Financiers with a mission: Buschmann, left, Ogburn, and Crosland Photo: Kay Hinton

harles Ogburn has a surprising answer for people who want to know where he took his family for vacation this year.

"I took them to the Persian Gulf," says Ogburn '77. "They had a great time."

A trip to the part of the world that most Americans consider dangerous these days isn't a big deal for Ogburn, who has traveled back and forth to Bahrain on business many times since the 9/11 attacks. Ogburn is one of a trio of Duke graduates who work for Atlanta-based Crescent Capital Investments Inc., a private-equity investment firm that gives Middle Eastern Muslims a religiously correct mechanism for investing in U.S. companies.

Crescent was founded in 1997 by First Islamic Investment Bank, based in Bahrain. Most of the bank's 100 shareholders and 600-plus investors are Muslim. But most are not the oil-rich royal families one might expect. Instead, they are business owners hailing from Kuwait, Bahrain, Qatar, Saudi Arabia, United Arab Emirates, and Oman, with combined assets of more than $500 billion. "Our largest shareholder is the General Motors dealer in Saudi Arabia," explains Scott Buschmann '98, an associate with the firm.

Crescent targets mid-size American companies it can purchase for $50 million to $300 million. In April, it signed an agreement to acquire Loehmann's Holdings Inc., the women's apparel retailer, for $177 million. Not counting the Loehmann's deal, in seven years Crescent has bought controlling interest in eleven companies, including Caribou Coffee; Cirrus Industries, the second-largest maker of single-engine planes in the world (one plane behind Cessna last year); and Watermark Inc., maker of Dagger and Perception kayaks and Yakima multi-sport racks. So far, the firm has invested $650 million in equity and executed transactions totaling $1.1 billion. The company has a London office and also a large real-estate division.

All of the businesses Crescent buys and sells have one thing in common: They are in accordance with the ancient Islamic code called Shari'ah [sha-REE-ah]. Among other things, Shari'ah makes off-limits any ventures involving alcohol, pork, gambling, or media companies with sexually explicit programming. Put in an American context, investing according to Shari'ah is similar in concept to the Green Fund, which only puts money in environmentally conscious companies, Ogburn says. At Crescent, a supervisory board of experts on Islamic law gives advice on acquisitions and monitors acquired companies to make sure their activities continue to adhere to Shari'ah precepts.

In practice, Shari'ah still leaves open about 85 percent of American businesses, says David Crosland '81, who, along with Ogburn, is an executive officer at Crescent. "The restrictions with respect to the industries we can invest in have not materially impacted our business," Crosland says. "Those are probably industries I'm not interested in investing in anyway."

Companies in the gambling business, for example, may have liability issues that disqualify them as good investments, irrespective of their ability to square with Shari'ah. There are also the occasional instances where the Shari'ah litmus test, itself, makes a company undesirable from a financial standpoint. In one example, after looking closely at a private prison-management company, Crescent had to pass. If the company had followed Shari'ah code in its operations, it "would have had to treat the prisoners too well to make any money," Crosland says.

Crosland had the opportunity to launch Crescent in 1997 through a connection with Atif Abdulmalik, CEO of the First Islamic Bank. Though they didn't know each other at the time, both men had worked at investing Middle Eastern money for Investcorp, a buyout firm that had pioneered the practice of securing capital from merchant families in the Middle East. "Atif had the vision of servicing a particularly Islamic market place," says Crosland. "He felt there was a vacuum there." After Investcorp balked at a Shari'ah-centered business, Abdulmalik tracked down Crosland and enlisted his help to establish a brand-new company.