ADFG and other related entities now own 9% of Dana Gas

Abu Dhabi Financial Group, a private investment firm with $6 billion in assets under management, and two other related entities now own around 9 per cent in Dana Gas, the Sharjah-based energy company in midst of court battles over the legality of its US$700 million sukuk.

The two other entities are Goldilocks Investment Company, an Abu Dhabi investment fund controlled by ADFG, and Integrated Capital, a unit of Dubai-based investment bank Shuaa Capital in which ADFG is the largest shareholder, Goldilocks said in a statement on Wednesday.

Goldilocks said it now has a 5.21 per cent stake in Dana Gas, which confirmed the acquisition in a statement to the Abu Dhabi exchange where its shares are traded. The remainder is held by ADFG and Integrated Capital. Last year, Goldilocks said it acquired around a five per cent stake in Abu Dhabi-listed Dana Gas.

Both Dana Gas and ADFG declined to give further details about Wednesday’s disclosure.

“Goldilocks is encouraged by Dana Gas’ positive operational performance and improving financial condition,” it said in a statement. “Goldilocks looks forward to working with all stakeholders to enhance Dana Gas’ profile and to make it one of UAE’s successful and profitable oil & gas companies.”

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Dana Gas' Sharjah Dec 25 court hearing adjourned, spokeswoman says

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Dana Gas is currently embroiled in legal battles after declaring in June last year its own sukuk non-Sharia compliant, citing recent developments in Islamic finance prior to the issuance maturing in October.

This is the second time that Dana Gas has sought to restructure Islamic bonds, following a deal with creditors in 2013 over a $1 billion sukuk that matured in October 2012. The company had faced cash flow issues due to outstanding payments from Egypt and the semi-autonomous Kurdish region of Iraq, where a large portion of its assets and production facilities are located.

In November, Dana Gas posted a 700 per cent increase in its third quarter net profit due to the favourable outcome of its arbitration dispute with the Kurdistan Regional Government (KRG) in August.

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.”

Four-day collections of TOH

Day Indian Rs (Dh)

Thursday 500.75 million (25.23m)

Friday 280.25m (14.12m)

Saturday 220.75m (11.21m)

Sunday 170.25m (8.58m)

Total 1.19bn (59.15m)

(Figures in millions, approximate)

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