A field of solar panels at Saudi Arabias King Abdulaziz City of Sciences and Technology. The kingdom has created an organisation to manage its renewables projects – and the announcement included deadlines. Fahad Shadeed / Reuters
A field of solar panels at Saudi Arabias King Abdulaziz City of Sciences and Technology. The kingdom has created an organisation to manage its renewables projects – and the announcement included deadlShow more

Fuel for Thought: The best thing to come out of Saudi Arabia this week? Dates



The day came when Saudi Arabia offered more information as to its plans for renewable energy.

An email was sent from the Ministry of Energy and Industry's newly created renewables division, the Renewable Energy Project Development Office (Repdo).

That message presented a couple of interesting points, such as the creation of a body (Repdo) that will be in charge of the process from A to Z, as well as the locations of the solar and wind projects.

To say the message was detailed is an understatement, particularly given the kingdom’s communications history.

But the most interesting part was the actual dates listed:

The request for qualification (RFQ) will be issued on February 20, "expected to close in July".

The request for proposals (RFP) for 700MW of solar and wind "would go live April 17".

And the grand finale: "The first round of projects is due to be awarded in September."

Why is this of particular interest?

Saudi Arabia is showing it is committed to getting these projects under way with a specific timeline that can hold the kingdom accountable for any delays or failure.

This is a positive move for those who may have questioned if the kingdom was really serious about its renewables ambitions.

lgraves@thenational.ae

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Install an air filter in your home.

Close your windows and turn on the AC.

Shower or bath after being outside.

Wear a face mask.

Stay indoors when conditions are particularly poor.

If driving, turn your engine off when stationary.

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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