Middle Eastern sovereign wealth funds are fond of multi-billion-dollar bilateral agreements and this week was no exception with Bahrain’s Mumtalakat party to a US$1.3 billion pledge to invest in the UK economy while the UAE’s ADQ has promised to stump up US$11.5 billion to support the Turkish economy.
On Wednesday, the UAE and Turkiye signed bilateral deals estimated at nearly US$51 billion, covering a wider array of sectors, during a visit by President Recep Tayyip Erdoğan to Abu Dhabi. As part of the vast package, the infrastructure-focused Abu Dhabi sovereign wealth fund ADQ agreed to finance up to US$8.5 billion of Turkiye earthquake relief bonds and signed an MoU with Export Credit Bank of Turkiye to finance up to US$3 billion in credit for Turkish exports.
ADQ’s commitment to earthquake relief bonds – agreed between Turkish Finance Minister Mehmet Simsek and the UAE’s investment minister Mohamed Hassan Al-Suwaidi, who is also ADQ’s CEO – will support reconstruction works in regions hit by earthquakes earlier in the year, particularly housing for the displaced.
The deals sit within the framework of the UAE-Turkiye Comprehensive Economic Partnership Agreement (CEPA), which was signed earlier in 2023. CEPA cut tariffs on 93% of non-oil trade and aims to more than double bilateral trade to US$40 billion annually by 2028.
The Turkish economy is bogged down by weak lira and sky-high inflation, while the government is struggling under the heavy weight of deficits. Erdoğan is engaged on a whistle-stop tour of the GCC to appease governments that had objected to Ankara’s support for groups associated with the Muslim Brotherhood, which the UAE and Saudi Arabia regard as threats.
Meanwhile, in London, the UK-Bahrain Strategic Investment Partnership was signed by Crown Prince Salman bin Hamad Al Khalifa and the UK’s Prime Minister Rishi Sunak, focusing investments in technology, services, and manufacturing sectors. Bahrain is planning GBP1 billion (US$1.3 billion) of investments by Mumtalakat as well as other Bahraini investors, Investcorp, GFH Financial Group, and Osool Asset Management.
The deal comes after Mumtalakat and Investcorp, which is part-owned by Abu Dhabi sovereign fund Mubadala, indicated they were setting up a joint platform to invest in and manage student housing assets in the UK. The platform currently manages Investcorp’s Houses in Multiple Occupation (HMO) assets in the UK with a portfolio of about 1,200 beds. It plans to acquire an additional 700-1,000 beds annually over coming years with the ambition to become one of the country’s biggest HMO providers.
The Bahraini deal comes two years after Mubadala pledged huge resources to tech and natural resources in the UK, with a commitment of GBP10 billion (US$14 billion) over 2021-26. Since the UK program was launched, there has been a steady stream of investments by Mubadala.