Peter J. Tanous

Like many busy chief executives, Peter J. Tanous, Chairman of the Petra Capital Corporation, is not always easy to reach. During much of the time, of course, he is working in his company's head office in New York's Pan American building, overlooking Park Avenue. At other times you might have to look him up in Washington, Kuwait, Abu Dhabi or Riyadh. Or, he could even be under his writing cap putting the finishing touches on his fourth novel.

Novel? What is a career investment banker doing writing novels? Mr. Tanous's answer is an uncomplicated one: "I've always enjoyed writing, and I do as much of it as I can." Two of the novels he has already had published were co-authored with Paul Rubinstein, a stockbroker and neighbor. Both books, not too surprisingly, have plots which are based on financial wheeling and dealing. On his own, Mr. Tanous has woven a fictional thriller inspired by the last flight of pioneer flyer Amelia Earhart, who disappeared in the Pacific Ocean in 1937.

Mr. Tanous is an American of Arab ancestry who runs the first Arab-controlled investment bank in the U.S., which is also the only one that has a seat on the New York Stock Exchange. He and three partners-of whom two, William A. Hanna and William G. Haddad, are also Arab Americans founded Petra Capital Corporation in 1978 as a vehicle to help Arabs invest their funds in the U.S. market. About 75 percent of the stock is owned by businessmen and institutions in Kuwait, Saudi Arabia, Bahrain and Dubai (in the United Arab Emirates). Messrs. Tanous, Hanna and Haddad hold the rest.

Experience and Ability

"We went into business for ourselves because we saw a need for a specialized, Arab-oriented investment banking firm," says Mr. Tanous, "and we had the experience and ability to organize it and run it." Mr. Tanous had spent 17 years in Wall Street's Smith Barney, Harris Upham & Co. Two of the other founding partners (one of them has left the company) also came from Smith Barney, and the fourth from E.F. Hutton.

For its clients, Petra carries out asset management operations, invests in stock and bonds and in real estate, so far mainly in Florida and Texas. But the deals are relatively small; with a capitalization of $6 million, Petra does not operate on the scale of a Morgan Stanley or a Salomon Brothers. However it did make a tidy profit of about $1 million last year.

A typical Petra deal was a joint venture it sponsored, during its first year, between an Arab client and the Texas company La Quinta Motor Inns, Inc., to build a 122-room, $3 million motor inn in Dallas. The arrangement called for the Arab investor to split the profits 50-50 with La Quinta, and his annual return, since the completion of the motor inn, has been exceeding 20 percent. Petra received a fee of $50,000 for structuring the deal. Sometimes Petra will take a percentage interest instead of a fee, but Mr. Tanous notes: "We always represent the buyer, not the seller, in transactions."

Investors Want Fair Deal

Mr. Tanous says his Arab clients, the buyers, show a healthy skepticism when considering offers, and he encourages this cautious attitude. "Many Americans selling a property think that a Middle East investor will pay a higher price than anyone else," he says. "But a potential Arab investor will often ask: 'If this piece of property is such a good deal, why are you trying to sell it to me? Can't you find an American to buy it?' Most of them are sophisticated businessmen, and if they don't know the value of a proposed investment, they will often hire someone who does. This is where we come in."

The interests of Arab investors are actually quite similar to those of American investors, Mr. Tanous says. "In addition to the assurance of a fair deal," he says, "they want safety for their capital and a decent return-the sorts of things that we Americans look for in our own personal and corporate investments." He notes that despite many misconceptions about Arabs which the investors encounter, they like investing in the U.S. "because of the diversity of the investment opportunities, the stability of the political system, and their affinity for the American people."

One misunderstanding about Arab investors that Mr. Tanous spends some of his time trying to counter is the idea, still widely prevalent, that Arab "petrodollars" are buying up huge hunks of American industry and real estate. He has given many speeches on this issue and has testified on it before Congressional committees. "Arab investments in the U.S. are insignificant compared to those of the British, the Germans, the Dutch, the Japanese and others," he says. According to the U.S. Department of Commerce, total accumulated direct investments made by Arabs are still less than one percent of the total made by foreigners.

Mr. Tanous, 43, is a graduate of Georgetown University, in Washington, D.C. He is the nephew of Peter S. Tanous, current chairman of the National Association of Arab Americans.