Christian Horner is calling for a new approach to technology in Formula One. Mark Thompson / Getty Images
Christian Horner is calling for a new approach to technology in Formula One. Mark Thompson / Getty Images

Christian Horner calls for change in Formula One



ABU DHABI // Yas Marina Circuit had its first experience of the new 1.6-litre V6 turbos powering Formula One cars on Friday, but if the Red Bull Racing team principal Christian Horner had his way, they would be only a fleeting experience for race fans.

The units, which replaced 2.4-litre V8 engines, have proven controversial due to their reported high price in a season where the problem of increasing costs in the sport has seen Marussia disappear from the competition, while Caterham needed donations from the public and sponsors to be able to line up on the grid for Sunday’s Etihad Airways Abu Dhabi Grand Prix.

Horner said in a news conference on Friday that the cost to the engine manufacturers, Mercedes, Ferrari and Renault, “has probably been close to a billion euros in developing these engines, and then the burden of cost has been passed on, unfortunately, to the customer teams”.

Horner, whose team use Renault engines, added that while he believed things cannot be changed for the 2015 season – which begins in March in Australia – a change in philosophy could be put in place for 2016, and was something he would suggest to the other teams.

“Maybe we need to even go as far looking at a different engine, a new engine, maybe still a V6, but maybe a more simplified V6 that controls the cost,” he said.

“Costs of development, costs of supply to a team and to the privateer team, and I think that is something we need to have a discussion about at the next strategy group.”

Claire Williams, the team principal of Williams, who use Mercedes units, warned that changing the engines, which were designed to promote racing that was more environmentally friendly, could damage the image of the sport.

“I think we have to consider very carefully any changes around the power units. We have already ploughed a lot of money into them, and developing them … a fifth of our budget is spent on our engine.

“There is an important message around those engines, as well, with their hybrid technologies, which are relevant to us and relevant to the sponsors we are trying to pitch to at the moment.

“I think making a U-turn so quickly I’m not sure is a way we would want to go, and I am not sure it puts us in a very credible position.”

gcaygill@thenational.ae

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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.”

THE SPECS

Engine: 3.5-litre V6
Transmission: six-speed manual
Power: 325bhp
Torque: 370Nm
Speed: 0-100km/h 3.9 seconds
Price: Dh230,000
On sale: now

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