It’s been a busy six months with massive stories breaking across many sectors in the UAE.
Sultan Al Jaber takes the reins at Adnoc
The UAE Minister of State, Sultan Al Jaber, was appointed to the role of chief executive of Abu Dhabi National Oil Company (Adnoc) by Ruler’s decree in February. Dr Al Jaber is also the chairman of the renewable energy firm Masdar and chief executive of energy at Mubadala. In May, he announced a new corporate regime at Adnoc as he moved to transform the culture, with changes at the top including Abdulaziz Abdulla Alhajri being named director of Adnoc’s refining and petrochemicals division, and Omar Suwaina Al Suwaidi moving to lead the gas division, having been deputy director of planning and strategy.
• Read the full story here
Emaar to build tower eclipsing Burj Khalifa
In April, the Dubai developer Emaar Properties unveiled plans for a mega-retail district at Dubai Creek which would also include a tower taller than the Burj Khalifa. Mohamed Alabbar, the Emaar chairman, later revealed that the tower would be 100 metres taller than Burj Khalifa, which stands at 828 metres, and work is now underway on the project. The development will have 2 kilometres of creekside waterfront and will house 679 million square metres of residential space, 851,000 sq metres of commercial property, 22 hotels with 4,400 rooms and 11.16 million sq metres of retail. By comparison, The Dubai Mall has an overall footprint of 1.1 million sq metres. The tower is set to be beaten in the height stakes by Saudi Arabia's 1km Jeddah Tower, however, that has hit delays and is now due to complete at the end of 2019.
• Take a closer look at The Tower at Dubai Creek Harbour here
Abu Dhabi expats to pay 3% municipal fee on home rentals
A new fee on expats in the capital was published in February's Official Gazette. The new fee will be collected with monthly electricity and water bills, and will add about Dh5,000 to the cost of renting an average two-bedroom apartment. UAE nationals are exempt. This is similar to the levy in Dubai, only that is 5 per cent. Details emerged on the opening day of Cityscape Abu Dhabi in April, and NBAD later calculated that it could boost government revenue by as much as Dh612 million a year.
• Read the full story here
Dubai breaks solar records
Last month, Dubai announced that the third phase of its Mohammed bin Rashid Al Maktoum solar park had set a new benchmark for the industry at 2.99 US cents a kilowatt-hour. A Masdar-led consortium won the contract for the 800 megawatt phase at what will be the largest single-site solar project in the world with a planned capacity of 5,000MW by 2030. This is enough to power 800,000 homes with a total investment of Dh50 billion. The second phase, which totalled 200MW - and also saw a then world record broken at 5.84 cents per kWh from Saudi Arabia's Acwa Power and its Spanish partner TSK. Dubai is looking to have 7 per cent of its total power output from clean energy sources in the next four years, followed by 25 per cent by 2030 and 75 per cent by 2050.
• Abu Dhabi solar project could match Dubai record-low prices - read here
Ipic and Mubadala to merge
We learnt just last week that the Abu Dhabi Government is to merge the two investment titans International Petroleum Investment Company (Ipic) and Mubadala Development Company. A joint committee headed by the Deputy Prime Minister Sheikh Mansour bin Zayed will be created and given the responsibility of merging the pair, state news agency Wam said. The combined entity will have assets of about US$135 billion, based on the latest financial reports from Mubadala and Ipic. Expect further details to emerge in the coming weeks and months.
• Read the full story here
• Read our analysis of the merger here
NBAD and FGB to create mega bank
The first big merger of the year was on the cards when NBAD and FGB said in June they were in discussions to join forces to create the biggest banking entity by assets in the Middle East. The past year has been tough for banks with many laying off employees because of a decline in business. More than 50 banks and financial institutions serve 9 million customers in the UAE, making it one of the most crowded banking markets in the region. A combination of NBAD and FGB will be the biggest banking merger in the UAE since Emirates Bank International and the National Bank of Dubai joined in 2007 to create Emirates NBD. The two banks’ boards unanimously voted to recommend to their shareholders the merger, it was announced on Monday.
• Read the full story here
• Listen to our podcast on the merger here
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What is the FNC?
The Federal National Council is one of five federal authorities established by the UAE constitution. It held its first session on December 2, 1972, a year to the day after Federation.
It has 40 members, eight of whom are women. The members represent the UAE population through each of the emirates. Abu Dhabi and Dubai have eight members each, Sharjah and Ras al Khaimah six, and Ajman, Fujairah and Umm Al Quwain have four.
They bring Emirati issues to the council for debate and put those concerns to ministers summoned for questioning.
The FNC’s main functions include passing, amending or rejecting federal draft laws, discussing international treaties and agreements, and offering recommendations on general subjects raised during sessions.
Federal draft laws must first pass through the FNC for recommendations when members can amend the laws to suit the needs of citizens. The draft laws are then forwarded to the Cabinet for consideration and approval.
Since 2006, half of the members have been elected by UAE citizens to serve four-year terms and the other half are appointed by the Ruler’s Courts of the seven emirates.
In the 2015 elections, 78 of the 252 candidates were women. Women also represented 48 per cent of all voters and 67 per cent of the voters were under the age of 40.
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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The biog
Favourite car: Ferrari
Likes the colour: Black
Best movie: Avatar
Academic qualifications: Bachelor’s degree in media production from the Higher Colleges of Technology and diploma in production from the New York Film Academy
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