the Arab world has suffered defeat for 1,000 years after serving as the pinnacle of world culture, where a message could be sent from Baghdad to Marrakech in 24 hours – a feat unheard of anywhere elsewhere in that era – and the Greek classics survived only in Arabic. If that wasn’t enough, she told him, the Arab world now has to contend with Israel, which embodies the worst possible colonialism and is one of the world’s smallest nations, yet is creating a gem right in its face – the hardest thing for them to swallow. Holding back normalization, the Egyptian publicist told Keinan, is the last card in their hands, and the fact that Israel is troubled by this shows that it serves its purpose.

How do you reply to statements like these?

“That Palestine can be helped to flourish and become an example to the entire Arab world of what can blossom through cooperation.”

Keinan established his investment house in 2006 along with David Steinhardt and Jay Pomrenze after asking himself why, after centuries as bankers to the world, here in the Holy Land of all places the Jews abandoned this destiny. He says he’s worried about the Israeli tendency to shut out the world and remain in seclusion.

Sending his three daughters to English-speaking American schools, Keinan believes Hebrew is one of Israel’s greatest handicaps. One of the traits that helped drive the Jewish people forward throughout history, he says, was its cosmopolitanism, and only in Israel has it adopted a language spoken by no more than 6 million or 7 million people in the world. Over their entire history, he notes, Jews always made sure to master the local language as well as a Jewish language – Ladino or Yiddish.

His firm’s clientele is 80% non-Israeli, says Keinan, but he estimates that most of it is Jewish. KCPS Clarity also has offices in New York to deal with clients, he says, but the money isn’t managed from there.

“Today I can build a team in Israel that’s impossible to put together in New York,” says Keinan. “There is so much talent here.”

Tomer Appelbaum