Abu Dhabi's ADQ joining with US private equity firm Energy Capital Partners for a $25 billion energy and data centres mega strategy is the latest big-ticket investment from the UAE.
Abu Dhabi's sovereign wealth fund announced on Wednesday that it has partnered with Energy Capital Partners to invest in energy projects and power data centres, mostly in the US.
The move puts the spotlight on the Emirates' efforts to tap into high-potential sectors and is also in line with plans to position itself for a future economy fuelled by technology.
Why is ADQ doing this deal?
ADQ's investment is in line with trends in the technology sector, in particular, data centres, which have emerged as an important component as the consumption of data has exploded. Remote working trends, largely established in response to the Covid-19 pandemic, have led to increased data consumption, fuelling the adoption of cloud services and the data centres that house them.
That has given incentive for companies and investors to pour money into the segment, betting on an industry expected to grow further.
"As an active investor with a sharp focus on critical infrastructure and proven capability in building long-term partnerships, we are in a prime position to help address these shifting structural dynamics," Mohamed Alsuwaidi, managing director and group chief executive of ADQ, said in a statement.
The global data centre market is projected to hit nearly $585 billion by 2032, from an estimated $242.72 billion in 2024, growing at a compound annual rate of almost 12 per cent, data from Fortune Business Insights shows.
The ADQ-Energy Capital Partners deal will involve an initial $5 billion being poured into the projects, mostly in the US. The full $25 billion will be used within the next five years, with the potential to be increased if there are other opportunities, Bloomberg reported, quoting ADQ deputy group chief executive Hamad Al Hammadi.
How crucial is energy for data centres?
Data centres consume a considerable amount of energy and this will only grow further as the adoption of digitalisation and artificial intelligence increases.
In the US, where ADQ's data centre investment will be concentrated, the power needs of data centres are projected to grow to about three times higher than the current capacity by the end of the decade, just to keep pace with adoption, consultancy McKinsey said.
That means that, from the present 3 per cent to 4 per cent of total US power demand, those needs will soar to between 11 per cent and 12 per cent by 2030, it said.
The US Department of Energy, meanwhile, previously said that data centre load growth had tripled in the past decade and was projected to double or triple by 2028. US electricity demand is seen to account for data centre expansion and the rise of AI applications, it added.
What deal says about UAE-US relations
Energy is one of ADQ's key portfolios. With the energy mix expected to shift considerably, "this is influencing an increasing focus on large-scale investments in renewable energy, resulting in enhanced energy efficiency", it said.
ADQ's strategy also mirrors the broader strategy of the UAE to become a major player in technology and energy globally, and the ADQ-Energy Capital Partners deal highlights how relations between the UAE and US continue to grow.
The Emirates views the US as a major business partner in energy and technology, and investing in the world's largest economy is an “absolute imperative”, Dr Sultan Al Jaber, Minister of Industry and Advanced Technology, said this month in a conference in Houston, Texas.
On Tuesday, Mr Trump also highlighted UAE-US efforts to strengthen co-operation on the economy and technology during a meeting with Sheikh Tahnoon bin Zayed, Deputy Ruler of Abu Dhabi and National Security Adviser.
In February, Adnoc, the Abu Dhabi-based UAE energy bellwether, moved its US investments to XRG, the $80 billion international lower-carbon energy and chemicals investment company launched by Adnoc last November.
Among those investments is a 35 per cent stake in an ExxonMobil hydrogen plant in Texas, as well as an 11.7 per cent equity stake in the NextDecade Rio Grande LNG export facility. After Mr Trump's election victory, Dubai-based Damac announced a $20 billion investment in American data centres. Meanwhile, UAE-based technology fund MGX joined Big Tech companies in the recent Stargate AI project in Texas.
Company: Instabug
Founded: 2013
Based: Egypt, Cairo
Sector: IT
Employees: 100
Stage: Series A
Investors: Flat6Labs, Accel, Y Combinator and angel investors
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Ziina users can donate to relief efforts in Beirut
Ziina users will be able to use the app to help relief efforts in Beirut, which has been left reeling after an August blast caused an estimated $15 billion in damage and left thousands homeless. Ziina has partnered with the United Nations High Commissioner for Refugees to raise money for the Lebanese capital, co-founder Faisal Toukan says. “As of October 1, the UNHCR has the first certified badge on Ziina and is automatically part of user's top friends' list during this campaign. Users can now donate any amount to the Beirut relief with two clicks. The money raised will go towards rebuilding houses for the families that were impacted by the explosion.”
