AD Ports Group, the operator of industrial cities and free zones in Abu Dhabi, signed two agreements with Uzbekistan as it continues to focus on expanding its operations globally.
The company has begun a new joint venture with Uzbekistan’s oil and gas company SEG (Sanoat Energetika Guruhi) for the development of logistics and freight infrastructure in the central Asian country.
As part of the agreement, the two companies will develop logistics and freight forwarding services in Uzbekistan, including intermodal freight forwarding, road, rail and air transport services, AD Ports said in a statement on Wednesday to the Abu Dhabi Securities Exchange, where its shares are traded.
They will also focus on developing inland ports and container depots, warehousing and other logistics infrastructure to help the country grow its international trade.
“This is a major new agreement that will help transform trade and logistics for Uzbekistan, which has a fast-growing economy and rich natural resources," said Capt Mohamed Al Shamisi, managing director and group chief executive of AD Ports Group.
"Our strategic investment in infrastructure and capabilities will help support international companies by opening new points of entry into central Asian markets and ensuring the highest levels of service and support."
The company also signed a separate deal with SEG to develop a food trading hub in the country to "enhance Uzbekistan’s food trade across global markets and drive Central Asian food security”, AD ports said.
The centre, near Samarkand International Airport, will be operated by SEG subsidiary Marakand Logain, according to the statement.
AD Ports will also set up its overseas office in Uzbekistan to support the project.
The latest agreements come after AD Ports signed a preliminary agreement with Enter Engineering Group to launch new logistics and freight businesses in Uzbekistan last month.
"Uzbekistan is a major producer of key export commodities, including oil, natural gas, and gold, and the second largest exporter of cotton in the world," said Bakhtiyor Fazilov, chairman of the SEG board.
With the new joint venture, "we will be able to bring a wider range of our products to the global market, which is fully consistent with the policy of our country and the policy of transforming SEG into a vertically integrated company", he said.
AD Ports Group, which made its debut on the ADX in February after raising Dh4 billion ($1.08bn) from its share sale, is planning to expand globally. Last week, the company said it will acquire a 70 per cent stake in Egypt's International Associated Cargo Carrier for Dh514 million to expand its footprint in the Arab world’s most populous country and the wider region.
It also signed a partnership agreement with the Aqaba Development Corporation to develop tourism, logistics, transport and digital infrastructure in the Jordanian coastal city as well as a deal with the Egyptian Group for Multipurpose Terminals in November last year to develop and operate a multipurpose terminal at Safaga Port on the Red Sea.
It is also exploring investment opportunities in Iraq after signing an agreement with the General Company for Ports of Iraq in September.
Established in 2006, AD Ports Group owns and operates 10 ports in the UAE, including Khalifa Port, Zayed Port, Mussaffah Port, Fujairah Terminals, Community Ports, Kamsar Port and the Abu Dhabi Cruise Terminal, as well as a terminal in Guinea.
It also manages more than 550 square kilometres of industrial zones and an end-to-end logistics business, besides offering a range of maritime services.
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.”
Will the pound fall to parity with the dollar?
The idea of pound parity now seems less far-fetched as the risk grows that Britain may split away from the European Union without a deal.
Rupert Harrison, a fund manager at BlackRock, sees the risk of it falling to trade level with the dollar on a no-deal Brexit. The view echoes Morgan Stanley’s recent forecast that the currency can plunge toward $1 (Dh3.67) on such an outcome. That isn’t the majority view yet – a Bloomberg survey this month estimated the pound will slide to $1.10 should the UK exit the bloc without an agreement.
New Prime Minister Boris Johnson has repeatedly said that Britain will leave the EU on the October 31 deadline with or without an agreement, fuelling concern the nation is headed for a disorderly departure and fanning pessimism toward the pound. Sterling has fallen more than 7 per cent in the past three months, the worst performance among major developed-market currencies.
“The pound is at a much lower level now but I still think a no-deal exit would lead to significant volatility and we could be testing parity on a really bad outcome,” said Mr Harrison, who manages more than $10 billion in assets at BlackRock. “We will see this game of chicken continue through August and that’s likely negative for sterling,” he said about the deadlocked Brexit talks.
The pound fell 0.8 per cent to $1.2033 on Friday, its weakest closing level since the 1980s, after a report on the second quarter showed the UK economy shrank for the first time in six years. The data means it is likely the Bank of England will cut interest rates, according to Mizuho Bank.
The BOE said in November that the currency could fall even below $1 in an analysis on possible worst-case Brexit scenarios. Options-based calculations showed around a 6.4 per cent chance of pound-dollar parity in the next one year, markedly higher than 0.2 per cent in early March when prospects of a no-deal outcome were seemingly off the table.
Bloomberg
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