EDF to look for investment partners in UK’s first nuclear plant

LONDON // EDF, the French state-backed electricity conglomerate, is likely to look for new investors to help to share the burden of the United Kingdom's first new nuclear power station for a generation, analysts in London predicted today.

The move is expected after the finance chief of EDF resigned in a row over the £18 billion (Dh93.66bn) cost of building the much-delayed nuclear plant at Hinkley Point in the west of England.

Angelos Anastasiou, a utilities analyst at invesment bank Whitman Howard, told The National he expected the French would "look for anything that broadens the risk. EDF itself does not have the financial muscle to carry this project".

In October last year, EDF signed over a third of the project to the Chinese utility China General Nuclear Power, with the backing of the British chancellor, or finance minister, George Osborne.

However, it is thought that the French finance chief wanted to find another investor who would take on at least half of EDF’s remaining stake.

Jean-Bernard Levy, the chief executive of EDF, said yesterday he regretted the “hastiness” of the finance director Thomas Piquemal’s departure. The finance chief apparently believed that proceeding with the world’s most expensive nuclear project could threaten the whole group financially.

EDF’s shares fell by more than 8 per cent in early trading today, after it confirmed that Mr Piquemal had quit.

The Somerset power station was supposed to come on line next year, but it now looks like it will be at least a decade late.

Richard Warren, a senior policy adviser at the EEF, which represents Britain's manufacturers, told The National EDF's bid to bring in new investors would be difficult to achieve, due to the continuing uncertainty of UK energy policy.

“The constant fluctuation of energy policy is seriously undermining those people who want to invest in the sector. It’s also increasing the cost of capital for the sector, by as much as £12 per household,” he said today.

A spokesman for the government's department of energy and climate Change reiterated the government's support for new nuclear facility, telling The National: "Good progress continues to be made."

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%3Cp%3E%E2%97%8F%20Estijaba%20helpline%3A%208001717%3Cbr%3E%E2%97%8F%20UAE%20Ministry%20of%20Health%20and%20Prevention%20hotline%3A%20045192519%3Cbr%3E%E2%97%8F%20UAE%20Mental%20health%20support%20line%3A%20800%204673%20(Hope)%3Cbr%3EMore%20information%20at%20hope.hw.gov.ae%3C%2Fp%3E%0A

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.”

'The Last Days of Ptolemy Grey'

Rating: 3/5

Directors: Ramin Bahrani, Debbie Allen, Hanelle Culpepper, Guillermo Navarro

Writers: Walter Mosley

Stars: Samuel L Jackson, Dominique Fishback, Walton Goggins

Labour dispute

The insured employee may still file an ILOE claim even if a labour dispute is ongoing post termination, but the insurer may suspend or reject payment, until the courts resolve the dispute, especially if the reason for termination is contested. The outcome of the labour court proceedings can directly affect eligibility.

- Abdullah Ishnaneh, Partner, BSA Law

EDF to look for investment partners in UK’s first nuclear plant

In October last year, EDF signed over a third of the project to the Chinese utility China General Nuclear Power, with the backing of the British chancellor, or finance minister, George Osborne.

Mental%20health%20support%20in%20the%20UAE

'The&nbsp;Last&nbsp;Days&nbsp;of&nbsp;Ptolemy&nbsp;Grey'

Labour dispute

'The Last Days of Ptolemy Grey'