Abu Dhabi's Taqa reported Dh6 billion in net profit in 2021 on the back of higher oil prices. Victor Besa / The National
Abu Dhabi's Taqa reported Dh6 billion in net profit in 2021 on the back of higher oil prices. Victor Besa / The National

Abu Dhabi’s Taqa 2021 profit more than doubles as revenue climbs on higher oil prices



Abu Dhabi National Energy Company, or Taqa as it is known, more than doubled its 2021 profit as revenue grew during the period on higher oil prices.

Net profit attributable to the equity holders for the full year rose to about Dh6 billion ($1.63bn), from Dh2.8bn the previous year, the company said in a statement to the Abu Dhabi Securities Exchange, where its shares are traded.

Revenue from oil and gas grew 78 per cent to Dh7.4bn, increasing overall group revenue 11 per cent to about Dh46bn. Capital expenditure increased 26 per cent last year to Dh4.7bn from 2020, driven by expenditure in transmission and distribution, the group’s largest business segment.

Upon approval of the financial results, the company's board proposed a final cash dividend of Dh1.2bn (1.1 fils per share). This will be the fourth and final quarterly dividend payment planned for the financial year of 2021, bringing total dividends for the year to Dh3.1bn.

"2021 showcased the financial and operational strength of Taqa ... we progressed in new areas such as green hydrogen and we achieved key milestones including the first water being produced from the Taweelah Reverse Osmosis plant – that once fully operational will be the largest of its kind in the world," said Jasim Husain Thabet, Taqa’s group chief executive and managing director.

"Internationally we also moved forward on our growth plans with signing the Tanajib cogeneration and desalination project in the Kingdom of Saudi Arabia with Saudi Aramco. We also became the partner of choice for decarbonising industries such as Adnoc’s offshore operations which we are linking to the onshore grid enabling power to come from low carbon electricity. This has laid the groundwork for 2022."

Taqa is also set to become a shareholder in Abu Dhabi’s clean energy company Masdar along with Adnoc and Mubadala Investment Company. It will take a 43 per cent stake in Masdar’s renewable energy business with Mubadala retaining a 33 per cent share and Adnoc holding a 24 per cent stake after the completion of the transaction in the coming months.

In Masdar’s green hydrogen business, Taqa will have a 24 per cent stake, while Adnoc will take 43 per cent shareholding, with Mubadala holding 33 per cent.

Oil prices have been increasing in the past year shoring up the earnings of oil companies. Oil prices have increased by more than 67 per cent last year and continue to rise amid higher demand, a tight market and geopolitical tensions related to the Ukraine crisis.

Brent, the global benchmark for two thirds of the world's oil, was trading at $90.61 per barrel at 10.46am UAE time on Friday, while West Texas Intermediate, the gauge that tracks US crude, was at $89.27 per barrel.

Taqa, together with Emirates Water and Electricity Company, also raised about $700m through its first green bond to diversify funding sources earlier this year.

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Ministry of Health and Prevention – 80011111

Dubai Health Authority – 800342 – The number to book a free video or voice consultation with a doctor or connect to a local health centre

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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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Updated: February 11, 2022, 10:05 AM

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