ADQ is a state-owned investor that is set to become a name on everyone’s lips as it begins its push into venture capital and evolves from a holding company dominated by infrastructure assets to a sovereign wealth fund in its own right.
ADQ shot into the headlines over the past year, having emerged in March 2020 from combining the Abu Dhabi Developmental Holding Company (ADDHC) with a clutch of other weighty assets spanning nearly a dozen sectors, including but not limited to Abu Dhabi’s railway, seaports, airports, utilities and stock exchange.
Since its launch, the investor has scooped up a range of assets that go beyond a focus on infrastructure, including a 45% stake in commodities trader Louis Dreyfus Co, healthcare and pharma companies, and a digital bank.
But venture capital seems to be a major focus of the investor’s strategy. Research by Global SWF has identified a venture capital team at least as large as Abu Dhabi stablemate, the Abu Dhabi Investment Authority. This week ADQ indicated it is preparing to invest US$70 million in Etechaces Marketing and Consulting, the parent company of India’s PolicyBazaar.
Venture capital in emerging markets will be an ongoing theme for the state-owned investor – a massive shift in emphasis from an erstwhile infra holding company. In October, it made a chunky investment in Egyptian hypermarket chain Lulu. In May, it established the US$300 million Alpha Wave Incubation Fund, managed by Falcon Edge Capital, to invest in early-stage businesses built out of India and Southeast Asia. Last month, the venture capital fund led a US$5 million Series A round for Indian edtech firm Kyt. This follows a slew of investments announced in September, which targeted financial services company Avail Finance, AI-based online customer research startup Entropik, video engagement platform Hippo Video, customer support automation platform Verloop.io, and solar-focussed drone technology analytics startup SenseHawk.
The PolicyBazaar investment is not part of the Alpha Wave Incubation Fund, indicating that ADQ is not just relying on external asset managers to leverage early stage opportunities but is also rapidly building up the capacity of its in-house team.
Nevertheless, infrastructure and domestic economic diversification will remain the SOI’s core activity, as demonstrated with its involvement in the US$2 billion joint venture with ADNOC in the petrochemicals sector, Ta’Ziz, announced in November. This will include a new port, utilities, infrastructure, feedstock supply and shared services. It also acquired a 10% stake in ADNOC’s gas pipeline assets in October, costing it over US$1 billion.