Abu Dhabi’s Khalifa Industrial Zone (Kizad) expects to attract more manufacturers of car parts after the start of construction of a Dh2.2 billion tyre plant in the area adjacent to the $7bn Khalifa Port, officials said.
Roadbot Tyre Project Kizad, which is being developed by China’s tyre manufacturer Roadbot, is the first investment in the 2.2-square kilometre China-UAE Industrial Capacity Co-operation Demonstration Zone, Kizad said on Tuesday. China’s Jiangsu Provincial Overseas Co-operation and Investment company is developing the free zone under a 50-year agreement struck in 2017.
“The Roadbot tyre factory will make an important contribution to the UAE’s manufacturing base as part of our leadership’s longstanding strategy to diversify our economy,” Dr Sultan Al Jaber, chairman of Abu Dhabi Ports, the operator of the zone said on Tuesday.
Abu Dhabi is developing a downstream industry in Kizad as part of efforts to diversify the economy away from oil, create jobs and attract foreign direct investments. Several industrial plants operate out of Kizad, including a smelter for Emirates Global Aluminium, Emirates Steel and petrochemical producer Borouge.
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Kizad, which along side Abu Dhabi Ports contributes 3.6 per cent to the non-oil gross domestic product of the emirate, has attracted Dh65bn in investments to date and is targeted to contribute to 15 per cent of non-oil GDP by 2030.
Roadbot Tyre Project Kizad, set to be operational by 2020, will create up to 1,200 jobs.
“We are talking to a number of spare part producers who are focusing on very specific elements of the cars to be produced in Kizad,” said Edwin Lammers, vice president of commercial and business development at Kizad. “We are confident that we will see more influx of the automotive industry into Abu Dhabi within this year.”
For example, Kizad is talking to manufacturers of brake pads to set up base in the zone, he added.
The zone already has a developing automotive cluster, with one company producing aluminium bumper parts for Porsche, he said.
Having resources from EGA, Emirates Steel and Borouge nearby helps attract companies to the free zone.
Kizad attracted Dh1.5bn in FDI in 2018 and expects to see inflows of up to $3bn annually, its chief executive Samir Chaturvedi said earlier this month.
Kizad and state-owned Abu Dhabi National Oil Company plan to develop a polymers park within the free zone as part of attracting more downstream industires. Polymers are used to produce plastics.
The economic zone and ports are attracting major Chinese investments as ties between Beijing and Abu Dhabi strengthen.
Khalifa Port last month inaugurated a $430 million terminal, which will be operated by China’s Cosco Shipping Ports according to a 35-year concession agreement.
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In numbers: PKK’s money network in Europe
Germany: PKK collectors typically bring in $18 million in cash a year – amount has trebled since 2010
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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.”
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