Arqaam Capital said it had bought the infrastructure asset management business of Instrata Capital as it targets emerging markets.
The Dubai-based firm would not disclose the amount it has paid for the business or the value of the assets in it but said the infrastructure portfolio that Bahrain-based Instrata manages includes power generation and water desalination assets across the Arabian Gulf.
“The acquisition takes us another step forward with the implementation of our growth strategy in emerging and frontier markets,” said Riad Meliti, the chief executive of Arqaam Capital. “The development of infrastructure is a fundamental requirement for economic growth in the Middle East, Africa and South East Asia. We see significant potential in this sector for Arqaam and our clients and this acquisition will complement the growth of our asset management division.”
Spending on infrastructure in the Middle East and North Africa is estimated to reach an annual US$106 billion until 2020 as governments spend more money on modern infrastructure including airports, ports, highways, bridges and high- speed railway facilities as well as social infrastructure projects. Since the Arab Spring there has been heavy infrastructure spending on projects in the Arabian Gulf and Dubai’s hosting of Expo2020 will also require additional investments.
The infrastructure assets that were acquired by Arqaam are currently held by the Sharia-compliant Bunyah GCC Infrastructure Fund and include Al Dur Independent Water and Power Project in Bahrain, the Barka 1IWPP in Muscat and the Salalah IWPP in the south of Oman.
The structure and ownership of the fund will remain unchanged and key team members from Intstrata joined Arqaam to ensure continuity in the management of the fund.
Arqaam’s expansion in asset management follows a number of additions to its business in recent years. It added a capital markets advisory service last year and is working on several initial public offerings. Last year the firm also purchased El Rashad Securities in Egypt and Al Rashad Finance and Management in Libya and this year it started a greenfield operation in South Africa. Arqaam also has plans to widen its footprint in other countries in the Middle East and Africa.
“Our emerging markets growth strategy is focused on delivering attractive investment opportunities for the benefit of our clients and our shareholders,” said Mr Meliti. “The acquisition provides our clients with access to a new class of assets and is a demonstration of continued long-term confidence in emerging markets.”
While emerging markets assets as a whole have taken a battering this year amid lacklustre economic growth and political worries in countries including Russia and Turkey, stocks in the UAE and the wider Gulf have been resilient because of their currency peg to the US dollar and vast reserves of oil-generated wealth.
The MSCI Emerging Markets index has dropped 3.6 per cent this year while Dubai’s benchmark has gained 23 per cent, the best performing index in the world among measures tracked by Bloomberg after indexes in Cyprus and Bulgaria.
mkassem@thenational.ae
