Monday, November 29

Abu Dhabi Lifts Curtain on New Fund With Lime, Indonesian Deals


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(Bloomberg) — Rapid-fire deals spanning the globe are putting a months-old Abu Dhabi sovereign fund on the map.

A convertible debt deal on Friday by US electric scooter and bike startup Lime marked the first known investment by Abu Dhabi Growth Fund, and an agreement with Indonesia followed the day after.

Based in a city that’s among the few globally to manage over $1 trillion in sovereign wealth capital, the emirate’s new fund was set up in July with a “unique risk profile that complements the existing Abu Dhabi sovereign wealth funds,” according to its website.

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Besides ADG, Abu Dhabi is also the home of the Abu Dhabi Investment Authority, with an estimated $829 billion in assets, and $243 billion Mubadala Investment Co. In addition to the two biggest funds, the government in 2018 set up ADQ, which took custody of some of the emirate’s biggest assets.

What little is known about Abu Dhabi Growth Fund hints at its close links with ADQ, originally known as Abu Dhabi Developmental Holding Co.

The newest fund is led by Khalifa Al Suwaidi, who was a chief investment officer at ADQ. Al Suwaidi, who according to his LinkedIn page became ADG’s chief executive in June, is a senior figure in the emirate’s establishment and also serves as chairman of local food firm Agthia Group PJSC and ADQ-controlled Senaat.

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ADG and ADQ have offices in the same building. It wasn’t immediately clear if ADQ would own or oversee the new fund. ADG’s LinkedIn page says it has between 11 and 50 employees.

A spokeswoman for ADQ wasn’t immediately available to comment while messages to ADG weren’t answered.

‘High’ Returns

ADG says it will invest primarily in private equity, venture capital, hedge funds and public equities. Its mandate is to pursue “a differentiated investment strategy to generate high financial returns for its shareholder,” the government, according to its website.

In devising a higher-growth strategy that’s less averse to risk, ADG resembles Mubadala Capital, the fund’s asset management arm.

Rainy-day sovereign funds usually deploy their government owner’s surplus money abroad to stow away windfall earnings for future generations. But Mubadala Capital became the first to manage third-party money as it hunts for opportunities abroad that range from private equity to venture capital.

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Establishing ADG “makes sense because of the flexibility and market reach a bigger fund such as ADQ would not be able to achieve,” says Diego Lopez, managing director of Global SWF, a boutique adviser and data firm.

ADQ has amassed an estimated $110 billion in assets, including a 45% stake in Louis Dreyfus Company BV. Its focus has been on four sectors deemed vital to the emirate’s long-term future: energy and utilities, food and agriculture, mobility and logistics, as well as health care and pharma.

Lime, Indonesia

Lime on Friday described as ADG as being among the “leading global funds” that committed $418 million in convertible debt funding to the San Francisco-based startup. Fidelity Management & Research Company, Uber Technologies Inc. and funds managed by Highbridge Capital Management also joined the financing.

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The following day, Indonesia’s state wealth fund signed an agreement with ADG to enable investments in a variety of high-yielding financial instruments as part of a broader commitment by the UAE to channel $10 billion into the Southeast Asian country. The Indonesia Investment Authority said Abu Dhabi Growth Fund was established by ADQ.

The emergence of ADG adds to the roster of sovereign investment vehicles available to Abu Dhabi as its coffers swell with energy revenues. The capital of the United Arab Emirates is home to almost 6% of the world’s oil reserves.

“As we have seen with Mubadala, having a subsidiary that acts as a GP and is able to raise third-party capital can be very beneficial in terms of complementing the portfolio and investing in a wide range of strategies, from hedge funds to private credit , to early stage venture capital,” Lopez said. “I’d expect ADG to follow a similar model, with some support from ADQ but a high degree of flexibility in terms of products of markets.”

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