Tabreed connected more than 118,000 tonnes of cooling to customers during the year. Courtesy Tabreed
Tabreed connected more than 118,000 tonnes of cooling to customers during the year. Courtesy Tabreed

Abu Dhabi-based Tabreed annual profit up 20 per cent



The cooling company Tabreed has announced a 20 per cent increase in net profit for 2014, boosted by a 14 per cent annual increase in tonnes of cooling capacity delivered throughout the region. The Abu Dhabi-based utility said on Thursday that net profit rose to Dh325.7 million last year, compared with Dh272.4m in 2013.

Tabreed connected more than 118,000 tonnes of cooling to customers during the year, more than half of which were delivered in the UAE. The company’s total connected capacity across its GCC footprint stood at 957,000 tonnes at the end of the year.

“Our core chilled water business continues to perform well and exceed growth forecasts, with total connected capacity across the group now approaching 1 million tonnes of cooling delivered to many of the region’s most critical landmarks and infrastructure projects,” said Tabreed’s chairman Waleed Al Mokarrab Al Muhairi.

“We continue to see a rise in demand for district cooling across the GCC, especially in Saudi Arabia and Qatar, where we connected over 31,000 [tonnes] and 16,000 [tonnes], respectively.”

Among the company’s notable contracts for 2014 were a renewed Dh6 billion master services agreement with the UAE Armed Forces, and a Dh1.05bn 30-year concession to provide cooling to developments on Abu Dhabi’s Al Maryah Island in conjunction with Mubadala Infrastructure Partners.

Tabreed’s shares closed down 1.7 per cent at Dh1.15 in trading on Thursday.

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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