Mubadala and Abu Dhabi Catalyst Partners invest $150m in Telegram app

Social messaging app Telegram is receiving $150 million in new funding from Abu Dhabi-based investors.

Mubadala Investment Company said yesterday that it is buying five-year, pre-initial public offering convertible bonds worth $75 million in the company. Abu Dhabi Catalyst Partners – a joint venture between Mubadala and New York’s Falcon Edge Capital – is also investing $75m.

“We believe that Telegram is well-positioned for an inflection point that will transform it into a leading global technology company,” said Faris Al Mazrui, head of Mubadala’s investment programme for Russia and the Commonwealth of Independent States.

“The company represents a very promising investment opportunity for Mubadala and will sit well within our wider portfolio of pioneering companies looking to transform their respective industries.”

Telegram co-founder Pavel Durov said the platform was looking forward to developing the strategic partnership with Mubadala and Abu Dubai Catalyst Partners “to continue our growth in the Mena region and globally”.

The platform was founded in 2013 by Mr Durov and his brother Nikolai as a secure messaging app with end-to-end encryption. It was initially based in Russia but later moved its headquarters to Dubai.

Last month, Mr Durov praised the start-up ecosystem and the business-friendly legislation in the UAE at a meeting with Dubai’s Crown Prince, Sheikh Hamdan bin Mohammed.

Telegram’s user numbers have increased in recent months after Facebook-owned WhatsApp made changes to its terms and conditions, sparking privacy concerns. It is now one of the 10 most downloaded apps in the world with more than 500 million active monthly users.

The growth “demonstrates the management team’s unshakeable dedication to building a platform centred around privacy and user experience”, said Abu Dhabi Catalyst Partners’ chief financial officer James Munce.

Telegram will also open an office in Abu Dhabi Global Market, the UAE capital’s financial free zone.

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.”

UAE tour of the Netherlands

UAE squad: Rohan Mustafa (captain), Shaiman Anwar, Ghulam Shabber, Mohammed Qasim, Rameez Shahzad, Mohammed Usman, Adnan Mufti, Chirag Suri, Ahmed Raza, Imran Haider, Mohammed Naveed, Amjad Javed, Zahoor Khan, Qadeer Ahmed
Fixtures:
Monday, 1st 50-over match
Wednesday, 2nd 50-over match
Thursday, 3rd 50-over match

UAE currency: the story behind the money in your pockets

Mubadala and Abu Dhabi Catalyst Partners invest $150m in Telegram app

The social messaging app has become increasingly popular following WhatsApp's user policy change and has more than 500 million active users

UAE tour of the Netherlands

UAE currency: the story behind the money in your pockets