Qatar invests $250m in Barclays equity fund

Qatar is investing US$250 million (Dh918.3m) in a Barclays-owned natural resources private-equity fund as Doha seeks to become a regional asset management hub.

Qatar Asset Management Company (QAMC), a joint venture between the Qatar Financial Centre Authority and the Qatar Investment Authority, have partnered with Barclays Natural Resource Investments (BNRI). QAMC will invest $250m in BNRI's current and future holdings - most of it going to the fund's existing $2.1 billion portfolio.

"This strategic partnership is an important milestone in Qatar's strategy of developing an asset-management hub and promoting the expansion of Qatar's financial-services industry," said Abdulrahman Ahmad Al Shaibi, the managing director of Qatar Financial Centre Authority.

The deal comes two years after the authority said it would focus on developing three core sectors - asset management, reinsurance and captive insurance. The global financial crisis has forced many international financial names with a presence in the Gulf to withdraw to their home markets, increasing competition among Dubai, Doha and Bahrain.

Shashank Srivastava, the acting chief executive of Qatar Financial Centre Authority, denied that the partnership was about Qatar buying investment in the asset-management sector.

"Seeding has always been part of our strategy. We are not buying the capability," he said.

The BNRI office will be in the Qatar Financial Centre and headed by Mark Brown as the managing director. Other fund executives will relocate from New York and London.

The private-equity fund targets strong management teams in the natural-resources sector - mainly in upstream oil and gas, mining and power. Typically $50m to $200m is committed to each venture for transactions identified by the company.

"That's the most crucial point," said John Vitalo, the regional chief executive of Barclays. "Typically in the private-equity market, you start out looking for assets that might be attractive to buy. But BNRI starts with the management teams it wants to back."

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If you go

The flights

There are direct flights from Dubai to Sofia with FlyDubai (www.flydubai.com) and Wizz Air (www.wizzair.com), from Dh1,164 and Dh822 return including taxes, respectively.

The trip

Plovdiv is 150km from Sofia, with an hourly bus service taking around 2 hours and costing $16 (Dh58). The Rhodopes can be reached from Sofia in between 2-4hours.

The trip was organised by Bulguides (www.bulguides.com), which organises guided trips throughout Bulgaria. Guiding, accommodation, food and transfers from Plovdiv to the mountains and back costs around 170 USD for a four-day, three-night trip.

4. Shahada

5. Zakat

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COMPANY PROFILE

Name: Kumulus Water

Started: 2021

Founders: Iheb Triki and Mohamed Ali Abid

Based: Tunisia

Sector: Water technology

Number of staff: 22

Investment raised: $4 million

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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