Abu Dhabi Fund to woo Asian investors to Middle East, Africa

Invest AD, the fund manager owned by Abu Dhabi Investment Council, is in talks to form partnerships with institutions in China and Southeast Asia as it seeks to attract investors to the Middle East and Africa.

The Abu Dhabi-based fund manager is looking to team up with asset managers including units of “large banks,” and “quasi sovereign and sovereign names” that also offer it access to investment opportunities in Asia, Mohammed Al Hashemi, chief executive officer of Invest AD’s investment management division, said in an interview.

“Many investment institutions have had a great deal of interest in the Middle East and Africa, and specifically the African continent; the asset prices there are cheaper than other zones around the world,” Al Hashemi said in Singapore today. “At the same time we are equally looking to Southeast Asia, China, the investment opportunities there.”

The government-controlled fund manager, which wants to manage more third-party money, is betting on growth in other parts of the Middle East and Africa as the debt crisis in Dubai hurts sentiment toward the Gulf. Dubai had to seek a $20bn bailout from Abu Dhabi last year after amassing at least $80 billion in debts.

Dubai accounts for less than 4 per cent of the region’s gross domestic product, Al Hashemi said.

“There are opportunities in Dubai, but there are significantly more opportunities elsewhere,” he said. “The region is not a one-city story and that tends to be overlooked; you have opportunities everywhere from Egypt to Morocco to Lebanon to Africa.”

Invest AD is meeting fund managers in Beijing, Hong Kong and Singapore this week, Al Hashemi said, without providing names.

Saudi Arabia’s Tadawul All Share Index gained 27 per cent and Egypt’s EGX30 Index rose 35 percent last year. Dubai Financial Market General Index rose 10 percent.

The seven-member United Arab Emirates will grow by no more than 1 per cent this year because of a continuing contraction in Dubai, the International Monetary Fund forecast January 26. Saudi Arabia will post growth of almost 4 per cent, according to a January 13 forecast by Banque Saudi Fransi.

Real-estate prices in Dubai, the second-largest emirate in the UAE, have plummeted about 50 per cent from their peak in late 2008. Abu Dhabi’s help enabled Dubai’s state-owned Dubai World to avoid defaulting on a $4.1 billion bond payment on December 14. Dubai World roiled markets worldwide when it said December 1 it was in talks with creditors to restructure $26bn of debt.

“The investment opportunities are not all real estate, tourism, banking,” said David Sanders, chief investment officer of Invest AD’s investment management unit. “There are real economies in the region, real growth stories that underpin the future of the region,” including dairy companies in Saudi Arabia and pharmaceutical and consumer firms in Egypt, he said.

Sanders said he will be traveling to South Africa, Zambia and Zimbabwe to visit companies.

Invest AD plans to launch two funds by mid-February, targeting institutional investors, the managers said. The GCC Fund will invest in 20 to 30 stocks in Gulf Cooperation Council countries, Sanders said.

The GCC countries are forecast by HSBC Holdings Plc to have average economic expansion of at least 4 per cent in 2010, after no increase last year. That compares with projected economic growth of 2.7 per cent in the US and 1 per cent in the 16-nation euro zone, according to the IMF.

The Mena Dynamic Fund will invest in 11 different markets in the GCC, North Africa, Lebanon, Jordan and Turkey, using technical analysis to invest, Sanders said.

Rebranding

Invest AD currently manages the $35m Emerging Africa Equities Fund and the UAE Equities Fund, which is set to grow to $100m, Sanders said.

Al Hashemi was formerly responsible for investment strategy at Abu Dhabi Investment Authority, the world’s largest sovereign wealth fund, in London, before moving to Abu Dhabi to manage funds for Abu Dhabi Commercial Bank PJSC.

Invest AD was created as Abu Dhabi Investment Company in 1977 and rebranded itself as Invest AD in June as it seeks to manage more money through funds and segregated accounts. It continues to manage government money.

Al Hashemi declined to disclose the size of the fund’s assets under management. Abu Dhabi holds 8 percent of the world’s oil reserves.