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Concierge Treatment: Private Equity Courts Mega Sovereign Funds and Pensions   
(Tuesday - November 25, 2014) Associated Profiles : Abu Dhabi Investment Authority
- swfinstitute.org - Sovereign funds like Kuwait Investment Authority (KIA), China Investment Corporation (CIC) and îAbu Dhabi Investment Authorityî (ADIA), have taken ownership stakes in headline private equity firms...
[more] 
TRLPC-Bankers ready 4.5 bln euros of debt for Lafarge Holcim assets   
(Monday - November 24, 2014) Associated Profiles : Abu Dhabi Investment Authority
- Reuters - BC Partners, Advent and Temasek have teamed up for the assets, as have CVC and sovereign wealth funds the îAbu Dhabi Investment Authorityî and Singapore's GIC. Bain and Onex form the third group and...
[more] 
TRLPC-Bankers ready 4.5 billion euros of debt for Lafarge Holcim assets   
(Sunday - November 23, 2014) Associated Profiles : Abu Dhabi Investment Authority
- Reuters - BC Partners, Advent and Temasek have teamed up for the assets, as have CVC and sovereign wealth funds the îAbu Dhabi Investment Authorityî and Singapore's GIC. Bain and Onex form the third group and...
[more] 
Sovereign fund forum has no plans to include central banks: Official   
(Saturday - November 22, 2014) Associated Profiles : Abu Dhabi Investment Authority
- Economic Times - "Central banks don't fit the definition of a SWF so they won't be included," Majed al-Romaithi, who is also chief executive of the real estate and infrastructure department at the îAbu Dhabi Investment...
[more] 
Sovereign fund forum has no plans to include central banks: Official   
(Friday - November 21, 2014) Associated Profiles : Abu Dhabi Investment Authority
- Economic Times - "Central banks don't fit the definition of a SWF so they won't be included," Majed al-Romaithi, who is also chief executive of the real estate and infrastructure department at the îAbu Dhabi Investment...
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Category
Abu Dhabi Investment Authority (ADIA)

Category: Sovereign Wealth Fund

Headquarters:  Abu Dhabi, the United Arab Emirates (UAE)
Established: 1976

 
The Abu Dhabi Investment Authority is considered one of the world's largest SWFs.

Estimated asset base:

SWF institute: US$627 billion (accessed December 26, 2012)
Financial Times: USD$700 billion (July 2009)
Zawya (Emirates Business): USD$400 billion (March 2009)

OVERVIEW / MISSION

Abu Dhabi Investment Authority states that its mission is "to invest funds on behalf of the Government of the Emirate of Abu Dhabi to make available the necessary financial resources to secure and maintain the future welfare of the Emirate.” 

Though ADIA does not always offer a detailed picture of its work to the public, we observed in fall 2012 that the ADIA Web site appears to have begun offering more insights into the SWF's operations. ADIA also began releasing annual reviews in March 2010 (PDF here). The first review includes information on asset allocation, specific investment departments, and staff nationality, but continues ADIA's tradition of not revealing the value of its assets. A second review, covering 2010, was issued in September 2011 (PDF online), and the third review was published in late June 2012 (PDF online).

 

BACKGROUND

ADIA was established in 1976-77 with a focus on “equities and bonds, treasury, finance and administration, real estate, local and regional investments.” ADIA moved into commodities in 1986, private equities in 1989, inflation-indexed bonds in 1998, and emerging markets in 2005. By 1993, ADIA employed over 1,000 people; the SWF's 2011 annual review says ADIA employed 1,275 representing 40 nationalities.

The annual reviews for 2009, 2010, and 2011 also note that roughly 80% of ADIA's assets are managed externally, with 2011's edition stating that "approximately 60% of ADIA's assets are invested in index-replicating strategies."

ADIA is universally recognized as one of the world’s largest sovereign wealth funds. A Business Week article from June 2008 estimated its value at the time at USD$875 billion, though in late December 2012, the SWF Institute showed Norway's Government Pension Fund (Global) at US$664.3 billion and ADIA at US$627 billion.


STRUCTURE & INVESTMENT BASICS

ADIA is owned by the government of Abu Dhabi but "carries out its investment programme independently and without reference to the Government of Abu Dhabi or other entities that also invest on the Government’s behalf," according to ADIA's Web site.

ADIA states that ADIA’s investment strategy is long-term value creation. The global portfolio crosses sectors, and decisions are “based solely on its economic objectives of delivering sustained long-term financial returns. ADIA does not seek an active role in the management of the companies in which it invests.” ADIA writes on the Investment Strategy page of its Web site that "ADIA’s investment strategy involves looking beyond individual economic cycles and focusing on strategies aimed at capturing secular trends to generate long-term, sustainable returns."

