Ministry of Defence signs Dh650m in deals on first day of UAE drone show

The future of military drones was unveiled in Abu Dhabi on Monday with home-grown companies displaying the latest technology.

On the first day of the Unmanned Systems Exhibition and Conference (Umex), manufacturers set out the latest in "swarming" aerial drones and unmanned fighting ground vehicles.

The Ministry of Defence signed three deals worth more than Dh650 million, the vast bulk of it with Edge-owned Global Aerospace Logistics, which repairs and overhauls aerial vehicles.

Abu Dhabi-based International Golden Group won a contract worth Dh10m for drone systems and South Africa’s Denel Dynamics won a deal worth Dh5.6m to provide support services for aircraft systems.

The solution is to bring both civil and defence under one centralised regulatory body that governs its use. I think if we reach that stage, we would be much safer

Col Staff Pilot Abdulnasir Al Hameedi,
Ministry of Defence

Although the exhibition at Abu Dhabi National Exhibition Centre is largely devoted to the latest military applications, there was much discussion about the future of civilian drones.

Col Staff Pilot Abdulnasir Mohammed Saif Al Hameedi, from the Ministry of Defence, said effective regulation of drones was a top priority for the authorities.

As with many nations, the country wants to see drones utilised for e-commerce and retail, but risks remain. On Monday, the Ministry of Interior extended a ban imposed in January on all aerial drones, in addition to light aircraft flights, following the attempted Houthi attacks on Abu Dhabi in January and February.

“Due to its rapid emergence, it is important for us to start regulating these systems," Col Al Hameedi told The National.

Sheikh Mansour bin Zayed, Deputy Prime Minister and Minister of Presidential Affairs opens Umex. All photos: Wam
Sheikh Mansour bin Zayed, Deputy Prime Minister and Minister of Presidential Affairs opens Umex. All photos: Wam
Sheikh Mansour bin Zayed, Deputy Prime Minister and Minister of Presidential Affairs opens Umex. All photos: Wam
Sheikh Mansour bin Zayed, Deputy Prime Minister and Minister of Presidential Affairs opens Umex. All photos: Wam
Sheikh Mansour bin Zayed, Deputy Prime Minister and Minister of Presidential Affairs today opens Umex on Monday. All photos: Wam
Sheikh Mansour bin Zayed, Deputy Prime Minister and Minister of Presidential Affairs opens Umex. All photos: Wam
Sheikh Mansour bin Zayed, Deputy Prime Minister and Minister of Presidential Affairs opens Umex. All photos: Wam

"I think the solution is to bring both civil and defence under one centralised regulatory body that governs its use. I think if we reach that stage, we would be much safer.”

“We will see more emerging technologies but there will also be more challenges so we need to accelerate the process of regulating and controlling this growth.”

The exhibition is held in cooperation with the Ministry of Defence and has 25 local and international exhibitors.

Among the main exhibitors is Abu Dhabi-based Edge, a conglomerate of two dozen defence companies.

Halcon, which makes swarming drones and other aircraft for Edge, said the new technology had created incredible opportunities and threats as well.

“Hostile drones present security authorities with a serious challenge all over the world, and this requires a comprehensive and end-to-end approach from defence leaders," said Saeed Al Mansoori, chief executive of Halcon.

"Following a detailed and extensive roadmap, we are working to deliver a multilayered and scalable solution to meet the ever-evolving security challenges from a broad spectrum of threats."

He said the industry here was already seeing far greater emphasis placed defensive drone technology — and not just offensive technology.

UAE currency: the story behind the money in your pockets

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.”