Ta’ziz and India’s Reliance sign shareholder agreement for $2bn Ruwais project

Abu Dhabi Chemicals Derivatives Company, better known as Ta’ziz, and Reliance Industries, India's largest private petrochemicals company, have signed a formal shareholder agreement on their new joint venture to develop a major chemicals project at the Ta’ziz industrial chemicals zone in Ruwais.

Reliance is partnering with Adnoc and Abu Dhabi holding company ADQ for the Ta’ziz EDC and PVC joint venture, which will construct and operate a chlor-alkali, ethylene dichloride (EDC) and polyvinyl chloride (PVC) plant with an investment of more than $2 billion, Adnoc said in a statement on Tuesday.

These chemicals will be produced in the UAE for the first time, “unlocking new revenue streams and opportunities for local manufacturers”, the statement said.

The agreement was signed during the visit of Mukesh Ambani, chairman and managing director of Reliance, to Adnoc's headquarters, where he met Dr Sultan Al Jaber, Adnoc's managing director and group chief executive.

They discussed opportunities for partnership and growth across the hydrocarbon value chain.

“Reliance is a valued strategic partner and our collaboration at Ta'ziz underscores the important role of industrial and energy co-operation as a means of strengthening the deep-rooted and friendly ties between the UAE and India,” said Dr Al Jaber, who is also Minister of Industry and Advanced Technology.

“We are building on this partnership and the progress at Ta'ziz to unlock more opportunities to drive the UAE’s industrial and manufacturing growth, while advancing co-operation on decarbonisation, new energies and upstream production.”

The UAE and India signed a Comprehensive Economic Partnership Agreement (CEPA) in February that aims to boost non-oil trade between the two countries to $100bn in five years, from $60bn currently.

The deal, which will take effect on May 1, is expected to support the growth of national industries in the UAE, enhance their competitiveness, accelerate the pace of adopting advanced technology and create competitive advantages in new fields.

The Ta'ziz complex is also expected to benefit from the trade agreement.

The chemicals set to be produced by the Ta’ziz EDC and PVC joint venture with Reliance have a wide range of industrial applications, “enabling local supply chains and meeting growing demand in key export markets”, Adnoc said.

Chlor-alkali enables the production of caustic soda, crucial to the alumina refining process, while EDC is used in the production of PVC, a high-strength thermoplastic material used to manufacture industrial and consumer products such as pipes, windows fittings, cables, films and flooring.

Chemicals is also a priority sector for the UAE's Operation 300bn strategy, which aims to raise the industrial sector’s contribution to national gross domestic product to Dh300bn by 2031.

“The production of chlor-alkali, EDC and PVC will create export opportunities in target markets in South-east Asia and Africa, as well as provide local industry with a source of critical raw materials manufactured in the UAE for the first time, strengthening in-country value,” Adnoc said.

The Ta’ziz EDC and PVC project is making “solid progress” towards the detailed design phase and a final investment decision is expected to be taken later this year.

Anchored by a refinery, Ruwais is home to the emirate’s biggest petrochemical projects. Wam

“I am happy to see the quick progress made by the Ta'ziz EDC and PVC joint venture between Reliance Industries Limited and Ta’ziz in a short time,” Mr Ambani said.

“This joint venture is a testimony to the strong and growing ties between India and the UAE and will be a benchmark for more such projects built on strengths of the two nations.”

Dr Al Jaber and Mr Ambani also exchanged a signed framework agreement to explore collaboration in the exploration, development and production of conventional and unconventional resources in Abu Dhabi as well as to decarbonise operations including carbon dioxide sequestration.

Mr Ambani also met Mohamed Al Ramahi, chief executive of Masdar, to explore potential opportunities for collaboration in renewable energy and green hydrogen, the statement said.

The UAE is creating a global clean energy powerhouse under the Masdar brand, consolidating the efforts of Adnoc, Taqa and Mubadala in renewable energy and green hydrogen.

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.”

Ta’ziz and India’s Reliance sign shareholder agreement for $2bn Ruwais project

Reliance is partnering with Adnoc and ADQ for the chemicals project, which is aimed at supporting the UAE’s industrial and manufacturing growth