Two funds chaired by Abu Dhabi powerhouse Sheikh Tahnoon bin Zayed al-Nahyan are planning to create one of the Middle East’s biggest independent asset managers, with General Atlantic joining as a strategic investor and partner in the new entity.
Sovereign wealth fund ADQ and the privately owned International Holding Co. (IHC), which is linked to the ruling family, are establishing a manager of a portfolio of assets across all classes from ADQ’s alternative investments platform Abu Dhabi Growth Fund (ADG) and alternative assets from IHC, as well as fresh capital. Based in Abu Dhabi, the manager is looking to establish offices in North America, Europe and Asia.
The move should bring together teams, create synergies and increase the muscle and flexibility of the combined portfolio under one entity, ideally leading to improved yield.
ADQ’s CEO Mohamed Hassan Alsuwaidi said, “Today’s announcement demonstrates our intention to create the largest independent alternative investment manager from the region that will serve global markets, with a clear remit to maximize long-term returns. Together with IHC, we will consolidate investment talent, expertise, and capabilities with scale and firepower to deliver long-term value in a rapidly evolving market.”
The size of the portfolio was not indicated. When it was launched in 2021, Global SWF estimated the size of ADG’s portfolio at US$5 billion and since then it has poured funds into venture capital, with a particular interest in emerging markets such as India, Egypt and Turkey as well as developed markets including the USA, UK, Germany and Israel. ADG was the entity chosen to commit up to US$ 10 billion to Indonesia’s high-yield financial investments identified by its SWF, INA.
The combining of ADG’s assets with IHC’s alternatives portfolio raises the question as to how ADQ will steer its strategy going forward. ADQ’s role has been part to pin down. It had been divesting stakes in national champions to increase its weight into private equity and venture capital, becoming increasingly like Mubadala, which raised the prospect of potential merger talks in the future. It is not yet known whether further capital will be ploughed into the new portfolio, from ADQ’s program of monetizing state assets and what direction the fund will now take.
IHC’s total AUM was US$62 billion at end-2022 and its market capitalization is currently US$239 billion, but it is unclear what portion of the portfolio will be hived off to be managed by the new entity. It has 422 subsidiaries under its control, including Alpha Dhabi Holding, Q Holding, International Securities, and Multiply Group. ADX-listed IHC is 61% owned by Royal Group, which is led by Sheikh Tahnoun bin Zayed Al Nahyan who also serves as ADQ’s chair and is full brother of UAE President Sheikh Mohamed bin Zayed Al Nahyan (MBZ).
The move is a sign of the growing co-ordination of Abu Dhabi sovereign funds, state-owned enterprises and ruling family interests after MBZ assumed power following the death of his half brother Sheikh Khalifa last May.
The consolidation of renewables assets under Masdar in December 2021 provides another example of the increasingly blurred lines between sovereign fund, state and family business interests. Masdar was originally established by sovereign wealth fund Mubadala. Both the oil company ADNOC and ADQ-owned utilities company TAQA exchanged their renewable assets in return for equity in Masdar’s enlarged renewables business, with ADNOC securing a 24% stake, Masdar founder Mubadala reduced to 33%, and TAQA holding the remaining 43%. By 2022, Masdar had a portfolio of 23GW and plans to reach 100GW by 2030.
A similar merger of assets could occur in the healthcare sector, with Mubadala Health and ADQ’s US$5 billion Pure Health platform potentially bringing together their assets. The assets of both companies cover pharma, clinics, hospitals, labs and care sectors, creating the basis for a fully integrated healthcare system under Mubadala-ADQ control.
