Kezad teams up with UAE-based Dana Group for steel project in Abu Dhabi

Kezad Group, a subsidiary of AD Ports Group, has signed a preliminary agreement with Dana Steel for the establishment of a new steel plant in Abu Dhabi as the emirate focuses on boosting its manufacturing sector.

As part of the agreement, Dana Steel will develop a 50,000-square-metre “hot and cold rolling” steel complex that will help the company to increase its manufacturing capacity in the GCC and replace imported raw materials with a new "made in UAE" supply, AD Ports said on Friday.

Dana Steel is part of the UAE-based Dana Group, which has interests in sectors including steel, oil, retail, healthcare and hospitality. The total capacity of the new plant will be 500,000 tonnes.

“Owing to the modern infrastructure and efficient transportation network offered by Kezad and Khalifa Port, investors such as Dana Steel are selecting our industrial ecosystem as a base from which to grow their operations in the UAE and globally,” said Mohamed Al Ahmed, chief executive of Kezad Group.

The agreement for the new project comes as Abu Dhabi aims to more than double the size of its manufacturing sector to Dh172 billion ($47 billion) by 2031 as part of its new industrial strategy, which was announced in June.

Abu Dhabi government is investing Dh10 billion across six industrial programmes to boost the contribution of the industrial sector to the emirate’s economy as part of the strategy.

“This project will be our ninth industrial facility within the UAE," said Ankur Dana, chief executive of Dana Steel Industry.

"Several unique factors led us to choose Kezad for this venture, including the world-class infrastructure on offer, in addition to seamless connectivity to global markets and easy access to natural gas at competitive rates."

AD Ports, which operates industrial cities and free zones in Abu Dhabi, launched Kezad Group in September to consolidate and grow its Economic Cities and Free Zones offering, as it seeks to strengthen the emirate's position as an industrial and manufacturing centre.

The company's Khalifa Industrial Zone Abu Dhabi (Kizad) and ZonesCorp (specialised economic zones) have been integrated into Kezad Group, which comprises 12 economic zones with a total area of 550 square kilometres, including 100 square kilometres designated as free zones.

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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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