Canada's investment in the UAE triples to $6.8bn since pandemic as ties deepen

Bilateral trade is expected to rise to a record this year, surpassing highs achieved in 2022, Canadian consul general in Dubai says

Canada's consul general in Dubai, Jean-Philippe Linteau, expects DP World to continue boosting its investments in Canadian ports. Antonie Robertson / The National

Canadian investors have put C$9 billion ($6.8 billion) into UAE entities in the past two years – almost tripling the previous investment figure, Canada’s consul general in Dubai has said.

This is expected to grow further as the countries deepen trade and economic ties, the official said.

Investment into the second-largest Arab economy has climbed from C$3.1 billion in 2020, driven by the UAE’s status as one of the region’s fastest growing economic, commercial and trading hubs.

“Since the pandemic, Canadian Investment into the UAE has tripled,” Jean-Philippe Linteau told The National in an interview.

“My expectation is to continue to see it growing based on the excellent economic fundamentals and welcoming environment that the UAE offers to Canadian investors.”

Investors are looking for places that are friendly to foreign capital and the UAE certainly ranks among the top of those global centres, he said.

“There's all kinds of turbulence in the world economy and this is a haven of stability, and on that basis, I expect investments to continue to grow.”

Among major Canadian investors is pension fund Caisse de Depot et Placement du Quebec (CDPQ), which has invested $5 billion in three of DP World's UAE assets – Jebel Ali Port, the Jebel Ali Free Zone and the National Industries Park.

The Montreal-based fund is taking a 22 per cent stake in the three Dubai-based assets through a new joint venture with DP World. CDPQ will invest $2.5 billion while the remainder of the transaction will be financed by debt.

The deal made Canada “the most important investor in Dubai in 2022”, accounting for 41 per cent of foreign direct investment inflow to the emirate, Mr Linteau said.

Brookfield Asset Management is another investor that has acquired UAE-based financial services assets as part of its Middle East expansion push.

Earlier this month, it signed an agreement to acquire payments-processing company Network International for £2.2 billion ($2.76 billion). Brookfield, which took a 60 per cent stake in First Abu Dhabi Bank’s payments business Magnati last year in a $2.76 billion deal, is combining Magnati and Network International to create the biggest payments firm in Middle East and Africa.

Mr Linteau, who is taking over as Canada’s ambassador in Saudi Arabia next month, expects the scale of investments to expand further, with growing interest from Canadian companies in UAE's sustainability, decarbonisation and energy transition sectors.

“The UAE is making a big push to decarbonise its economy to grow its non-oil industrial manufacturing sector. These are areas where we're going to see more investments, [especially] clean technologies to reduce the carbon footprint,” he said.

Both Canada and the UAE are “resource intensive economies” that are looking to reach net zero by 2050 and the commonality of their goals is also a driver of investments.

“It's only natural that we would work together to reach that goal,” he said.

“We [already] see Canadian firms here that are actively working within the oil and gas sector” bringing sustainability, clean energy and energy efficiency technologies to the industry, he added.

The UAE's hosting of the Cop28 summit this year in Dubai has also opened up new avenues of investment for Canadian companies and while it's difficult to give specific numbers, “we're definitely seeing a lot of interest”, Mr Linteau said.

Sustainability is a theme so “watch for announcements between now and then”, he added.

The UAE’s economic rebound from the pandemic-driven slowdown, the continued non-oil economic growth momentum and its position as a regional hub is an added attraction for Canadian investors.

The country's economy posted about 7.6 per cent gross domestic growth last year, the highest in 11 years, after expanding 3.9 per cent in 2021. It is projected to grow 3.3 per cent in 2023 and 4.3 per cent in 2024, according to the latest UAE Central Bank data.

“The UAE is the natural jumping point for the region, and this is why for Canadian business, the UAE punches way above its weight,” he said.

Already, more than 150 Canadian businesses are operating in the UAE and some use it as their base for global exports and re-exports.

Canada is the biggest exporter of lentils globally and a number of Canadian companies are importing pulses to the UAE, processing it and then re-exporting it to more than 70 countries, Mr Linteau said.

UAE investors are also equally interested in solidifying their presence in Canada, with Abu Dhabi's clean energy company Masdar being the latest to explore investment options in the G7 economy.

“Masdar is interested in projects around green hydrogen and renewable energy all over the world and that's what we hope that we can do in Canada with Masdar,” he said.

“We need players like them that are serious, know what they're doing, and are capable in order to achieve our energy transition goals.”

The aggregate value of the UAE’s investment in Canada has already reached $30 billion, according to the UAE Ministry of the Economy data.

Mubadala Investment Company, Abu Dhabi National Energy Company (Taqa) and DP World are among the major UAE investors that hold significant business interests in the Canadian oil and gas and petrochemicals sectors as well the country’s ports infrastructure.

Mubadala holds a stake in petrochemicals producer Novo Chemicals, while DP World has investments in the Ports of Vancouver, Prince Rupert, Nanaimo and Saint John. Taqa holds interests in major upstream oil and gas projects in Alberta and Saskatchewan provinces through its subsidiary Taqa North America.

Mr Linteau expects DP World to continue to boost its investment in Canada as “they're very happy with what they've achieved so far and [we] expect to see them continuing to double down”, he said.

“They have done regular investments both on the east and west coasts.”

In April, the two countries launched the Canada-UAE Sovereign Wealth Fund Council, with the aim of exploring investment opportunities for their state-owned funds that have an estimated $3 trillion in assets.

The SWFC is tasked with finding “synergies between Canada and the UAE’s pre-eminent institutional investors to deliver superior risk-adjusted returns”, Canada’s ambassador to the UAE, Kris Panday, said at the time.

“What they [the funds] have in common is that they are among the best in the world at doing what they do and that is deploying capital,” Mr Linteau said.

“What I expect to see is collaborations on sustainability, the green economy and energy transition … and maybe infrastructure as well.

“There are huge opportunities in the Middle East and these funds here know the region very well, much better than the Canadians, so that's another area of interest.”

While investments are on the rise, bilateral trade between the two countries has also increased over the past few years.

Since 2018, the value of bilateral trade has consistently grown, climbing 1.6 per cent year-on-year to C$2.558 billion at the end of 2022. With the value of trade reaching C$994 million in the first four months of this year, it is set to surpass the highs achieved last year.

“We've seen an increase in the trade numbers, as high as it's ever been, and I'm going to make a prediction here that in 2023 it will be the highest ever,” Mr Linteau said.

Last year, the UAE was Canada’s second-largest merchandise trade partner in the Mena region after Saudi Arabia. It was also the biggest Canadian merchandise export market in Mena, with aggregate value of exports reaching C$1.8 billion.

Canada is interested in boosting trade with the UAE further in the long term, potentially through a Comprehensive economic partnership agreement (Cepa).

However, its current focus is to conclude negotiations on a Foreign investment protection agreement (Fipa) with the UAE that will help boost protection for investors in both jurisdictions, he said.

Once it concludes a Fipa deal, which Mr Linteau expects may happen this year, Canada will look at the potential of a broader trade deal with the UAE, which has already signed Cepa agreements with India, Indonesia, Turkey and Israel.

“Canada has free trade agreements with over 50 countries and is the only G7 country that has a trade agreement with all other G7 countries,” he said.

“The UAE is obviously a very attractive economy” with whom it can look at a potential trade deal, however, “in the short term, our priority is to conclude the Fipa”, he added.