Allianz Global Investors is seeking partners for infrastructure and energy sector investments in the Middle East, as the $681 billion asset manager aims to expand its regional portfolio, its chief executive said.
The Europe-focused investment management arm of global financial services group Allianz, which established its first Middle East office in Abu Dhabi in September, is now assessing interest from would-be partners for co-investment propositions, Tobias Pross, chief executive of AllianzGI, told The National on the sidelines of Abu Dhabi Finance Week.
“We want to invest into infrastructure, but that depends, and this is what we are figuring out in phase one, how huge is the appetite to partner,” Mr Pross said.
“We are just setting up a team here, looking into infrastructure opportunities, which is to us is of importance and it's one of our biggest growth segments on the private market side.”
The level of expertise and talent for infrastructure development is already huge in the Middle East, and investors really “don't need us to come in and tell them what to do better. They're really only partnering”, he said.
Co-investment deals can be mutually beneficial as infrastructure development models created in the Middle East can be exported.
Abu Dhabi and the broader Gulf have managed to create super-modern infrastructure and “I truly believe there is a high demand in Europe [for infrastructure], so we also can learn from the region how to build,” Mr Pross said.
“The speed is amazing, and the sky is the limit in this region.”
Across the Middle East and North Africa, national transformation agendas such as Saudi Arabia’s Vision 2030, Abu Dhabi’s Economic Vision 2030, Qatar’s National Vision 2030, as well as Dubai’s 2040 Urban Master Plan are driving the rapid growth of infrastructure.
Over the past decade, public sector entities and sovereign wealth funds in the Gulf, in particular, have launched mega schemes across sectors including energy, transport, digital infrastructure and social services. The race to become the global AI and data centre hub has driven another wave of infrastructure investments in the Gulf region.
Globally, the cumulative gap between infrastructure supply and demand is forecast to hit $15 trillion by 2040 and requires a significant boost in investment to bridge that, according to a Boston Consulting Group report. The total value of planned large-scale projects until 2030 across the Mena is estimated at $4.1 trillion, 65 of which, or $2.5 trillion worth of projects, are within the Gulf countries.
Data centres and energy infrastructure
AllianzGI is interested in the investment opportunities in traditional as well as energy infrastructure but finds the data centre space inundated with investment flows.
“I would say the places are really crowded, and you hear that there's a lot of investments ongoing in data centres. But what people sometimes do forget is that you need energy, and you need a lot of energy,” Mr Pross said.
AllianzGI is among the leading investors in the European energy sector, whether its solar, wind, or hydrogen. It also invests in district cooling and is the biggest investor in Taiwan’s semiconductor sector, both of which are essential for cooling and powering data centres.
“We have a huge knowledge along the value chain, and I'm perfectly fine if others operate data centres, as long as they buy our energy,” he said.
Beyond infrastructure, AllianzGI is also looking at growing its Middle Eastern business in asset classes including equities, private credit and private equity, he added.
Sovereign fund partnerships
The other business stream AllianzGI aims to grow in the Middle East is its third-party portfolio management mandates for institutional clients, large family offices and sovereign wealth funds.
“That's plain vanilla business for us,” Mr Pross said. It already works with entities such as the Abu Dhabi Investment Authority, Mubadala and Qatar Investment Authority, among others.
With an office on the ground, the firm now aims to offer European opportunities to these investors in sectors including defence, private credit and equities.
AllianzGI brings to the table the complete knowledge of European investment dynamics, he said.
“This is where we say, look, let's focus on where your or our strength is, team up, and create global partnerships.”
The demand for infrastructure, as well as in defence and grid assets in Europe is huge and sovereign wealth funds can easily “thematically deploy capital with the knowledge and the transparency we can create around that”, he said.
AllianzGI’s $681 billion of assets under management are spread 24 per cent across equities, 30 per cent in fixed income, 28 per cent in multi assets, and 17 per cent in private markets. It manages $478 billion, or about 70 per cent on behalf of institutional clients while the remaining $203 billion is the company’s retail asset base.
Here for the long haul
Within the Gulf region, AllianzGI manages $7 billion on behalf of institutional and $3 billion for retail clients.
Mr Pross said the company is keen to grow its business organically in the region.
“This is what we will try here … build organically, and the plan is really to be on the ground long term, he said. “We do want to run a book, which is very meaningful on the private credit side, where we really have a lot of expertise.”
AllianzGI has been serving clients in the region for more than three decades and it is one of the fastest growing businesses for the company globally. The pace of growth Abu Dhabi’s ADGM has achieved over the past few years is a reflection of that, according to Mr Pross.
“It's our gateway at the moment. This is the only office we have in the region,” he said.
Last week, ADGM, the onshore financial hub of emirate, said it is entering its second decade of operations with the addition of 11 new major global financial institutions with $9 trillion in AUMs.
The sharp increase from $635 billion last year and $450 billion in 2023, “marks one of the most significant expansions by any international financial centre globally this year”, ADGM said in a statement.
Mr Pross said its growth reflects “the power of the region as it's not only Abu Dhabi and the UAE, I think it's really the GCC where we see a lot of demand, also for global products”.
“We have delivered on our Asia strategy and the next stop, clearly, is the Middle East,” he said. While the fly-in approach has served the company well in the past, it is time to set roots in the region. “We are, I think, not late in the race, but we haven't been early either.”
