Top Obama adviser to meet Sheikh Mohammed today


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DUBAI // The US national security adviser is due to meet with Sheikh Mohammed bin Zayed, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the Armed Forces, today to discuss "regional issues," the White House says.

The agenda is expected to include aspects of the political unrest that has worried Gulf nations and created tensions in the region.

The trip by Tom Donilon comes as part of his three-day visit to the UAE and Saudi Arabia, and amid several high-level encounters between American and Gulf officials.

"The national security adviser's visit underscores the importance of our relationship with these two key partners," the White House said in a statement.

Gulf leaders have witnessed popular uprisings across the region in recent months.

Closest to home are the situations in Bahrain and Yemen. Last month in Bahrain, the UAE formed part of a Saudi-led GCC force called into the kingdom to protect infrastructure as protests continued.The US Navy's Fifth Fleet is based in Bahrain.

In Yemen, President Ali Abdullah Saleh yesterday rejected a GCC call for him to step down and pave the way for a peaceful transition to new government.

He faces frequent civilian protests by tens of thousands of Yemenis across the country, and has met the demonstrations with deadly force on several occasions.

Also likely to be on the agenda for today's meeting is the fighting in Libya between forces supporting Colonel Muammar Qaddafi and rebel elements. The UAE has dispatched 12 fighter jets and Qatar sent two warplanes and two military transport planes to help enforce a UN no-fly zone over Libya.

Gulf governments are also concerned about the transitions to new governments in Egypt and Tunisia, and violent clashes between protesters and government forces in both Jordan and Syria.

The US defence secretary, Robert Gates, visited Abu Dhabi at the weekend and met with Sheikh Mohammed about regional unrest, defence co-operation and Iran, Pentagon spokesman Geoff Morrell said.

It was Mr Gates's third visit to the UAE in less than a year.

On Thursday the US president, Barack Obama is scheduled to meet the ruler of Qatar, Sheikh Hamid bin Khalifa Al Thani, at the White House.

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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