InvestAD eyes African mining rights

Invest AD may buy mining rights in Africa to tap future demand for commodities generated by the expansion of China's economy. The investment fund, owned by the Abu Dhabi Government, has been looking at concessions in central Africa among other potential opportunities overseas as it seeks to transform itself into a viable commercial company, the firm's chief executive said. Africa is to be a major focus for Invest AD in the future and an African stock fund was among four equities funds the firm launched this year. "We're going to a place like Congo because we are discovering tremendous opportunities to get concessions for the right minerals that either are, or are on the way to becoming, strategic for the industrial engine of the East," Nazem al Kudsi told The National in a rare interview. While metal prices declined during the financial crisis, many experts believe surging demand from Asia will drive up the value of those goods as global economies rebound. Prices for nickel and steel have already climbed significantly since reaching lows in the summer. The firm is also looking at acquiring a logistics company in the MENA region and is reviewing agribusiness investments at the behest of institutional clients. While the Abu Dhabi Government was doing a "tremendous job" securing sources of food abroad, he said food security and a water shortage were near the top of the region's investment agenda. Many governments and private firms in the Gulf, which imports most of its food, have spent billions of dollars buying farmland and other agricultural assets in Africa and Asia in the past two years. "Water and food are going to be the next frontiers out there," Mr al Kudsi said. "Last time I looked at the numbers, the world population isn't getting smaller." Invest AD also plans to launch a property fund that will invest in distressed assets and in growing property markets. The fund, expected to be in the range of US$200 million (Dh734.6m) to $500m, comes as a number of local and international investors raise money to invest in distressed property in the UAE. Those plans are the extension of a series of investments Invest AD has made since Mr al Kudsi became its chief executive last summer. It recently announced it would raise a $400m private equity fund, and this summer said it bought a stake in a ski resort in Sochi, the Russian city that is to host the 2014 Winter Olympics. The company also plans a partial listing of its shares on stock markets in Abu Dhabi and perhaps London in about three years, Mr al Kudsi said. And it is negotiating with the Abu Dhabi Investment Council (ADIC) to allow management to own shares in the firm as part of their compensation packages. "We have to share the risk of the business with the shareholders," he said. "That's what's going to take the firm to the next step." The company, a subsidiary of ADIC, was started in 1977 as a government investment arm similar to but much smaller than the Abu Dhabi Investment Authority, which is estimated to have more than $300 billion in assets. But Invest AD's mandate changed in 2007, when the council decided to allow outside investors to put their money in alongside it, making it perhaps the only sovereign fund in the world to welcome external funds. As part of the transition, the firm, once called the Abu Dhabi Investment Company, changed its name this summer. Under its new organisation, Invest AD has two lines of business: a proprietary investment wing that continues to invest on behalf of the government; and a third-party investment arm that aims to attract capital from outside investors. It has also formed partnerships in recent years, including with the Swiss bank UBS for a regional infrastructure fund and with the German private bank BHF to advise on investments in the region. "There's a lot of excitement in Abu Dhabi," Mr al Kudsi said. "Not because, as many in the West perceive, Abu Dhabi has piles and piles of cash and it's up for grabs. "It's because of the investment opportunities in Abu Dhabi and the wider region, which are tremendous." @Email:[e-mail]