By Steven R. Strahler November 12, 2012
Thomas Pritzker, patriarch of Chicago's richest family and executive chairman of Hyatt Hotels Corp., is starting to do business in Iraq.
A venture he co-founded to chase deals in the war-torn country and other parts of the Middle East announced its first project last month: an upgrade of a port on the Persian Gulf—work that will be parceled out to two other Pritzker holdings.
Mr. Pritzker joined with Paul Brinkley, a former Silicon Valley engineer who until 2011 headed a Defense Department task force focused on spurring Western investment in Iraq and Afghanistan amid corporate skepticism about a region with a well-earned reputation for instability and corruption.
A purported four-fifths of the $1 billion in foreign currency auctioned weekly by Iraq's central bank is funneled out of the country illegally, according to a report to Congress two weeks ago. But the findings by the Special Inspector General for Iraq Reconstruction also cite Iraq's potential: economic growth topping 10 percent, record electricity production and oil output at a post-1990 high.
An archaeology buff, Mr. Pritzker, 62, maintains an interest in Middle Eastern culture that transcends but does not eclipse business. Four years ago, when Chicago-based Hyatt opened a Dubai office to manage its growing portfolio in the Gulf, he toured Iraq with two other Chicago executives, CF Industries Holdings Inc. CEO Stephen Wilson and Morgan Stanley's William Strong.
Scores of other U.S. executives, including Boeing Co. CEO James McNerney, were hosted by Mr. Brinkley, 45, whose task force is credited with attracting more than $8 billion in private investment to Iraq and reviving 66 factories there between 2006 and 2011.
Mr. Pritzker declines to comment. In a statement announcing the port deal, he said, “Peace and prosperity are two sides of the same coin: Viable, profitable businesses contribute to the creation of prosperous communities that enhance stability.”
During his 2008 trip, Mr. Pritzker said hotel projects weren't imminent in Iraq and characterized looting in the country as “organized, tribal and unstoppable,” according to a State Department cable published by WikiLeaks.
North America Western Asia Holdings LLC, a little-known entity chaired by Mr. Pritzker, said in October that it would invest more than $14 million to bring heavy lift crane and container handling capabilities to a berth in Maqal Port, closed for two decades. The 10-year privatization deal also calls for construction of a container yard.
While it's unclear what kind of payback or follow-on work the venture envisions, the initial impact on Pritzker interests is unmistakable: The port project will utilize Bermuda-based Triton Container International Ltd. and Marmon Crane Services Inc. The Pritzker family retains a piece of each firm after selling control in Triton to private-equity investors last year and in Marmon Group LLC to Warren Buffett's Berkshire Hathaway Inc. in 2008. Mr. Pritzker remains Marmon chairman.
TOUR OF DUTY
Mr. Brinkley, president and CEO of North America Western Asia, has been likened to 19th- and 20th-century British colonial officers who identified business opportunities on tours of duty and invested afterward. He's a native Texan and former chief information officer for telecom equipment maker JDS Uniphase Corp. in Milpitas, Calif., who developed connections with some 250 potential contractors, including Peoria-based Caterpillar Inc., while in Iraq.
Mr. Strong, since posted to Hong Kong by Morgan Stanley as co-CEO of its Asia/Pacific business, says he nurtured the Brinkley-Pritzker relationship by inviting Messrs. Pritzker and Wilson to join the Iraq tour. The investment banker had met Mr. Brinkley through an aide to then-Defense Secretary Robert Gates; Mr. Strong at the time was a member of the United States Military Academy at West Point's board of visitors.
Once in Iraq, Mr. Strong witnessed Mr. Brinkley's comfortable relationship with Iraqi officials, he says. “He had earned their respect and friendship and, more importantly, their trust,” Mr. Strong says. “You could clearly see the chemistry was very strong.”
Mr. Pritzker's international bent is hardly new. He chairs the Hyatt Foundation, whose Pritzker Architecture Prize has honored Baghdad native Zaha Hadid, collects Asian art and goes on digs in the Himalayas.
Compared with Hyatt's global presence—a quarter of the 473 hotels it owns, manages or franchises are outside the U.S.—his beachhead in Iraq is tiny. But it coincides with Hyatt's growth in the Arab world. This year, for instance, it agreed to manage three new hotels in Saudi Arabia.
“To have people there, you have to have hotels,” Mr. Strong notes. “He really is extremely knowledgeable about the culture, the people and the legacy these countries have.”
original source: http://www.chicagobusiness.com/article/20121110/ISSUE01/311109981/hyatts-pritzker-tiptoes-into-iraq