Positive Zero, a Dubai-based decarbonisation company backed by US private equity firm BlackRock, is building the scale of its business as it considers an initial public offering (IPO) and plans to raise debt in a bid to enter new markets, its chief executive said.
“Any type of exit, including IPO, could be on the table,” David Auriau told The National. "To make an efficient listing, you need to have a certain scale and this is what we're working on every day."
The company, which secured up to $400 million in investment from BlackRock in 2023, plans to raise another “few hundred million dollars” in debt in the short term to fund its growth in potential new markets, he said.
Positive Zero is a one-stop shop for clean energy services and operates through three key businesses: SirajPower for solar power generation, Taka Solutions for energy efficiency improvements and Hypr Energy, which supplies mobile battery systems.
Since its deal with BlackRock, the company has doubled its earnings and nearly tripled its capital expenditure on projects year-on-year, Positive Zero said in a statement last month, without revealing the figures.
The company, which currently has more than 200 megawatts of distributed solar installations in operation, secured 43 new solar projects across the Gulf region last year. Distributed solar systems are commonly set up on building roofs, at businesses and factories, or on small land areas.
Positive Zero aims to be “at the forefront” of the UAE's evolving energy market and is focusing on the “key strategic accounts” that it has. These include major companies such as DP World, Landmark Group, Dubai Holding, and Lulu Group, Mr Auriau said.
The company practices a form of vendor financing, where it funds projects on behalf of its clients.
“Our work depends on a few key factors,” Mr Auriau said. "One of them is having a relatively bankable agreement, which allows us to finance and refinance [our activities] with banks."
He added that a key criterion was to have a creditworthy off-taker with firm financials.
In January, the Abu Dhabi National Exhibitions Company (Adnec) Group signed a power purchase agreement for the installation of solar panels on the roof of Adnec Centre Abu Dhabi, the largest exhibition venue in the Middle East.
Managed by SirajPower, the project will run for 15 years and feature a five-megawatt peak installed capacity of solar panels. Set to be up and running by late 2025, it will supply 30 per cent of Adnec Centre’s annual electricity needs.
The UAE has been increasingly boosting the share of power generated by low-emissions sources, which grew to 35 per cent last year – up from only 3 per cent in 2019, according to the International Energy Agency.
Strong annual growth of 29 per cent in solar photovoltaic (PV) generation and 25 per cent in nuclear helped displace thermal generation, which was down by almost 8 per cent annually, the agency said in its Electricity 2025 report.
Trade war impact
The solar energy sector has been a focal point of trade disputes in recent years, especially between the US and China. Since his return to the White House in January, US President Donald Trump has already imposed tariffs of 20 per cent on Chinese imports.
Positive Zero is “keeping an eye” on trade developments but is not worried about the impact of tariffs and other restrictions on solar goods, its chief executive said.
If the price of solar panels goes up, the company will charge customers more for their solar energy. However, Positive Zero is confident that solar is now so cost-effective that it will still be a good deal for customers to switch to solar rooftops or carports, Mr Auriau said.
IPO boom: UAE set for eight company listings in 2025
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Jersey win by 35 runs
UAE currency: the story behind the money in your pockets
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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.”
