Abu Dhabi's Investment Funds: A Brief Guide

[Music] um your excellencies uh distinguished guest ladies and gentlemen good afternoon uh thank you very much ad GM for giving me the opportunity of speaking at this stage and thank you very much for giving me all of 10 minutes to talk about 1.7 trillion us doar um so I'll start by sharing uh personal story if I may um so back in 2013 I was working at a large consulting company in Brazil and I got a call from a Head Hunter saying that another consulting company was setting up a sovereign we fund group in the Middle East and they wanted me to come and work for them and I said fine but it's going to be in Abu Dhabi and they say why Abu Dhabi I said well Abu Dhabi is where the capital is so the name the capital of capital may be new but uh Abu Dhabi has always been the epicenter of sovereign wealth in the world so using that point in time as a reference 2013 we had the Abu Dhabi investment Authority which was established four years prior to the formation of the UAE basically to invest the all surpluses overseas we had the iPic which was basically born as a joint ventor between Adia and annok to invest in oil and gas companies uh abroad uh we had mua development company which was a successor of the offset program to basically bring knowledge and knowhow into the Emirate we had addic which was an offshoot of AA to manage the financial services in the Emirate and we also had Emirates investment Authority which uh to this day is the only Sovereign we fund at Federal level obviously a few years later we saw the consolidation of some of these entities into the what is today the Mad Investment Company um and we also saw the mer of yet another Sovereign World fund uh which is adq which is a kind of sponsor of this Arena and event and obviously some of its subsidiary ad growth and eventually the formation of lunate earlier this year so this is a lot of acronyms and names but this is just to say that this is what we call the Abu Dhabi approach so Abu Dhabi approach means having different Sovereign World funds for different purposes and this is in contrast with an other sort of uh GCC countries so if we look at Saudi today Pi sort of Amal Gates all these uh mandates and purposes into the same entity we look at kubit we have a Kia doing the same uh cutar uh we have the qia doing all these um um purposes and mandates and in omang we saw in 2020 the merger uh of omang investment authority to also do the same so let's zoom out for a second uh today Sovereign well manag 13 trillion us I repeat 13 trillion us that clock actually turned to 13 trillion two days ago um and where is that Capital well uh over five trillion of it is in the Middle East and North Africa region and over two trillion of it is in the UAE and Abu Dhabi we've heard it over and over again during these two days manages 1.7 trillion of that capital and that makes them or that makes Abu Dhabi the capital of capital when it comes to Sovereign we funds um but it's not only that I mean if you think about Abu Dhabi as compared to the rest of the Emirates Abu Dhabi has 94% of the oil reserves in the UAE 80% of the area and around 70% of the GDP however only 40% of the residents live in Abu Dhabi and that means that the GDP per capital in Abu Dhabi is much larger than those in the rest of the Emirates and also only 30 3% of the debt at UAE level is in Abu Dhabi that means that the books of Abu Dhabi are much healthier than those in the rest of the Emirates which are already quite healthy by the way uh but the fiscal position of Abu Dhabi is really enviable now if we look at the future the next two years uh F ratings is forecasting 3.6% of fiscal surplus of GDP uh in 2025 7% of the GDP of fiscal Surplus in 2026 that would translate into an additional $60 billion US flowing into the books of The Sovereign wealth funds domestically not only that but we are seeing the inbound efforts of Abu Dhabi right so we keep hearing about asset managers and service providers being set up here in 0gm we've seen over 70 entities uh setting up office this year Alone um which is probably going to be historical record by year end and also if we look at FDI this is a UA level but if we look Abu Dhabi level it would be very similar historical picks of FDI received by the UAE and Abu Dhabi uh in the past year now let's look at the landscape of uh The Sovereign and um and sort of energy today so a few years ago the Abu Dhabi government set up the Supreme Council for financial and economic Affairs basically was the successor of the Supreme petroleum Council and few other entities and it basically oversees all the energy or most energy and investment related entities in the Emirate so we got annok obviously which set up xergy uh a few days ago actually and they already completed the first first acquisition with covestro in Germany um which is quite unparallel