Abu Dhabi's artificial intelligence and cloud computing company G42 will be the lead investor in the latest funding round of $500 million for Dubai-based consumer technology development and investment company Astra Tech.
The funding round, which started in October, will be closing soon, Astra Tech said in a statement on Monday, without disclosing the exact timetable and details of other investors.
The company, which recently acquired FinTech platform PayBy and Rizek, the UAE-based super app for on-demand home services, will use the latest funding to acquire other consumer platforms globally.
“Backed by prominent global and regional investors, the round is meant to equip Astra Tech with the resources to expand its portfolio of smart solutions across e-commerce, communications, FinTech, news and more,” the company said.
Founded in January, Astra Tech is also building an “ultra platform” that aims to simplify the way people communicate, shop, pay and transact. The platform will allow businesses and vendors worldwide to seamlessly connect with customers across a variety of services and products in a single, interconnected ecosystem, eliminating the complexity of using different apps.
“We are continuously seeking to combine exceptional human talent with the necessary technical and financial resources to enable the development of the most advanced AI powered-solutions for both the public and private sectors,” said Peng Xiao, group chief executive of G42.
“We are pleased to be supporting Astra Tech with its latest round of funding, one that will establish it as the go-to regional platform for consumer technology and services."
The start-up ecosystem in the Middle East and North Africa region has received a strong boost in recent years as entrepreneurs tap into innovation to address consumer needs.
Funding for start-ups in the UAE — one of the top destinations for venture capital investments in the Mena region — rose by about 5 per cent in the third quarter to $148 million, according to data platform Magnitt.
Earlier this month, the Emirates also launched a new programme aimed at supporting and honouring the top 100 start-ups that will have a significant impact on the country's economy and boost its readiness for the future.
The Future 100 initiative will support new economic sectors such as space, renewable energy and emerging technology, which will shape the country's future economy, the Ministry of Economy and the Ministry of Governmental Development and Future said at its launch.
“Our disruptive next generation ultra platform will bring together selected consumer technologies, products, and services and is specifically designed to address the platform fatigue many users are experiencing today,” said Abdallah Abu Sheikh, founder and chief executive of Astra Tech.
“We continuously seek to align with the national drive for digital transformation by delivering an innovative and revolutionary ecosystem, something beyond what the super platforms of today have to offer,” said Mr Abu Sheikh. The Jordanian entrepreneur is also the founder of other start-ups such as Rizek and Bark EV, an electric vehicle company.
We continuously seek to align with the national drive for digital transformation by delivering an innovative and revolutionary ecosystem
Abdallah Abu Sheikh,
founder and chief executive of Astra Tech
A super platform is an ecosystem of many apps that are either built together or bundled through third-party integrations. They usually work with freelancers and small and medium enterprise service providers to improve their skills and help them land more opportunities.
Astra Tech's ultra platform intends to provide connectivity between consumers and businesses, enabling users to access home, e-commerce and FinTech services within one place, three times faster than through competing platforms, the company said.
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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.”
