Ardian considering co-investments in green hydrogen with Masdar and PIF

French private equity firm expects to close first deal with Abu Dhabi clean energy company next year

Ardian senior managing director Francois-Aissa Touazi says the company plans to boost its assets in the Gulf to as much as $40 billion within five years. Photo: Ardian

French private equity company Ardian is evaluating co-investment in green hydrogen projects with Abu Dhabi’s Masdar and exploring a tie up for joint deals in the sector with Saudi Arabia’s Public Investment Fund, a senior Ardian executive has said.

Ardian, which has $169 billion of assets under management, expects to announce the first joint investment with the Abu Dhabi clean energy company next year through its $2.2 billion clean energy, infrastructure and storage investments fund, Francois-Aissa Touazi, senior managing director and member of Ardian’s executive committee, told The National in an interview.

The investment manager is betting big on green hydrogen and is building an in-house team to help explore deals globally, particularly in the Gulf, where oil-rich states are trying to diversify their economies away from hydrocarbons.

“What we would like is to benefit from the expertise of Masdar in the GCC and to invest alongside them … there are deals we are currently working on, and I hope next year we can do our first deal in the region,” Mr Touazi said.

Paris-headquartered Ardian, one of the top private equity players in Europe, is also launching a hydrogen tech growth fund to capitalise on the huge potential the sector offers.

The company is in the process of hiring a hydrogen investment team in its Abu Dhabi office amid strong investment interest from companies such as Masdar, as well as a sovereign push for more projects in Saudi Arabia and Oman, said Mr Touazi, who is also the chairman of Ardian Abu Dhabi. “I need to have a team which will look at all these transactions in the region.”

Ardian, which set up a base in Abu Dhabi Global Market last year, is also preparing to hold talks with the PIF to explore joint investment opportunities in green hydrogen projects and related infrastructure in the kingdom and beyond.

An Ardian team is set to meet the $925 billion Saudi sovereign fund within the next two weeks. The meeting follows media reports that the kingdom is preparing to make a multibillion-dollar bet on hydrogen and will launch a new company to produce the clean fuel.

The PIF has already created the Energy Solutions Company to finance green hydrogen power production, Bloomberg cited sources as saying this month. The new body is expected to invest at least $10 billion and that number could grow significantly depending on demand for hydrogen and its investment pipeline, the report said.

Funded by the PIF, it is expected to be led by former Thyssenkrupp Uhde chief executive Cord Landsmann and will make some investments jointly with state-controlled oil producer Saudi Aramco, the report added.

“What we would like to see is how we can explore ways of collaboration with Saudis and to have a better view on what they have in mind,” Mr Touazi said. “We clearly align with Saudi [economic diversification] objectives, we know the potential for green hydrogen and we know there is a strong political ambition to take a leading position in hydrogen.”

The discussion with PIF will focus on finding common grounds to work together, as, along with investment, Ardian also offers an ecosystem of portfolio companies in Europe who are working closely with the team in Abu Dhabi, he added.

Gulf hydrogen ambitions

The UAE and Saudi Arabia – the two biggest Arab economies – as well as Oman and other members of the Gulf region have ambitions to become global suppliers and trading hubs of hydrogen.

The region, home to a third of the world’s proven oil reserves, is already investing heavily to boost its renewable energy sources, essential to produce clean hydrogen.

Saudi Arabia, Opec’s top oil producer, has started building an $8.4 billion green hydrogen plant in its futuristic Neom city. The plant, one of the few large-scale facilities globally to enter the construction phase, is expected to produce up to 600 tonnes of carbon-free hydrogen daily in the form of green ammonia by the end of 2026.

State oil company Aramco also has ambitions to enter the hydrogen market. The company aims to account for at least 15 per cent of blue hydrogen production globally, in addition to investing in green hydrogen, PIF governor Yasir Al Rumayyan said earlier this year.

The UAE, meanwhile, updated its Energy Strategy 2050 and laid out the National Hydrogen Strategy in June last year to boost the Emirates' commitment towards achieving sustainable economic and social development goals.

Ardian's office in ADGM. The company is in process of hiring a team of hydrogen investment experts. Photo: Ardian

The UAE’s hydrogen ambitions include making the top 10 producers of green hydrogen by 2031 and hitting a production target of 1.4 million tonnes a year. The Emirates also plans to establish hydrogen centres to speed up industry adoption, cultivating a supply chain and enabling infrastructure to attract global energy players.

