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.
PROFILE OF SWVL
Started: April 2017
Founders: Mostafa Kandil, Ahmed Sabbah and Mahmoud Nouh
Based: Cairo, Egypt
Sector: transport
Size: 450 employees
Investment: approximately $80 million
Investors include: Dubai’s Beco Capital, US’s Endeavor Catalyst, China’s MSA, Egypt’s Sawari Ventures, Sweden’s Vostok New Ventures, Property Finder CEO Michael Lahyani
THE BIO: Martin Van Almsick
Hometown: Cologne, Germany
Family: Wife Hanan Ahmed and their three children, Marrah (23), Tibijan (19), Amon (13)
Favourite dessert: Umm Ali with dark camel milk chocolate flakes
Favourite hobby: Football
Breakfast routine: a tall glass of camel milk
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4,872 matches
1,942 teams
116 pitches
76 nations
26 UAE teams
15 Lebanese teams
2 Kuwaiti teams
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Countries recognising Palestine
France, UK, Canada, Australia, Portugal, Belgium, Malta, Luxembourg, San Marino and Andorra
In numbers: China in Dubai
The number of Chinese people living in Dubai: An estimated 200,000
Number of Chinese people in International City: Almost 50,000
Daily visitors to Dragon Mart in 2018/19: 120,000
Daily visitors to Dragon Mart in 2010: 20,000
Percentage increase in visitors in eight years: 500 per cent
Results
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5.30pm: Wathba Stallions Cup – Handicap (PA) Dh70,000 (T) 1,400m; Winner: AF Musannef, Tadhg O’Shea, Ernst Oertel
6pm: Al Dhafra – Maiden (PA) Dh80,000 (T) 1,600m; Winner: AF Mualami, Antonio Fresu, Abubakar Daud
6.30pm: Al Khaleej Al Arabi – Handicap (PA) Dh80,000 (T) 1,600m; Winner: Hawafez, Adrie de Vries, Abubakar Daud
7pm: Al Mafraq – Handicap (PA) Dh80,000 (T) 1,600m; Winner: JAP Almahfuz, Royston Ffrench, Irfan Ellahi
7.30pm: Al Samha – Handicap (TB) Dh80,000 (T) 1,600m; Winner: Celestial Spheres, Patrick Cosgrave, Ismail Mohammed
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- Flexible work arrangements
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COMPANY%20PROFILE
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Earth under attack: Cosmic impacts throughout history
- 4.5 billion years ago: Mars-sized object smashes into the newly-formed Earth, creating debris that coalesces to form the Moon
- 66 million years ago: 10km-wide asteroid crashes into the Gulf of Mexico, wiping out over 70 per cent of living species – including the dinosaurs.
- 50,000 years ago: 50m-wide iron meteor crashes in Arizona with the violence of 10 megatonne hydrogen bomb, creating the famous 1.2km-wide Barringer Crater
- 1490: Meteor storm over Shansi Province, north-east China when large stones “fell like rain”, reportedly leading to thousands of deaths.
- 1908: 100-metre meteor from the Taurid Complex explodes near the Tunguska river in Siberia with the force of 1,000 Hiroshima-type bombs, devastating 2,000 square kilometres of forest.
- 1998: Comet Shoemaker-Levy 9 breaks apart and crashes into Jupiter in series of impacts that would have annihilated life on Earth.
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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.”
COMPANY PROFILE
Founders: Alhaan Ahmed, Alyina Ahmed and Maximo Tettamanzi
Total funding: Self funded
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Titanium Escrow profile
Started: December 2016
Founder: Ibrahim Kamalmaz
Based: UAE
Sector: Finance / legal
Size: 3 employees, pre-revenue
Stage: Early stage
Investors: Founder's friends and Family
COMPANY PROFILE
Name: Akeed
Based: Muscat
Launch year: 2018
Number of employees: 40
Sector: Online food delivery
Funding: Raised $3.2m since inception
Global state-owned investor ranking by size
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Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
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Labour dispute
The insured employee may still file an ILOE claim even if a labour dispute is ongoing post termination, but the insurer may suspend or reject payment, until the courts resolve the dispute, especially if the reason for termination is contested. The outcome of the labour court proceedings can directly affect eligibility.
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The biog
From: Upper Egypt
Age: 78
Family: a daughter in Egypt; a son in Dubai and his wife, Nabila
Favourite Abu Dhabi activity: walking near to Emirates Palace
Favourite building in Abu Dhabi: Emirates Palace
