UAE establishes $10bn fund to support Turkey investments

The UAE has announced the establishment of a $10 billion fund to support investments in Turkey.

The deal followed talks between Sheikh Mohamed bin Zayed, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the Armed Forces, and Turkish President Recep Tayyip Erdogan.

It will enhance support for the Turkish economy and strengthen co-operation between the two nations.

The fund will focus on strategic investments, including energy, health and food.

Sheikh Mohamed arrived in Turkey on Wednesday for the talks, after being invited to make the official visit to Ankara by Mr Erdogan. He was received at the presidential palace by the president.

An official reception ceremony was held in honour of Sheikh Mohamed after the arrival of his convoy on the palatial grounds.

A cavalry raised the flags of the two countries before Sheikh Mohamed and Mr Erdogan headed to a podium as the national anthems of the UAE and Turkey were played.

A 21-gun salute was fired as soldiers formed a guard of honour.

The Turkish lira recovered as much as 7 per cent on Wednesday, but was still down 38 per cent since end of last year against the dollar.

Dr Sultan Al Jaber, Minister of Industry and Advanced Technology, was part of the high-level delegation accompanying Sheikh Mohamed.

He told Turkish broadcaster TRT World that the countries are home to two of the "most dynamic economies" in the region.

Sheikh Mohamed and Mr Erdogan previously exchanged views on various topics in a phone call in August.

They explored the prospects of building relations between the countries during that call.

Those talks came days after a UAE delegation met Mr Erdogan in Ankara to discuss ways to consolidate ties between the two countries, particularly in the fields of trade, transport, health and energy.

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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Alanood Al Kaabi, head of programmes at the Education Affairs Office of the Crown Price Court - Abu Dhabi, said: "The Crown Price Court is fully behind this initiative and have already seen the curriculum succeed in empowering young people and providing them with the necessary tools to succeed in building the future of the nation at all levels.

"Moral education touches on every aspect and subject that children engage in.

"It is not just limited to science or maths but it is involved in all subjects and it is helping children to adapt to integral moral practises.

"The moral education programme has been designed to develop children holistically in a world being rapidly transformed by technology and globalisation."

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UAE establishes $10bn fund to support Turkey investments

Announcement was made amid talks between Sheikh Mohamed bin Zayed and Recep Tayyip Erdogan

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