Spectators watch as the fleet sail out of the heads at the start of the Sydney Hobart yacht race in Sydney Thursday, Dec. 26, 2013. AP Photo / Glenn Nicholls
Spectators watch as the fleet sail out of the heads at the start of the Sydney Hobart yacht race in Sydney Thursday, Dec. 26, 2013. AP Photo / Glenn Nicholls

Team Australia pull out of America’s Cup citing financial constraints



SYDNEY // Team Australia on Saturday pulled out of the 2017 America’s Cup citing financial constraints, ending Australia’s hopes of reclaiming the coveted yachting trophy.

The Hamilton Island Yacht Club announced they were withdrawing Team Australia from the competition.

The decision followed a key meeting in San Francisco last week at which further details of the competition were discussed, Australian Associated Press said.

Australia, who won the America’s Cup in 1983, have not challenged for the trophy since 2000.

But hope was renewed for the next Cup with their first team in more than a decade to be skippered by Olympic gold medallist and World Sailor of the Year, Mat Belcher.

Belcher and the crew were informed of the decision on Friday.

“We really thought that this was our time and our opportunity -- we’re very sad,” Belcher told AAP.

Billionaire wine baron Bob Oatley, Hamilton Island Yacht Club owner and Sydney to Hobart veteran, conceded the mounting costs forced the withdrawal.

“The challenge was initiated with a view to negotiating a format for the 35th America’s Cup that was affordable and put the emphasis back on sailing skills,” he said.

“Ultimately our estimate of the costs of competing were well beyond our initial expectation and our ability to make the formula of our investment and other commercial support add up.

“We are bitterly disappointed that this emerging team of fine young Australian sailors will not be able to compete at the next America’s Cup under our banner.”

Belcher did not rule out Australia’s challenge being revived if additional funding was forthcoming.

“If government funding came in or sponsors come in there’s always that possibility,” Belcher said. “We could do a late entry.”

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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.”

2025 Fifa Club World Cup groups

Group A: Palmeiras, Porto, Al Ahly, Inter Miami.

Group B: Paris Saint-Germain, Atletico Madrid, Botafogo, Seattle.

Group C: Bayern Munich, Auckland City, Boca Juniors, Benfica.

Group D: Flamengo, ES Tunis, Chelsea, Leon.

Group E: River Plate, Urawa, Monterrey, Inter Milan.

Group F: Fluminense, Borussia Dortmund, Ulsan, Mamelodi Sundowns.

Group G: Manchester City, Wydad, Al Ain, Juventus.

Group H: Real Madrid, Al Hilal, Pachuca, Salzburg.

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