Sovereign wealth funds (SWFs), the big government-owned investing institutions, had a year of record activity in 2013, with the highest levels ever of direct transactions, showing a strong recovery from the financial crisis.
According to the Sovereign Wealth Fund Institution, an American organisation that tracks SWF performance, some $174 billion of direct transactions took place during the year, way ahead of 2012’s $65.09bn.
“This rebound of direct transactions reflects sovereign funds’ growth in assets, maturation of internal operations in the larger funds and improved confidence in the world economy,” said the institute.
Abu Dhabi Investment Authority (Adia) was one of the most active, according to the institute, with $7.93bn of deals in the year, behind only funds from Norway and Singapore in terms of investment activity.
The institute said: “Adia’s buying splurge of core assets in Europe and Australia has pushed up the level of direct investment activity in both observed deals and transaction amounts for the fund. In 2013, Adia accelerated its hiring programme, picking up experienced private equity and investment banking professionals from Europe.
“This has allowed the sovereign fund to seek out more direct deals. In January 2013, Adia bought 90 Boulevard Pasteur through LaSalle Investment Management from Crédit Agricole for €250 million [Dh1.26 billion]. Moving toward equities, Adia has augmented participation in initial public offerings.”
A spokesman for Adia declined to comment on the institute’s findings. He also declined to confirm another of the institute’s surveys that showed Adia with $773bn of assets under management, the second highest total.
The institute also highlighted activity by another investing institution in the capital, the Abu Dhabi Investment Council (Adic), which “extended investment activities into private equity, real estate and infrastructure. A prime instance is Adic’s involvement in the group that purchased the 14- storey Shiba Park Building in central Tokyo”, said the institute.
The biggest and most active global players among the SWFs remained the Norwegians, the institute said, with some $124.7bn of transactions in 2013 by its principal funds.
“Norway’s Government Pension Fund Global, invested through the Norges Bank Investment Management unit, wins the prize for being the most active sovereign wealth fund for 2013, for two reasons: first the SWF has purchased over 5,000 equity transactions worth over a million in 2013.
“Second, the fund has taken an enhanced active approach when it comes to corporate governance and environmental standards.”
The institute noted that the Norwegian fund has taken part in IPOs ranging from Formula One’s launch “to the lofty Hong Kong IPO of China Cinda Asset Management, one of China’s major bad debt managers.”
The institute added: “Besides the equity transactions, the Norwegian sovereign wealth fund has made its mark in institutional real estate. With a 5 per cent target allocation to real estate, the largest SWF in the world inked deals with Metlife and Prologis – acquiring large portfolios of real estate assets.”
Second in the institute’s ranking table came the two big SWFs from Singapore, Temasek and GIC, with a total of $28bn invested in 481 transactions in 2013.
The institute said: “Temasek and the renamed GIC Private have seized many small to medium-sized stakes in businesses globally. Temasek has engaged in huge transactions like buying a 4.6 per cent stake for €600m in Evonik Industries, a German speciality chemical manufacturer. It has rejigged its portfolio, favouring consumer-based companies over the past preference of financial institutions.”
“Flipping to the other side, GIC has triumphed over Temasek in the total dollar amounts of transactions and number of observations for 2013. GIC has become emboldened in dealing with other private equity firms. The SWF has partnered with private equity firms like Bain Capital on its takeover of BMC Software,” the institute added.
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'The Ice Road'
Director: Jonathan Hensleigh
Stars: Liam Neeson, Amber Midthunder, Laurence Fishburne
2/5
How to play the stock market recovery in 2021?
If you are looking to build your long-term wealth in 2021 and beyond, the stock market is still the best place to do it as equities powered on despite the pandemic.
Investing in individual stocks is not for everyone and most private investors should stick to mutual funds and ETFs, but there are some thrilling opportunities for those who understand the risks.
Peter Garnry, head of equity strategy at Saxo Bank, says the 20 best-performing US and European stocks have delivered an average return year-to-date of 148 per cent, measured in local currency terms.
Online marketplace Etsy was the best performer with a return of 330.6 per cent, followed by communications software company Sinch (315.4 per cent), online supermarket HelloFresh (232.8 per cent) and fuel cells specialist NEL (191.7 per cent).