so basically xrg is doing what IP was doing back in the day so now it's just anoc insourcing that investment effort within anlock uh books then we have obviously the monetary authorities right so we have the Department of Finance Abu Dhabi level which has a subsidiary called CVM that has also been quite active uh in the automotive space so CVN invested in Neo in China a few months ago and just closed a deal with montala CAD last week to acquire part of the McLaren group so quite active investment uh entity as well obviously we have the Central Bank of the UAE which issues the Dirham and has over 150 billion in foreign reserves uh that is US Dollars and then let's move on to Sovereign we funds so these are all the Sovereign funds we were talking about before so Adia adik or the council mad um adq eia and also abudhabi fund for development uh which has a smaller Investment Portfolio uh and also tawazun Council uh which with uh H group manage the defense related companies um also we have the public Pension funds right so Abu Dhabi pension fund manages the pension of all emiratis living in the emirat of Abu Dhabi and jipsa manages the pensions of those living in the rest of the Emirates except for ser and also we have the Royal private offices so what do we call Royal private offices are basically family conglomerates on or Chair by members of the ruling family in Abu Dhabi and as you can see there is quite an array of them uh most notably the Royal group and all of its subsidiaries that have been very active in the marketplace so IH C multiply group Alpha dby g42 uh 2.0 and so on uh so all this EOS system I if you think about the economy of Abu Dhabi today if you go through every single industry today real estate infrastructure a healthcare consumer and you see all the national champions operating of those Industries today they are propelled by either muad or adq so basically mad and adq are propelling the economy of the Emirates and also diversifying it of the list of the companies that you can see there those that are in pink are already listed in the adx that means that either muala or adq have taken them public and have managed to attract foreign investment into those entities uh yet if we look at adx companies today uh 70% of the uh market cap is still owned by Royal group and entities and also by muala adq and anoc so there will be some work to do in terms of uh diversifying that Capital base now if we look at the activity of sovereign we funds globally uh which is what we do um we identify what we call the oil five the oil five are basically those Sovereign World funds that are most active today in the world three of them are from Abu Dhabi Adia muad adq and then P from Saudi qia from Qatar these five funds are basically eating the market share of global deal making uh when it comes to asset owners and Sovereign funds if we look at them in another perspective which is horizontal uh 2024 probably is going to see at the end of it uh historical pick in the number of Investments coming from these three funds in Abu Dhabi only so this is focused on Abu Dhabi only now uh and again we're going to see a historical Peck in 2024 uh of Investments now where is this Capital flowing so 27% of the capital is still flowing to the United States uh six 177% is staying in-house so it's a lot of investment in the country and then the rest of it is very Diversified across uh both develop and Emerging Markets we may see this chart uh changing in the future as Adia muala adq are starting to invest more and more into Emerging Markets now if we look at Industries actually it's very very Diversified so I would say that Alia muq they have managed to uh do what they were set up to do which is basically that diversify away from hydroc carbons so all these are companies that have been flowing um from uh these entities now the Playbook is available in the report so I will go very quickly giving one or two ideas per Sovereign fund Adia again very liquid investor uh very biased towards U develop markets historically by increasingly in Emerging Markets including uh a new office in India that just opened recently addic um very private Capital FOC uh new office in New York a very uh increasingly active uh Sovereign fan as well they rushing me through it so I'm not sure I'm going to have time through to go through it but again the Playbook is available in the report but finally I wanted to give some deporting remarks which is again capital of capital nothing new Abu Dhabi has always been like that um attracting foreign talent and companies today uh challenges uh disruption technology disruption geopolitics um but we believe that the growth will continue and obviously the role that adgm adio Abu Dhabi IPO fund and obviously the finance uh week are doing will be Paramount to make that Capital sustainable thank you very much for your time much [Music]