Abu Dhabi National Energy Company on Wednesday said it completed its transaction with Abu Dhabi Power Corporation to create one of the largest utility companies in the EMEA region. Ravindranath K/The National
Abu Dhabi National Energy Company on Wednesday said it completed its transaction with Abu Dhabi Power Corporation to create one of the largest utility companies in the EMEA region. Ravindranath K/The National
Abu Dhabi National Energy Company on Wednesday said it completed its transaction with Abu Dhabi Power Corporation to create one of the largest utility companies in the EMEA region. Ravindranath K/The National
Abu Dhabi National Energy Company on Wednesday said it completed its transaction with Abu Dhabi Power Corporation to create one of the largest utility companies in the EMEA region. Ravindranath K/The

Business

Taqa completes deal with ADPower to create one of the largest utility companies in the region

Jasim Husain Thabet is the new chief executive and managing director of Taqa

The National

July 01, 2020

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Abu Dhabi National Energy Company (Taqa) completed its transaction with Abu Dhabi Power Corporation to create one of the largest utility companies in the Europe, Middle East and Africa region with total assets worth about Dh200 billion.

As part of the deal, ADPower transferred the majority of its power and water generation, transmission and distribution assets to Taqa in exchange for more than 106.3 billion new shares, the company said on Wednesday.

Following the deal, Moody's upgraded Taqa's issuer rating to Aa3 from A3 and its short term rating to P-1 from P-2. The ratings agency said that the new assets have a "significant positive impact on Taqa's business and financial profiles".

Taqa is also intending "to seek an increase to the free float through a follow-on public offering".

“The successful consolidation of Abu Dhabi’s power and water assets has created a true national energy champion that is well-positioned to spearhead the transformation of the utilities industry,”  Mohamed Hassan Alsuwaidi, chairman of Taqa, said in a statement.

“Taqa’s strong balance sheet, predictable income, access to global capital markets and deep industry expertise enables it to play an active role in the UAE’s diversification strategy, putting a strong emphasis on clean sources.”

Taqa currently has 23 gigawatts of power generation capacity globally and 916 million imperial gallons per day of water desalination capacity, of which 1.4GW are from renewable sources. In addition, it has a further 4.4GW and 200 MIGD under development, including 2GW from renewable sources.

Taqa also named Jasim Husain Thabet as the new chief executive and managing director of the company. Saeed Hamad Al Dhaheri will be the new deputy chief executive and Stephen John Ridlington the company’s chief financial officer.

“Today marks the beginning of Taqa’s new journey, which will see us fully integrate our diverse asset portfolio and combine the talent and expertise of both organisations into a stronger company,” Mr Thabet said.

The entity “has a strong international footprint that enables us to pursue growth opportunities in the GCC and beyond, all while rewarding our shareholders with a sustainable dividend policy”, he said.

Following the completion of the transaction, Taqa, which is listed on the Abu Dhabi Securities Exchange, has become the UAE’s third-largest publicly traded company by market capitalisation.

Khalid bin Mohamed bin Zayed Al Nahyan, a member of the Abu Dhabi Executive Council, and chairman of the Abu Dhabi Executive Office also visited Taqa to review the results of the company's transactions with ADPower, Abu Dhabi Media Office tweeted on Wednesday.

He was also briefed about the company's future strategy, the office added.

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Tomorrow 2021

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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Two months before the first round on April 10, the appetite of voters for the election is low.

Mathieu Gallard, account manager with Ipsos, which conducted the most recent poll, said current forecasts suggested only two-thirds were "very likely" to vote in the first round, compared with a 78 per cent turnout in the 2017 presidential elections.

"It depends on how interesting the campaign is on their main concerns," he told The National. "Just now, it's hard to say who, between Macron and the candidates of the right, would be most affected by a low turnout."

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