Mr Garnry says digital companies benefited from the lockdown, while green energy firms flew as efforts to combat climate change were ramped up, helped in part by the European Union’s green deal.
Electric car company Tesla would be on the list if it had been part of the S&P 500 Index, but it only joined on December 21. “Tesla has become one of the most valuable companies in the world this year as demand for electric vehicles has grown dramatically,” Mr Garnry says.
By contrast, the 20 worst-performing European stocks fell 54 per cent on average, with European banks hit by the economic fallout from the pandemic, while cruise liners and airline stocks suffered due to travel restrictions.
As demand for energy fell, the oil and gas industry had a tough year, too.
Mr Garnry says the biggest story this year was the “absolute crunch” in so-called value stocks, companies that trade at low valuations compared to their earnings and growth potential.
He says they are “heavily tilted towards financials, miners, energy, utilities and industrials, which have all been hit hard by the Covid-19 pandemic”. “The last year saw these cheap stocks become cheaper and expensive stocks have become more expensive.”
This has triggered excited talk about the “great value rotation” but Mr Garnry remains sceptical. “We need to see a breakout of interest rates combined with higher inflation before we join the crowd.”
Always remember that past performance is not a guarantee of future returns. Last year’s winners often turn out to be this year’s losers, and vice-versa.
Brief scores:
Toss: Nepal, chose to field
UAE 153-6: Shaiman (59), Usman (30); Regmi 2-23
Nepal 132-7: Jora 53 not out; Zahoor 2-17
Result: UAE won by 21 runs
Series: UAE lead 1-0
The specs
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WORLD CUP SEMI-FINALS
England v New Zealand
(Saturday, 12pm UAE)
Wales v South Africa
(Sunday, 12pm, UAE)
The specs: 2018 Ford F-150
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Engine: 5.0-litre V8
Power: 395hp @ 5,000rpm
Torque: 555Nm @ 2,750rpm
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Fuel consumption, combined: 12.4L / 100km
Killing of Qassem Suleimani
Killing of Qassem Suleimani
Read more from Kareem Shaheen
The specs
AT4 Ultimate, as tested
Engine: 6.2-litre V8
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The specs
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THE SPECS
Engine: 6.75-litre twin-turbocharged V12 petrol engine
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Company profile
Name: Infinite8
Based: Dubai
Launch year: 2017
Number of employees: 90
Sector: Online gaming industry
Funding: $1.2m from a UAE angel investor
MATCH INFO
Manchester City 0
Wolves 2 (Traore 80', 90 4')
Frankenstein in Baghdad
Ahmed Saadawi
Penguin Press
Sanchez's club career
2005-2006: Cobreloa
2006-2011 Udinese
2006-2007 Colo-Colo (on loan)
2007-2008 River Plate (on loan)
2011-2014 Barcelona
2014–Present Arsenal
How to protect yourself when air quality drops
Install an air filter in your home.
Close your windows and turn on the AC.
Shower or bath after being outside.
Wear a face mask.
Stay indoors when conditions are particularly poor.
If driving, turn your engine off when stationary.
Director: Laxman Utekar
Cast: Vicky Kaushal, Akshaye Khanna, Diana Penty, Vineet Kumar Singh, Rashmika Mandanna
Rating: 1/5
Results
Stage 7:
1. Caleb Ewan (AUS) Lotto Soudal - 3:18:29
2. Sam Bennett (IRL) Deceuninck-QuickStep - same time
3. Phil Bauhaus (GER) Bahrain Victorious
4. Michael Morkov (DEN) Deceuninck-QuickStep
5. Cees Bol (NED) Team DSM
General Classification:
1. Tadej Pogacar (SLO) UAE Team Emirates - 24:00:28
2. Adam Yates (GBR) Ineos Grenadiers - 0:00:35
3. Joao Almeida (POR) Deceuninck-QuickStep - 0:01:02
4. Chris Harper (AUS) Jumbo-Visma - 0:01:42
5. Neilson Powless (USA) EF Education-Nippo - 0:01:45
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
The Land between Two Rivers: Writing in an Age of Refugees
Tom Sleigh, Graywolf Press
COMPANY PROFILE
Founders: Alhaan Ahmed, Alyina Ahmed and Maximo Tettamanzi
Total funding: Self funded