Oman is also pursuing aggressive green hydrogen plans. The sultanate, which is the second-largest liquefied natural gas (LNG) exporter in the Middle East after Qatar, aims to produce at least 1 million tonnes of renewable hydrogen a year by 2030 before increasing capacity to 3.75 million tonnes by 2040.

By 2050, Oman plans to have a green hydrogen capacity of 8.5 million tonnes, greater than Europe's current hydrogen demand of about 8 million tonnes, according to government data.

Mr Touazi said Ardian's decision to build a hydrogen investment team and base it in Abu Dhabi reflects the recognition of potential growth in the sector.

“We are aware of the ambition of Gulf states, especially the UAE and Saudi Arabia on hydrogen, and would like to participate in this journey by offering our expertise and bringing investment to the region,” he said.

Fuel of the future

Hydrogen is usually referred to as the fuel of the future as it burns without releasing carbon emissions, the main source of global warming and climate change.

Green hydrogen is produced through a process called electrolysis, in which water is split into hydrogen and oxygen using electricity generated from renewable sources. The grey version uses hydrocarbons to produce hydrogen while natural gas and carbon capture and storage is used to produce the blue variety of the fuel.

Production of hydrogen is expensive and requires vast investment in manufacturing and related infrastructure before it can be produced at a level to be used as a sustainable aviation fuel or for other commercial applications.

The global project pipeline has grown by a factor of seven since 2020 to 1,572 schemes, as of May this year, with the number of clean hydrogen projects reaching a final investment decision stage rising seven-fold to $75 billion in committed investment across 434 projects globally, the Hydrogen Council said in its report in September.

Total announced investment through to 2030 in the hydrogen industry has increased by about 20 per to $680 billion, said the report co-written by McKinsey & Company.

More deals on the cards?

Ardian, which has been operating in the UAE and the wider Middle East region for more than two decades, counts some of the biggest sovereign wealth funds, family offices, government-related institutional investors as well as pension funds and corporate investment houses in its client base of 75 in the region.

The Abu Dhabi Investment Authority, Mubadala Investment Company and the Emirates Investment Authority are among its sovereign clients in the UAE. Elsewhere in the region, the company is working with the PIF, as well as the investment authority in Qatar and Kuwait, Mr Touazi said.

The French company manages more than $25 billion in client assets in the Gulf region and plans to boost it to between $35 billion and $40 billion in the next five years. “If we can reach $40 billion, I would be more than happy, but I need to do a lot of work [to get there],” he said.

Ardian, over the past four to five years, has also deployed more than $9 billion in capital in the region in deals that include buying private equity portfolios from sovereign funds, pension funds and family offices. It is seeking more such deals to grow its assets under management in the region.

It is a “win-win partnership”, with Ardian acting as a liquidity provider, which allows both parties to diversify their portfolios and grow, he said.

Ardian’s co-investment pipeline of deals is also robust, especially in the UAE and Saudi Arabia, amid the push to boost their non-oil economic base.

In June, Ardian collaborated with the PIF for a £3.26 billion ($4.26 billion) deal to buy stakes in Heathrow Airport from infrastructure investment company Ferrovial.

Under the agreement, which involved other sellers, Ardian and the PIF acquired 22.6 per cent and 15 per cent, respectively, of FGP Topco, the parent company of Heathrow Airport Holdings.

“We have worked together on the London airport [deal]. We have very strategic partnerships and we have been working with the PIF since 2015. It’s a long and strong relationship. we have a lot [of deals] where we have co-investors from the GCC, especially in the healthcare sector,” he said.

Fund-raising

The Gulf and the wider Middle East is also important for Ardian’s global fund-raising ambitions, as investors from the region account for a sizeable chunk of new funding.

In May, the Qatar Investment Authority signed a deal with Ardian to anchor an investment commitment in Ardian Semiconductor, a fund which seeks investment in the semiconductor industry in France as well as the rest of Europe.

“When we launch a fund, Middle East investors often represent 15 per cent to 20 per cent, sometimes even more, depending on the fund and so, for us, it's important," Mr Touazi said.

The Abu Dhabi Investment Authority is the largest partner in the region for Ardian. Not only does it put money into Ardian’s direct investment funds, it also participates in funds of funds, which invest capital into a wider portfolio of other investment funds.

“We do a lot of investment together. It's very effective, it's a model, even for the industry,” he said.