x Abu Dhabi, UAESaturday 22 July 2017

Global Marketplace Abu Dhabi an attraction for asset managers

International financial firms mulling a move to Global Marketplace Abu Dhabi need little reminding of the large concentration of institutional wealth based in the emirate.

International financial firms mulling a move to Global Marketplace Abu Dhabi need little reminding of the large concentration of institutional wealth based in the emirate.

Some of the world's largest sovereign wealth funds and several state pension funds are located in the capital, not least of which is the Abu Dhabi Investment Authority (Adia).

The precise size of the capital's sovereign wealth fund is unknown, but it is one of the world's biggest government investors and is routinely approached directly by the world's investment banks.

Abu Dhabi's government investment vehicles were increasingly looking overseas, creating opportunities for international firms that could advise them, said Rachel Ziemba, the director of emerging markets at Roubini Global Economics.

"We've already seen an increase in offshoots and spin-offs from big sovereign funds in Abu Dhabi," she said.

Gaining access to these mandates from these funds could create a lucrative incentive that the Government could offer in trying to attract international asset managers, Ms Ziemba added.

"One of the quid pro quos for gaining some of the local institutional wealth might be location in Abu Dhabi or at least a presence," she said. "You've seen that to some extent for government contracts."

But deep institutional wealth that targets local markets was still in shorter supply in the UAE than elsewhere, she added.

"This is still a region that doesn't have a lot of institutional players in local markets," she said. "We're probably seeing more globally focused funds being spun out because of concerns over lack of liquidity on local markets."

The Abu Dhabi Investment Council was spun out of Adia in 2006 to manage the Government's domestic portfolio of companies. It owns controlling stakes in National Bank of Abu Dhabi and Abu Dhabi Commercial Bank, and fully owns Al Hilal Bank and InvestAD. It also has a large global investment mandate.

The Emirates Investment Authority, the UAE's federal sovereign wealth fund, is smaller in size, but owns sizeable stakes in the telecommunications firms Etisalat and du and has been behind plans to merge the nation's stock exchanges.

Domestic pension funds represent a smaller pot of assets than in Europe or the United States, but funds such as the UAE General Pensions and Social Security Authority and the Abu Dhabi Retirement Pensions and Benefits Fund also hold a large proportion of their assets internationally.

 

ghunter@thenational.ae