Emirates Aluminium, known as Emal, has secured financing for the world's biggest aluminium smelter, to be built in the new Khalifa Industrial Zone in Abu Dhabi.
Emal, a joint venture between Mubadala, a strategic investment company owned by the Abu Dhabi Government, and Dubai Aluminium, raised US$3.4 billion in loans, according to Bloomberg. Of those loans, $2.93bn are conventional, while $475 million are Islamic products, a source told the newswire.
Construction of the new smelter is under way, and the $4.58bn expansion project will increase output at the Khalifa Industrial Zone Abu Dhabi (Kizad) to 1.3 million tonnes per year by 2015, from 800,000 per year.
The aluminium producer expects to raise a further $600m from export credit agencies, according to Bloomberg.
The company received bids from a group of 22 foreign and local banks for loans of $4.3bn in January. It plans to raise $1bn of bonds in the second half of the year, according to Bloomberg, most likely with a 16-year tenor and an amortizing structure.
Emal did not respond to requests for comment.
Industrial expansion is a central plank of Abu Dhabi's efforts of economic diversification, and Kizad is the epicentre of the emirate's industrial drive. The zone was officially inaugurated late last year, but Emal had already been operational at the site in Taweelah. The smelter serves as an anchor tenant, attracting downstream industries that feed off its output.
Emal will be joined in Kizad by Emirates Steel, after the state-owned steel maker opted to build its next expansion project there.
Aluminium and steel production is energy intensive, and Abu Dhabi is racing to expand its supply of natural gas to cater to industrial expansion. While Abu Dhabi National Oil Company (Adnoc) is working to increase domestic gas production, Mubadala and Abu Dhabi's International Petroleum Investment Company (Ipic) are adding to import capacity.
An offshore gas development project is planned to add to supplies this year, and next year the Shah sour gas project will help to balance supply with rapidly increasing demand. From 2015, liquefied natural gas will be imported by a Mubadala-Ipic joint venture in Fujairah.
A shortage of gas is threatening to slow the pace of industrial development. The Emirates Steel expansion, which will increase output by 1.6 million tonnes of per year, will not commence until the gas has been allocated. Once the new mill has been constructed, it will help to attract downstream industries, and contribute to the critical mass Kizad needs to become an industrial and logistics hub.
In November, Mubadala signed a bauxite supply agreement with Guinea. Bauxite is an essential ingredient in aluminium production.
fneuhof@thenational.ae
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COMPANY PROFILE
Name: HyperSpace
Started: 2020
Founders: Alexander Heller, Rama Allen and Desi Gonzalez
Based: Dubai, UAE
Sector: Entertainment
Number of staff: 210
Investment raised: $75 million from investors including Galaxy Interactive, Riyadh Season, Sega Ventures and Apis Venture Partners
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%20PROFILE
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COMPANY PROFILE
Name: Almnssa
Started: August 2020
Founder: Areej Selmi
Based: Gaza
Sectors: Internet, e-commerce
Investments: Grants/private funding