Vertical farming company AeroFarms has started construction in Abu Dhabi on a 8,200-square-metre research and development centre, the largest in the world, which aims to advance sustainable agriculture in arid climates.
AeroFarms AgX, the New Jersey company's wholly owned subsidiary in the UAE, is part of a group of four agriculture technology ventures to share in a $150 million investment from Abu Dhabi Investment Office, announced in April 2020, to bring cutting-edge research to the capital to improve food security.
“This important milestone for AeroFarms AgX is another step in the realisation of Abu Dhabi’s mission to ‘turn the desert green’," Tariq Bin Hendi, director general of Adio, said.
Food security and innovation in agriculture are priorities for the UAE.
The Abu Dhabi government has earmarked Dh1 billion ($272m) for the agricultural technology incentive programme as part of its Ghadan 21 accelerator initiative.
While 90 per cent of the nation's food is imported, the UAE aims to increase domestic food production by "30 to 40 per cent in the next 10 years", Mariam Almheiri, Minister of State for Food and Water Security, said in an interview with Bloomberg in April.
UAE residents are already seeing evidence of recent efforts to localise agriculture: locally harvested produce at the market or on dining menus is now a common sight. Much of this surfaced over the past few years as vertical and hydroponic farming ventures, research and cloud-seeding bear fruit.
The site, expected to open in the first quarter of 2022, will employ 60 engineers, horticulturists and scientists and start with research and growing methods for lettuces, tomatoes and berries.
The R&D centre will have high-tech laboratories conducting advanced speed breeding, as well as robotics and automation research aimed at increasing food yields and reducing the resources needed to grow produce.
AeroFarms AgX also plans to partner with local universities on research projects to tackle problems agriculture faces in desert climates.
“This is an important development for AeroFarms as we expand globally," said David Rosenberg, co-founder and chief executive of AeroFarms.
"We are pleased to take this step forward and proud to be a catalyst for helping to establish the emirate of Abu Dhabi as a global hub for AgTech innovation.”
The company monitors 130,000 data points for every harvest and uses 5 per cent of the water consumed by a typical field.
The plants are not grown in water or soil but rely on aeroponics, which mists the crops with a balance of water and nutrients without the use of pesticides.
In March, the company announced it would go public on the Nasdaq under the new ticker symbol ARFM through a merger with Texas-based special purpose acquisition company Spring Valley Acquisition.
The deal gives the combined entity an equity value of about $1.2 billion.
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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.”
