Yachts are moored at Port Hercules in Monaco during the 23th edition of the International Monaco Yacht Show. VALERY HACHE / AFP Photo
Yachts are moored at Port Hercules in Monaco during the 23th edition of the International Monaco Yacht Show. VALERY HACHE / AFP Photo

Gulf Craft of the UAE takes its six-million-dollar yacht to Monaco



Sheikh will meet chic as Gulf Craft, the UAE’s only maker of superyachts, exhibits one of its US$6 million Majesty 105s at the Monaco Yacht Show, which starts today.

Two weeks ago, the Gulf-based manufacturer was displaying its wares at the neighbouring Cannes boat show, where it debuted its Majest 105 model, with an eye on how the world’s wealthy were feeling about splashing out.

“It’s a barometer for how the consumer confidence is today.” said Erwin Bamps, the chief operating officer of Gulf Craft. “We had some worries on the first two days of the show because there weren’t too many people there, but then the third day it started picking up and a lot more people were participating and we found an interested crowd for the rest of the week.”

A superyacht is classified as being at least 101ft in length.

It is an important period for Gulf Craft as the ripples of the global financial crisis are still rocking the boat-building world – in 2009-10 boat sales in Europe dropped 70 per cent. However, the company insulated itself against the squalls by looking higher up the value chain.

“We focused more and more on bigger yachts and that is where we saw the growth,” said Mr Bamps. “We have never sold as many superyachts as over the past four years. That interest in the market has continued. Whoever had the money to buy a $6m yacht had that money and still had that money. In the last 12 months globally there have been 200 superyachts produced and delivered. We have delivered seven out of those; that is not a massive market share but it is far more than we used to do by double.”

This week it launched its latest Majesty 135 model, which costs upwards of $16m. Earlier this year Gulf Craft said it was building a 155ft superyacht slated for completion in 2015. This is 20ft longer than its current longest model.

Gulf Craft said recently it was looking at an IPO, after an attempt in 2006, and is working towards that aim over the next couple of years.

“Our company is being reshaped into a technology company,” said Mr Bamps “In the past we were seen as a company that could put a boat together in an artisanal way. Now we are testing the limits of engineering, construction and corporate governance. We are rethinking everything we do from design, style and assembly.

“We have a huge growth potential regionally but also globally. We have always wanted to make boat- owning democratic and the smallest boats we sell with the engines are below the Dh200,000 mark, so everybody who can afford a decent car can afford a boat.”

ascott@thenational.ae

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.”

Brief scores:

Manchester United 4

Young 13', Mata 28', Lukaku 42', Rashford 82'

Fulham 1

Kamara 67' (pen),

Red card: Anguissa (68')

Man of the match: Juan Mata (Man Utd)

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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UAE currency: the story behind the money in your pockets
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Director: Basel Adra, Yuval Abraham, Rachel Szor, Hamdan Ballal

Stars: Basel Adra, Yuval Abraham

Rating: 3.5/5