MCLEAN, UNITED STATES // The security firm once known as Blackwater changed its name for the second time in less than three years as its owners continue to reshape the company they bought from its founder a year ago.
The Arlington, Virginia-based company announced it will no longer be known as Xe Services and is now called Academi. The name is inspired by Plato's Academy in ancient Greece and is designed to connote elite, highly disciplined warriors who are thinkers as well as fighters.
Ted Wright, the chief executive officer, said on Monday a new name was needed to reflect changes the company has undergone since a group of investors bought it in December 2010 from founder Erik Prince, who is based in Abu Dhabi.
"Simply stated, we are a new company. New ownership team. New board of directors," Mr Wright said.
Mr Prince founded the company in 1997 in North Carolina and built it into a contractor that provided training and protection for US government workers in war zones around the globe. But Blackwater guards were involved in a series of high-profile shootings, none more so than the 2007 shootings in Nisoor Square in Baghdad that left 17 Iraqis dead. Iraq has since banned the company from working in the country. And four Blackwater guards still face federal prosecution for their actions.
Mr Prince, though, offered aggressive defences of his company's work and became a target for critics who said he fostered a trigger-happy culture. In 2009, the company acknowledged the Blackwater name had become tarnished and changed its name to Xe.
Asked about the name changes, Mr Wright pointed out that the first name change occurred under the old ownership group, and he admitted he was not a fan of the Xe name.
"I think it was confusing," Wright said of the Xe name. "It didn't have any reason behind it."
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.”
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