IDC launches Gulf advisory council

International Data Corporation (IDC) has launched its Technology Advisory Council in the Arabian Gulf with the aim of advising governments, regulators and the private sector.

The newly formed committee comprises nine representatives and chief information officers (CIOs) from the private and public sectors, including Dubai Aluminium (Dubal), Abu Dhabi Ports and Saudi Arabia’s ministry of finance.

“The constantly evolving nature of the technology landscape is having a profound impact on the leadership challenges facing those tasked with managing it,” said Jyoti Lalchandani, the vice president and regional managing director at IDC Middle East, Africa and Turkey. “We want to have a council to bring together CIOs. We want to make it a representative council to talk to governments and other stakeholders to be the voice of certain changes we want to see.”

The council aims to become a forum to discuss topics such as research and development, innovation in technology and development of IT skills across the technology sector. Mr Lalchandani described the skills shortage as a “major challenge” in the growth of the industry.

“In the last couple of years things have drastically changed. The growth that has been happening in this region and the changes we have gone through necessitates having a council to discuss what is happening,” said Ahmed Al Mulla, the vice-president of Dubal and a member of the Technology Advisory Council. “[The council] will be an important element in bringing agenda and bringing CIOs together.”

Information communications and technology spending in the Middle East is expected to reach US$96 billion this year, according to IDC. IT spending in the Middle East is growing at about 7 per cent, faster than the worldwide growth of 5 per cent. Saudi Arabia is the region’s biggest market, accounting for almost $7bn of spending, while Qatar is one of the fastest-growing markets.

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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.”

Our Time Has Come
Alyssa Ayres, Oxford University Press

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IDC launches Gulf advisory council

International Data Corporation has brought together chief information officers from the private and public sectors to create a Technology Advisory Council to liaise with governments and stakeholders in the Gulf.

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