Formula One champions Red Bull strike a partnership with Infiniti



LONDON // Red Bull-Renault, the Formula One champions, have teamed up with Nissan's Infiniti brand in a deal reversing the recent exodus of Japanese manufacturers from the sport.

The two-year marketing agreement announced today will see Infiniti's branding on the front, side and rear of the Red Bull car as well as the overalls of Sebastian Vettel, their German world champion, and Australian Mark Webber.

Although no financial details were given, the deal is likely to cover at least the team's annual engine costs of around €8 million (Dh40.5m) and probably much more, given their status as champions.

Andy Palmer, the senior vice-president of Infiniti, said it was the biggest sponsorship activity that Nissan Group had ever done while Christian Horner, the Red Bull principal, hailed a "very important and strategic partnership".

"As manufacturers have been leaving in their droves over the last few years, for a Japanese manufacturer to be coming back in is I think great news," Horner said.

"Maybe it will encourage more to follow... I think their (Infiniti's) approach is the right one in that they've not come and said they want to own and run a team. They have decided to partner a team."

Malaysian-owned Lotus Group have done something similar with former champions Renault, who are no longer owned by Renault, while Virgin have secured significant backing from Russian sportscar maker Marussia.

Palmer said Infiniti would work with Renault, who own 43.4 per cent of Nissan while Nissan own 15 per cent of the French company, on future F1 technical collaboration in areas such as Kinetic Energy Recovery Systems (Kers) and battery technology.

Red Bull's engines will retain the Renault name on them rather than being 're-badged' however.

"We haven't come back in a very traditional way, we've not gone and bought a team," Palmer said of the first F1 involvement by a Japanese automotive brand since the departure of Honda in 2008, Toyota in 2009 and tyre maker Bridgestone at the end of last year.

"First and foremost it's a marketing partnership, then hopefully we are confident it will lead to some technical collaboration, particularly in areas where Infiniti and the Nissan group have some strengths."

While made in Japan, Nissan's luxury brand has targeted the US market primarily but is now determined to win market share elsewhere — largely in places where Formula One has a high profile or is winning new audiences.

"We've decided that we are going to grow the brand significantly and we need to grow it in Western Europe...but also in places like China, Russia, South East Asia," said Palmer.

"The sponsorship of Formula One is going to get the name in front of an awful lot of people very quickly."

The deal is also a significant step for Red Bull Racing, a high-profile marketing vehicle for the Austrian energy drink company that has pumped hundreds of millions of dollars into the team to turn them into double title winners last year.

"The key thing about this relationship is that it goes much beyond a marketing benefit to Red Bull," said Horner.

"The area of weakness for us compared to our rivals has been the R+D (research and development), the technical depth of resource that a company like Infiniti and Nissan Group have available to them.

"For us, a partnership like this is really the missing piece in our jigsaw that enables us to hopefully maintain our competitiveness that we've worked hard to achieve."

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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