ADIA's annualized return for the 30 years preceding its 2011 annual review were 8.1%; the 20-year rate was 6.9%.

ADIA announced in late August 2011 that it had restructured its external equities departments in July 2011. According to ADIA's 2011 Review, the restructuring created two divisions: "the Indexed Funds Department, which comprises all passively-managed equity portfolios; and the External Equities Department, which combines all of our external actively-managed equity portfolios." External equities were previously divided by geography, into Europe, North America, Far East, and emerging markets. The 2011 Review also notes that about 80% of ADIA's assets are managed by external managers. (PDF: 2011 ADIA Review)

Another change in 2011 was the merging of real estate and infrastructure into one department, now known as the Real Estate & Infrastructure Department.


INVESTMENT STRATEGIES & METHODOLOGIES:

ADIA's 2011 annual review and Web site list investment targets by asset class and geographical region. The largest asset class is developed equities (35-45%), followed by emerging market equities and government bonds (10-20% each). ADIA's other categories are: small cap equities, credit, alternative, real estate, private equity, infrastructure, and cash. The review also provides basic information on operations within each of ADIA's investment departments.

Geographically, the largest area for investments is North America (35-50%), followed by Europe (25-35%), emerging markets (15-25%), and developed Asia (10-20%). ADIA does not invest in the United Arab Emirates and only invests in the Gulf region "in instances where such investments constitute part of an index."

These asset class listings differ a bit from those quoted in June 2008, when ADIA reported its asset allocation range for Business Week as: stocks in developed markets (45-55%), stocks in emerging markets (8-12%), small-cap stocks (1-4%), government bonds (12-18%), corporate and other bonds (4-8%), alternative investments (5-10%), real estate (5-10%), private equity (2-8%), infrastructure (0-4%), and cash (0-5%). (link)

An article on PrivateEquityRealEstate.com dated March 1, 2010, (online here) provides a detailed look at ADIA's real estate operations, which Bill Schwab, global head of real estate for ADIA, says have a broad mandate. The real estate department was slated to grow to about 90 staff members in 2010.

An article in The New York Times, published February 28, 2008, reports that ADIA “averages a yearly return of 10 to 20 percent, say people who have been briefed on the fund’s investment strategy.” The article estimates that Abu Dhabi generates an annual surplus of $50 billion if oil is $100/barrel; much of the surplus flows to ADIA. The real estate department was slated for growth to 90 people in 2010.

The Times article also notes that a relatively new strategic investment group within ADIA, overseen by Saeed Mubarek Rashid al-Hajiri, “picks investments in hopes of generating market-beating returns.” The group apparently manages roughly $30 billion; the Times reports that “outsiders still manage 80 percent of ADIA’s assets, proof that the fund’s commitment to making direct investments is only in its early stages.” The Times mentions Jean-Paul Villain, a French money manager, as a significant figure in ADIA’s investment strategy and asset allocation.

 

TRANSPARENCY

The Sovereign Wealth Fund Institute rates ADIA a “5” for transparency (on scale of "10" as highest); the rating rose in late 2011 from 4 to 5. As mentioned above, ADIA released its first annual review in 2009, and Ahmed bin Zayed Al Nahyan, ADIA's late managing director, mentions trust in his statement, continuing by writing, "...with the publication of this, our first Annual Review, we aim to enhance understanding of ADIA in key areas such as governance, investment strategy, portfolio structure, our approach to risk and – the lifeblood of our organisation – our people." Though the review is not an annual report, it is a decent first step toward greater transparency; additional reviews have been released in subsequent years. ADIA's Saeed Al Hajeri, executive director of ADIA's emerging markets department, noted in an interview in the January-February 2011 issues of CFA Magazine (PDF online) that "as a responsible long-term investor, we need to build understanding in the market about what we do and how we do it."

The New York Times February 2008 report noted that ADIA had no internal communications department but was working to establish one; by 2009, press releases carried the name of a media relations staffer. ADIA is publicity-shy after its experiences during the Bank of Credit and Commerce International (BCCI) scandal in the early 1990s, when ADIA “is said to have lost hundreds of millions of dollars.” ADIA appears to be moving toward greater disclosure (see “Open Editorial” below).

 

GOVERNANCE

ADIA claims it has “established governance standards with defined policies, processes and systems that we have developed over many years to ensure accountability." The ADIA Web site lists functions within the organization – investment departments, finance and administration, information technology, and specialized committees – but provides little view of how they interact, though annual reviews offer significant glimpses into operations.

ADIA’s board of directors “holds primary responsibility for the implementation of ADIA's strategy" and oversees (but does not participate in) many aspects of ADIA's management. The managing director reports to the board, and the investment committee assists the managing director.

