Abu Dhabi Inc comprises three SWFs with combined AUM of nearly US$1.2 trillion, but their distinct missions and strategic asset allocation are increasingly blurred as they diversify and expand their private equity footprint.
Abu Dhabi’s US$110 billion sovereign wealth fund ADQ is the most notable example. The signs are that it is divesting large mature state-owned assets in its portfolio to invest in both domestic economic development and foreign private equity.
Earlier this month, ADQ announced plans to list Abu Dhabi Ports on the emirate’s exchange, ADX, by the year-end with the IPO expected to raise US$1 billion. Abu Dhabi Ports’ portfolio comprises 11 ports and terminals and more than 550 square kilometres of industrial zones at Khalifa Industrial Zone Abu Dhabi (KIZAD) and Higher Corporation for Specialised Economic Zones.
Meanwhile, ADQ is pouring cash into foreign venture capital and domestic economic development. In terms of foreign investments, it is heavily focused on three significant emerging markets: India, Egypt and Turkey.
This week is an example of the trends in ADQ’s external push as it moves away from a core infrastructure focus. It formed a consortium with Aldar Properties – a portfolio company of another Abu Dhabi SWF, Mubadala – to buy a 90% stake in Egypt’s Sixth of October for Development and Investment Company (SODIC), a real estate developer listed on the ADX. If approved, the deal would be worth US$453 million - a premium of 18% over the three-month volume-weighted average price.
The fund also announced plans to create the UAE’s first fresh produce AgTech Park. The project is part of the Abu Dhabi Ports’ free zone cluster and follows a similar approach taken by Singapore’s Temasek, which is backing agtech venture capital which goes hand in hand with the city state’s creation of an Agri-Food Cluster Transformation Fund to strengthen its food resilience. The goal is the same: reducing food import dependency.
The project involves developing and operating greenhouse facilities in a 200 hectare park, producing 39,000 tonnes of fresh fruit and vegetables every year. Last year, ADQ launched Silal to support the Emirate’s food and agricultural sector’s expansion and efficiency through technology.
Developments over the past month continue and accelerate a trend seen in ADQ’s activities over the past year and offer a window into the fund’s strategy. Yet, becoming an active and diverse SWF raises a crucial question: why does Abu Dhabi have three SWFs which are increasingly converging?
