In a time of great uncertainty, the UAE continues to attract the world’s most sophisticated capital. A recent deal involving Apollo Global Management is a testament to the strength of the country’s fundamentals and the wisdom in building long-term strategic relationships.
Apollo, an American asset management firm, announced on Monday that it was investing more than $1 billion for a less than 10 per cent stake in Mubadala Capital, the alternative asset management subsidiary of Mubadala Investment Company. Other strategic investors are expected to join, bringing anticipated commitments of $5 billion to the company’s overseas investment strategies.
The stake is, in and of itself, an endorsement of Mubadala Capital’s business and international growth prospects. But the significance extends beyond the money involved, with Apollo’s expertise and global relationships expected to help the Abu Dhabi firm attract a wider pool of investors, particularly in North America.
The announcement comes at a time of deepening commercial ties between other UAE-based entities and America’s most influential financial institutions.
In May, L’imad Holding Company, Abu Dhabi’s most recently established sovereign wealth fund, and Adnoc joined Global Infrastructure Partners, a subsidiary of BlackRock and Singaporean global investment company Temasek in a consortium that aims to inject $30 billion of infrastructure investments in the Gulf and Central Asia.
The current, favourable investment climate in the UAE – even as the broader region remains locked in a nearly eight-month military conflict – is instructive.
The country’s location undoubtedly makes it an attractive destination for overseas investors. As BlackRock’s senior managing director, Mike Pyle, said earlier this year, “the Gulf is really the linchpin” that connects the Middle East to South Asia and South-East Asia. But geographical advantages don’t adequately explain the trends. There are other factors, such as the UAE’s internal stability, its ambitions, and its ability to think and plan long term – as last week’s national budget showed.
In his interview to The National, Apollo chief executive Marc Rowan offered a revealing assessment of risk. Asked about potential concerns given the ongoing Iran war, he said: “Everyone has adapted to the situation. We now know what the outcome is. It doesn’t mean there won’t be continued hostilities, but in terms of the unknown, we have less risk today than we did a year ago.”
That assessment, from the head of a firm managing more than $1 trillion, is a powerful vote of confidence in the UAE’s stability and adaptability. It also suggests that investors are willing to distinguish between the current regional turbulence and the UAE’s longer-term economic and financial prospects.
The data seems to agree. Abu Dhabi Global Market reported a 57 per cent rise in assets under management in the first quarter of this year, with the number of asset and fund managers there climbing 24 per cent to 179. Global fund managers such as Capital Group and State Street have chosen the UAE as a base. Capital and talent have both kept arriving despite the war.
No country is ever immune to disruptions, but the objective must always be to build resilience in anticipation of the next crisis. By looking beyond the immediate one, and by deepening its commercial relationships and investing for the long term, the UAE is strengthening the foundations of its future prosperity. That is sound economic strategy.
