Saudi Aramco, through a wholly owned subsidiary, has agreed to buy a 10 per cent equity stake in Horse Powertrain, a joint venture between Renault Group and Chinese car maker Geely, amid efforts to create more sustainable transport solutions.
UK-based Horse Powertrain, which was set up in May, aims to offer hybrid and combustion-based low-emission powertrain solutions – components that transfer energy from the engine to help the car move.
Aramco will acquire the stake in equal parts from Renault and Geely, which will each retain 45 per cent equity stakes, the companies said in a joint statement on Friday.
The price to be paid by Aramco at closing, which is subject to closing conditions and regulatory approvals, will be based on a €7.4 billion ($7.9 billion) enterprise valuation, they said.
“Aramco’s investment is expected to directly contribute to the development and deployment of affordable, efficient and lower-carbon emission internal combustion engines globally,” said Ahmad Al Khowaiter, Aramco's executive vice president of technology and innovation.
“Our goal is to provide solutions that can help reduce transport greenhouse gas emissions while meeting the needs of both vehicle manufacturers and motorists.”
Saudi Aramco, the world’s largest oil-exporting company, is working on the development of sustainable fuels and is signing partnerships to help reduce global transport emissions.
The company aims to achieve net-zero Scope 1 and Scope 2 emissions by 2050.
In 2022, it also signed an agreement with Formula One’s Aston Martin for the development of internal combustion engines, sustainable fuels and advanced lubricants to lower emissions in racing cars.
Horse Powertrain, which has 17 global plants and nine industrial customers including vehicle manufacturers, expects to soon have an annual production of five million powertrain units.
It aims to create all types of powertrain solutions – full hybrids and long-range plug-in hybrids as well as internal combustion engines (ICE) that use alternative fuels such as ethanol, methanol, LPG, CNG and hydrogen.
The automotive industry will require a combination of various technologies, including highly efficient ICE, transmissions and hybrid powertrains, alternative fuels such as lower-carbon synthetic fuels and lower-carbon hydrogen, as well as vehicle electrification to support an “orderly energy and mobility transition around the world”, Aramco, Renault Group and Geely said.
The latest agreement also includes collaboration arrangements for Aramco and Valvoline on technologies, fuels and lubricants to collectively improve the performance of Horse Powertrain ICE.
“Mitigating carbon in the automotive industry won’t be a solo play,” said Luca de Meo, Renault Group's chief executive.
The deal will allow all three companies to “reinvent the future of ICE and hybrid technologies”, he said.
If you go
The flights
Emirates flies from Dubai to Seattle from Dh5,555 return, including taxes.
The car
Hertz offers compact car rental from about $300 (Dh1,100) per week, including taxes. Emirates Skywards members can earn points on their car hire through Hertz.
The national park
Entry to Mount Rainier National Park costs $30 for one vehicle and passengers for up to seven days. Accommodation can be booked through mtrainierguestservices.com. Prices vary according to season. Rooms at the Holiday Inn Yakima cost from $125 per night, excluding breakfast.
HIV on the rise in the region
A 2019 United Nations special analysis on Aids reveals 37 per cent of new HIV infections in the Mena region are from people injecting drugs.
New HIV infections have also risen by 29 per cent in western Europe and Asia, and by 7 per cent in Latin America, but declined elsewhere.
Egypt has shown the highest increase in recorded cases of HIV since 2010, up by 196 per cent.
Access to HIV testing, treatment and care in the region is well below the global average.
Few statistics have been published on the number of cases in the UAE, although a UNAIDS report said 1.5 per cent of the prison population has the virus.
The Sand Castle
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Stars: Nadine Labaki, Ziad Bakri, Zain Al Rafeea, Riman Al Rafeea
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KILLING OF QASSEM SULEIMANI
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Name: Dr Hassan Mohsen Elhais
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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.”
