Khalifa University students and faculty attend a talk at the Abu Dhabi campus. Delores Johnson / The National
Khalifa University students and faculty attend a talk at the Abu Dhabi campus. Delores Johnson / The National

Infrastructure programmes are welcome



Decisions made at last week’s meeting of the Abu Dhabi Executive Council will have a positive effect on the quality and amenity of life in the emirate, and will strengthen its future. At the meeting, under the chairmanship of Sheikh Mohammed bin Zayed, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the Armed Forces and Chairman of the Executive Council, the Council committed billions of dirhams to important projects, including much-needed housing and infrastructure programmes.

Also approved was the merger of the Khalifa University, Masdar Institute and the Petroleum Institute, with the intention of creating a world-class school of learning and research. Separately these medium-sized institutions have established records of excellence in their fields, and together they should be a formidable force. There are obvious synergies – for example, between Masdar’s research into advanced energy and sustainable technology and the Petroleum Institute’s work in oil engineering – and the merger should result in efficiencies along with considerable cost savings as duplication is minimised. The university plan mirrors the announced mergers of investment companies Ipic and Mubadala, and banks FGB and NBAD, which are both expected to result in significant savings and higher profits.

Large sums of money have been earmarked for housing loans, and the development of schools, roads and other infrastructure, including drainage, sewage, electricity and telecommunications networks. A Dh249 million development project in the capital’s Al Zahiya district will involve street redesigns, and the provision of pedestrian and bicycle lanes. Residents will be especially pleased to know that street entrances and exits surrounding Abu Dhabi Mall will be improved. Temporary traffic barriers and old road markings in the area have long caused confusion for pedestrians and motorists alike. Spending will not be restricted to Abu Dhabi City – residents of Al Ain, Madinat Zayed, Al Qua’a and other regional areas will also see improvements.

While the global downturn and lower oil prices have affected the economy, the Abu Dhabi Government has always proven itself both resilient and resourceful. Efficiencies being made across the public sector will ensure the continuation of, and steady improvements in, the provision of infrastructure and essential services.

COMPANY%20PROFILE
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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.”

COMPANY PROFILE
Name: Kumulus Water
 
Started: 2021
 
Founders: Iheb Triki and Mohamed Ali Abid
 
Based: Tunisia 
 
Sector: Water technology 
 
Number of staff: 22 
 
Investment raised: $4 million 

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A little about CVRL

Founded in 1985 by Sheikh Mohammed bin Rashid, Vice President and Ruler of Dubai, the Central Veterinary Research Laboratory (CVRL) is a government diagnostic centre that provides testing and research facilities to the UAE and neighbouring countries.

One of its main goals is to provide permanent treatment solutions for veterinary related diseases. 

The taxidermy centre was established 12 years ago and is headed by Dr Ulrich Wernery.