The board of Abu Dhabi National Energy Company (Taqa) gave the nod to a sale and purchase agreement for its asset swap deal with Abu Dhabi Power Corporation (ADPower) that will create a regional utilities champion.
Taqa's board also approved the issuance of a mandatory convertible bond to ADPower for the planned deal, it said in a statement to the Abu Dhabi Securities Exchange, where its shares trade. The energy firm has also recommended its shareholders to approve the deal at the annual general assembly due to be held on April 29.
ADPower in February submitted an offer to transfer most of its water and electricity generation, transmission and distribution companies portfolio to Taqa. The assets, worth approximately Dh120 billion at the end of 2018, generated a cumulative net profit of Dh4.8bn, the two firms said in statement at the time.
Taqa, as part of the deal, will issue 106.3 billion shares to ADPower, which means that once the deal is executed, AD Power will own 98.6 per cent of Taqa's entire share capital, placing a value on Taqa of Dh4.16bn.
The combined entity will have total assets worth Dh200bn, with more than 85 per cent of its revenue coming from regulated and contracted businesses, the companies said.
The transaction will allow the joint entity to have a "strong platform for new projects locally and internationally," the company's chief executive, Jasim Thabet, told The National in an interview at the time.
Following the deal announcement, Moody's Investors Service placed all the ratings of Taqa under review for an upgrade.
“The review for upgrade reflects Moody's view that a successful transfer of the ADPower assets would reinforce the strategic importance of Taqa for the government of Abu Dhabi,” it said in a February 13 statement.
ADPower owns several power and utility subsidies in Abu Dhabi. The deal with Taqa is part of ongoing efforts in the UAE capital to consolidate assets. The emirate has already seen large-scale mergers in the banking and finance industry following the slide in oil prices in 2016.
The deal would make the new entity one of the top utility companies in the Europe, Middle East and Africa region and also make Taqa one of the largest-listed companies on the Abu Dhabi stock market.
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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.”
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Started: 2018
Founders: Eslam Hussein and Pulkit Ganjoo
Based: Dubai
Sector: Transport
Size: 9 employees
Investment: $1,275,000
Investors: Class 5 Global, Equitrust, Gulf Islamic Investments, Kairos K50 and William Zeqiri
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- Laying out the report in the House of Commons, David Cameron told MPs: "The main findings of the review support the conclusion that membership of, association with, or influence by the Muslim Brotherhood should be considered as a possible indicator of extremism."
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Tax authority targets shisha levy evasion
The Federal Tax Authority will track shisha imports with electronic markers to protect customers and ensure levies have been paid.
Khalid Ali Al Bustani, director of the tax authority, on Sunday said the move is to "prevent tax evasion and support the authority’s tax collection efforts".
The scheme’s first phase, which came into effect on 1st January, 2019, covers all types of imported and domestically produced and distributed cigarettes. As of May 1, importing any type of cigarettes without the digital marks will be prohibited.
He said the latest phase will see imported and locally produced shisha tobacco tracked by the final quarter of this year.
"The FTA also maintains ongoing communication with concerned companies, to help them adapt their systems to meet our requirements and coordinate between all parties involved," he said.
As with cigarettes, shisha was hit with a 100 per cent tax in October 2017, though manufacturers and cafes absorbed some of the costs to prevent prices doubling.
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Started: 2018
Founders: Rishabh Khanna, Ankit Khanna and Sahil Makker
Based: India, UAE and the UK
Industry: EdTech
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Born: Mukalla, Yemen, 1979
Education: UAE University, Al Ain
Family: Married with two daughters: Asayel, 7, and Sara, 6
Favourite piece of music: Horse Dance by Naseer Shamma
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Best advice you’ve ever been given: If you have a dream, you have to believe it, then you will see it.
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Started: 2016
Founders: Hussein Nasser Eddin, Laila Akel, Tayeb Akel
Based: Ramallah, Palestine
Sector: Technology, Security
# of staff: 13
Investment: $745,000
Investors: Palestine’s Ibtikar Fund, Abu Dhabi’s Gothams and angel investors
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Always use only regulated platforms
Stop all transactions and communication on suspicion
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Report to local authorities
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