 

LEADERSHIP

Board chairman is H.H. Sheikh Khalifa bin Zayed Al Nahyan, who is also president of the United Arab Emirates. The managing director is H.H. Sheikh Hamed bin Zayed Al Nahyan, half-brother of the president. He succeeds his brother, H.H. Sheikh Ahmed bin Zayed Al Nahyan, who held the position until he died in a glider crash in Morocco in late March 2010. An aiCIO story dated April 15, 2010, summarizing the developments, appears here.

 

RECENT NEWS HIGHLIGHTS

ADIA made two new appointments in October 2012, hiring Colm Lanigan as head of principal investments in the private equities department and Marc Keirstead as chief financial officer in the private equities department. Lanigan came to ADIA from Tara Capital, a private equity firm that he founded in 2005, and Keirstead previously served as director of investor finance at the Canada Pension Plan Investment Board. (PDF release on Lanigan, PDF release on Keirstead)

Glen Beamson was appointed chief technology officer in mid-September 2012. (PDF release) Beamson joined ADIA from Standard Bank and has also worked at Bank of America and Barclays Capital.

On June 25, 2012, ADIA released its 2011 ADIA Review. A press release about the review (PDF online) notes that publication covers such topics as the restructuring of the external equities department (see above, Structure & Investment Basics) and the merging of the real estate and infrastructure functions. The full 2011 ADIA is available for PDF download.

On March 28, 2012, ADIA announced that it hired Eduardo Favrin to head the Latin America team in ADIA's Internal Equities Department. Favrin previously worked for HSBC Global Asset Management in Brazil, where his team managed a $2.6-billion equities portfolio. (PDF press release; date is incorrect) ADIA also added Pascal Duhamel as head of European real estate investments in February 2012. (PDF release)

ADIA announced on December 7, 2011, that it hired Benjamin C. Weston as global head of alternative investments. According to ADIA's press release (PDF online) Weston most recently worked as "CEO of Helvetica Wealth Management Partners, a company controlled by Credit Suisse and the State of Qatar."

As noted above, ADIA reorganized its external equities department in summer 2011, breaking it into two divisions, indexed funds and active funds. The change is intended to simplify work with external managers. Sheikh Mohammed bin Khalifa Al Nahyan is managing external indexed funds and Obeid Al-Suwaiti is managing external equities. (Reuters news article)

An interview with Saeed Al Hajeri, executive director of ADIA's emerging markets department, in the January-February 2011 issue of CFA Magazine, offers information about ADIA's investments, international employee base, and transparency.

New appointments during the second half of 2010 included James Kester as chief investment officer for private equities (PDF release) and Ted Chu as chief economist (PDF release). Kester joined ADIA from Zurich Alternative Asset Management and Chu previously worked at General Motors.

The biggest news at ADIA in early 2010 was, as noted above, the death of managing director Ahmed bin Zayed Al Nahyan.

Other news in 2010 has included ADIA's acquisition of 15% of Gatwick airport (news item from UAE Interact here) and ADIA's issuance of its first annual review, which The New York Times blog DealBook briefly noted here.

In June 2008 ADIA announced a deal with Korea Development Bank and the Korea Trade Promotion Agency to increase investment flows between South Korea and the MENA region.

An Open Editorial by H.E. Hamad Al Hurr Al-Suwaidi, Under Secretary of Finance of Abu Dhabi; Henry Paulson, U.S. Secretary of the Treasury; and Tharman Shanmugaratnam, Singapore Finance Minister: This document addresses the “Santiago Principles,” a “Voluntary Set of Generally Accepted Principles and Practices for Sovereign Wealth Funds.” H.E. Hamad Al Hurr Al-Suwaidi served in October 2008 as a co-chair of the International Working Group of Sovereign Wealth Funds and supports the principles. (available via link on ADIA site) The ADIA News page includes further history of ADIA’s role in developing the principles, which are being adopted by various SWFs.

 

Most recent profile update:  December 26, 2012.

 

CONTACT

Invest AD
211 Corniche
PO Box 3600
Abu Dhabi, United Arab Emirates 

Tel +971 2 415 0000 
Fax +971 2 415 1000

Email pressoffice@adia.ae 
Web http://www.adia.ae/

Online contact form

 

For Real Estate Investment:

William Schwab - Global Head of Real Estate

Thomas Arnold - Head of Americas Real Estate

Both are based in Abu Dhabi.

 

 

This profile was created by the Institute using (primarily) publicly-available information.  Certain insights were included based on the experience of Institute staff and its network of subject matter experts (SMEs).  The profiles in INSIGHTS-edge are regularly updated with current information.

Content on this page Last update : December 26, 2012
 

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