Businesses that sell virtual shisha pipes and flying horses do not immediately sound like viable ventures.
Video: Flying horses and virtual shisha
Ben Flanagan looks at the latest move by twofour54.
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But the Abu Dhabi media zone twofour54 has invested more than US$2.5 million (Dh9.1m) in two video-game publishers that specialise in such curios.
The government-owned hub has taken minority equity stakes in two Arabic online gaming companies, Tahadi Games and Jawaker.
Both derive the majority of their revenues from the sales of virtual goods purchased within games.
Wayne Borg, the deputy chief executive and chief operating officer at twofour54, said the investments would help create jobs in the capital.
"The value of the combined transactions is in excess of $2.5m," said Mr Borg.
"We're bringing two great gaming businesses to Abu Dhabi. They will create between them in excess of 50 jobs in the next couple of years."
Mr Borg said "gaming represents a huge area of growth". According to the research firm Gartner, consumer spending on online games is expected to double from $11.89 billion this year to $28.29bn by 2015. Tahadi Games was established in 2008 by the founders of Maktoob.com, the Arabic web portal that was recently purchased by Yahoo.
Steve Tsao, the chief executive of Tahadi Games, said 95 per cent of its revenues came from sales of items within games, which include virtual lions and flying horses.
"We feel that's a strong growth model," he said.
Tahadi specialises in localising international games titles for Arabic audiences and is currently testing a local version of an international shooting game.
But the twofour54 investment will allow the company to accelerate its plan to make its own titles, said Mr Tsao.
Jawaker, based in Jordan, is a multiplayer card game website that was launched in April 2009.
The site claims to have 500,000 registered users, 95 per cent of whom use the site in Arabic. Most games are free, but users can pay to enter tournaments and send each other gifts bought with a virtual currency.
Mohamed Haj Hassan, the co-founder of Jawaker, said 90 per cent of its revenues were from sales of in-game goods.
"I'd say it's substantially skewed towards in-game purchases," he said.
"We sell virtual goods to users on the gaming table. They can buy a virtual cup of tea, or a virtual argeelah [shisha pipe]."
The venture-capital deals were made by twofour54 ibtikar, the centre's financing and support arm.
Tahadi Games has already relocated to Abu Dhabi from Dubai following the twofour54 deal.
Jawaker, which employs six people, is moving its base from Jordan in the coming weeks.
bflanagan@thenational.ae
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.”
Abu Dhabi Desert Challenge – Rally schedule:
Saturday: Super Special Spectator Stage – Yas Marina Circuit – start 3.30pm.
Sunday: Yas Marina Circuit Stage 1 (276.01km)
Monday: Nissan Stage 2 (287.92km)
Tuesday: Al Ain Water Stage 3 (281.38km)
Wednesday: ADNOC Stage 4 (244.49km)
Thursday: Abu Dhabi Aviation Stage 5 (218.57km) Finish: Yas Marina Circuit – 4.30pm.
Terminator: Dark Fate
Director: Tim Miller
Starring: Arnold Schwarzenegger, Linda Hamilton, Mackenzie Davis
Rating: 3/5