ENGLAND SQUAD
For first two Test in India Joe Root (captain), Jofra Archer, Moeen Ali, James Anderson , Dom Bess, Stuart Broad , Rory Burns, Jos Buttler, Zak Crawley, Ben Foakes, Dan Lawrence, Jack Leach, Dom Sibley, Ben Stokes, Olly Stone, Chris Woakes. Reserves James Bracey, Mason Crane, Saqib Mahmood, Matthew Parkinson, Ollie Robinson, Amar Virdi.
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Previous men's records
- 2:01:39: Eliud Kipchoge (KEN) on 16/9/19 in Berlin
- 2:02:57: Dennis Kimetto (KEN) on 28/09/2014 in Berlin
- 2:03:23: Wilson Kipsang (KEN) on 29/09/2013 in Berlin
- 2:03:38: Patrick Makau (KEN) on 25/09/2011 in Berlin
- 2:03:59: Haile Gebreselassie (ETH) on 28/09/2008 in Berlin
- 2:04:26: Haile Gebreselassie (ETH) on 30/09/2007 in Berlin
- 2:04:55: Paul Tergat (KEN) on 28/09/2003 in Berlin
- 2:05:38: Khalid Khannouchi (USA) 14/04/2002 in London
- 2:05:42: Khalid Khannouchi (USA) 24/10/1999 in Chicago
- 2:06:05: Ronaldo da Costa (BRA) 20/09/1998 in Berlin
David Haye record
Total fights: 32
Wins: 28
Wins by KO: 26
Losses: 4
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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Director: Romany Saad
Starring: Mirfat Amin, Boumi Fouad and Tariq Al Ibyari
Killing of Qassem Suleimani
Four motivational quotes from Alicia's Dubai talk
“The only thing we need is to know that we have faith. Faith and hope in our own dreams. The belief that, when we keep going we’re going to find our way. That’s all we got.”
“Sometimes we try so hard to keep things inside. We try so hard to pretend it’s not really bothering us. In some ways, that hurts us more. You don’t realise how dishonest you are with yourself sometimes, but I realised that if I spoke it, I could let it go.”
“One good thing is to know you’re not the only one going through it. You’re not the only one trying to find your way, trying to find yourself, trying to find amazing energy, trying to find a light. Show all of yourself. Show every nuance. All of your magic. All of your colours. Be true to that. You can be unafraid.”
“It’s time to stop holding back. It’s time to do it on your terms. It’s time to shine in the most unbelievable way. It’s time to let go of negativity and find your tribe, find those people that lift you up, because everybody else is just in your way.”
The Melbourne Mercer Global Pension Index
The Melbourne Mercer Global Pension Index
Mazen Abukhater, principal and actuary at global consultancy Mercer, Middle East, says the company’s Melbourne Mercer Global Pension Index - which benchmarks 34 pension schemes across the globe to assess their adequacy, sustainability and integrity - included Saudi Arabia for the first time this year to offer a glimpse into the region.
The index highlighted fundamental issues for all 34 countries, such as a rapid ageing population and a low growth / low interest environment putting pressure on expected returns. It also highlighted the increasing popularity around the world of defined contribution schemes.
“Average life expectancy has been increasing by about three years every 10 years. Someone born in 1947 is expected to live until 85 whereas someone born in 2007 is expected to live to 103,” Mr Abukhater told the Mena Pensions Conference.
“Are our systems equipped to handle these kind of life expectancies in the future? If so many people retire at 60, they are going to be in retirement for 43 years – so we need to adapt our retirement age to our changing life expectancy.”
Saudi Arabia came in the middle of Mercer’s ranking with a score of 58.9. The report said the country's index could be raised by improving the minimum level of support for the poorest aged individuals and increasing the labour force participation rate at older ages as life expectancies rise.
Mr Abukhater said the challenges of an ageing population, increased life expectancy and some individuals relying solely on their government for financial support in their retirement years will put the system under strain.
“To relieve that pressure, governments need to consider whether it is time to switch to a defined contribution scheme so that individuals can supplement their own future with the help of government support,” he said.
