The European missile maker MBDA expects to maintain at least €1 billion (Dh3.88bn) in annual sales in the Middle East, its biggest export market, as countries upgrade their missile systems, a company official said.
MBDA had over €3bn of orders from the Middle East in 2015, exceeding annual averages, said Florent Duleux, vice president Middle East. The 2016 figures have yet to be disclosed. In 2015, MBDA had a total turnover of €2.9bn and is aiming to reach €4bn in annual sales by 2020.
“They [Middle Eastern countries] are getting rid of old systems and buying new ones because they are becoming obsolete with the evolution of technology people have to reinvest in defence,” said Mr Duleux in an interview at the International Defence Exhibition and Conference in Abu Dhabi.
MBDA, which competes with the likes of Raytheon from the US, was formed in 2001 through a partnership between UK’s BAE Systems with a 37.5 per cent stake, Airbus with a 37.5 per cent stake and Italy’s Finmeccanica (since renamed Leonardo) with the remainder.
Half of the company’s exports go to the Middle East and the other half is sold mainly in Asia.
Domestic sales, which are half of total sales, are concentrated in Germany, France, the UK, Italy and Spain.
The company did see an effect from lower oil prices on defence spending in the region, but is adjusting its prices to meet client needs.
“Oil prices has definitely an affect,” said Mr Duleux. “We address the need for high ratio of effectiveness versus affordability.”
The company is also increasingly cooperating with local companies to boost its sales.
It struck a deal to transfer technology to UAE company Siham Al Khaleej Technology to produce a weapon system called Siham3.
The company is also talking to Abu Dhabi-owned Emirates Defence Industries Company (Edic) and the emirate’s Tawazun Holding to have more partnerships with UAE companies.
“We are in constant discussion with Edic and Tawazun and hopefully we will able to announce sooner than later a symbolic, significant transfer of technology and systems to be built here in the UAE,” said Mr Duleux.
“Hopefully, next year we can announce something.”
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[ Idex 2017 ]
■ Nimr wins contract to supply armoured vehicles to UAE Armed Forces
■ Dh344 million in contracts signed on final day of defence show
■ Fourth day brings Dh3.42 billion in new deals
■ Photo gallery: Idex 2017 in Abu Dhabi, day three
■ AK-47 rifle maker Kalashnikov has UAE factory in its sights
■ Photo gallery: Sights from the second day at Idex 2017
■ UAE and Russia to develop fighter jet
■ UAE Armed Forces awards deals valued at Dh6.91 billion
■ Thales set to sign deal with UAE Armed Forces this week
■ US military defence technology firm Harris lands UAE Armed Forces contract
■ Photo gallery: Idex 2017 opens in Abu Dhabi
■ Dh4.41bn worth of arms deals struck on day one of defence show
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dalsaadi@thenational.ae
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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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