Business

Khalifa Fund chairman: greatest opportunities come from challenging times

'We are proud to be in a country which is blessed with leadership that has a vision . That's why I believe in this country, we are heading in the right direction.'

Mustafa Alrawi
Mustafa Alrawi

January 18, 2015

  • English
  • Arabic

In 2009, Hussain Al Nowais, chairman of the Khalifa Fund for Enterprise Development, told The Nationalthat in challenging times come the greatest opportunities.
"Yes, I am still a strong believer in this," he says now. "I told my friends when the stock market was crashing now is the time to buy. Some of them did listen and made some money too."
For him it's all about human nature.
"Very few people have the guts to stop when the price goes up and say I'm not going in or to buy when the price is going down. Timing - that is what differentiates success from failure."
Oil prices have more than halved from their peaks last summer. This must qualify as a challenging time for any oil-exporting nation.
"Prices go up and down. It is a cycle. We have seen oil at US$9 [a barrel] so one doesn't make strategic decisions based on short-term issues. Make it for the future," he says. "I don't believe in making predictions because no one can predict. A few months ago I sat with some of the world's top experts on oil and their view was it would not fall below $70 [a barrel]. Look where we are today.
"We are proud to be in a country which is blessed with leadership that has a vision. Who provide security, confident, comfortable support for its people and provide the means and the tools. That's why I believe in this country, we are heading in the right direction."
Mr Al Nowais has close links to the business communities in Germany, France and Russia. Russia's beleaguered currency and economy have hit the country hard, but the crisis has been caused by a combination of geopolitics and oil and gas prices, he says. International events are also a timely reminder that contagion is a real risk in this interconnected world.
"No one today is immune. It is a global world and no one can say I don't care what is happening in that or this country. We need to take that into consideration in everything we are doing."
Given what is happening in Russia, Europe and elsewhere as falling oil prices, deflationary pressures and stuttering economic growth around the world give cause for concern, will this week's World Economic Forum in Davos be a particularly tense meeting with so many competing interests at stake?
"I have been attending Davos for more than 25 years. It is always challenging and it is a venue and a platform where it helps to listen to what is going on," he says. "It is in the best interests of everyone for Europe to remain united on all fronts and what we have seen in Paris [last week] is a demonstration of how great it is to be united. Solidarity is important."
malrawi@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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The lowdown

Bohemian Rhapsody

Director: Bryan Singer

Starring: Rami Malek, Lucy Boynton, Gwilym Lee

Rating: 3/5

Results:

5pm: Maiden (PA) Dh80,000 2,200m | Winner: AF Al Montaqem, Bernardo Pinheiro (jockey), Ernst Oertel (trainer)

5.30pm: Maiden (PA) Dh80,000 1,200m | Winner: Daber W’Rsan, Connor Beasley, Jaci Wickham

6pm: Handicap (PA) Dh85,000 1,600m | Winner: Bainoona, Fabrice Veron, Eric Lemartinel

6.30pm: Handicap (PA) Dh80,000 1,600m | Winner: AF Makerah, Antonio Fresu, Ernst Oertel

7pm: Wathba Stallions Cup Handicap (PA) Dh70,000 | Winner: AF Motaghatres, Antonio Fresu, Ernst Oertel

7.30pm: Handicap (TB) Dh90,000 1,600m | Winner: Tafakhor, Ronan Whelan, Ali Rashid Al Raihe

Terror attacks in Paris, November 13, 2015

- At 9.16pm, three suicide attackers killed one person outside the Atade de France during a foootball match between France and Germany- At 9.25pm, three attackers opened fire on restaurants and cafes over 20 minutes, killing 39 people- Shortly after 9.40pm, three other attackers launched a three-hour raid on the Bataclan, in which 1,500 people had gathered to watch a rock concert. In total, 90 people were killed- Salah Abdeslam, the only survivor of the terrorists, did not directly participate in the attacks, thought to be due to a technical glitch in his suicide vest- He fled to Belgium and was involved in attacks on Brussels in March 2016. He is serving a life sentence in France

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