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Abu Dhabi focus on investment in emerging areas
Roula Khalaf, FT Syndication Service
3/29/2006
LONDON: Abu Dhabi's main investment arm is looking to invest more of the country's petrodollars in emerging markets, including in privatisation deals in the Middle East.
But according to Saeed Mubarak al-Hajeri, executive director of the emerging markets department at the Abu Dhabi Investment Authority (ADIA), the fund will not be deterred from buying assets in the US in the wake of the Dubai Ports World debacle.
ADIA, which invests the oil surplus of Abu Dhabi, the richest city state within the United Arab Emirates (which also includes Dubai), is considered the Arab world's largest investment fund.
Created in 1976, its investments and performance have been treated as a national secret. Economists, however, have estimated that it has as much as $250bn (euro207bn, £143bn) in assets.
ADIA's portfolio has always been diversified, across regions and asset classes. But like other Arab funds during the oil boom now sweeping the region, it has taken a closer interest in emerging markets.
In an interview with the Financial Times, Mr Hajeri provided a rare glimpse into ADIA's strategy in emerging markets. He said that, relative to other similar investment funds, more of ADIA's assets were now in emerging markets, with exposure to equity alone accounting for 14 per cent of the fund's equity portfolio. ADIA, however, does not take controlling stakes in companies on its own.
"We have huge bets on emerging markets -- and it will increase," said Mr Hajeri. "Everyone has liquidity but what makes us different is that we are long-term investors -- our short term is 15 years. So we make strategic bets and think we'll be in the markets for 50 years."
ADIA, he indicated, was particularly interested in investing in Chinese companies set for privatisation, including in the insurance and oil and gas sectors. A typical example is its bid for about 2.5 per cent of the state-owned Industrial and Commercial Bank of China, which he said was still awaiting government approval amid pressure on the authorities not to sell assets to foreigners.
But ADIA was also looking at Indian financial companies focused on infrastructure assets. "We see as much opportunity in China as in India and we understand India better -- they've been a trade partner for a long time," he said. In Russia, meanwhile, ADIA was looking at the oil, banking and retail sectors.
Until now the investment fund's exposure to the Middle East is believed to have been limited and it never invested on local stock markets, avoiding the recent sharp declines. Mr Hajeri, however, said ADIA was now looking to buy into privatisations, citing for example Saudi Arabia, Kuwait and Tunisia.
"We've got a full team working on this," he said. "We think we have great knowledge of the Middle East and we perceive risk differently."
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