#UAE: #AbuDhabi’s ADQ Plots Next Act After Assets Double in Four Years - Bloomberg

UAE: Abu Dhabi’s ADQ Plots Next Act After Assets Double in Four Years - Bloomberg

Sovereign wealth fund ADQ has more than doubled assets in four years, boasting a portfolio that spans everything from a stake in auction house Sotheby’s to Abu Dhabi’s flagship airline. From a high-rise in the heart of the city, executives are plotting ways to capitalize on that momentum.

Over a period that included a pandemic, two US elections and a surge of interest in artificial intelligence, the $251 billion ADQ emerged as one of the world’s fastest-growing wealth funds. Now, amid a trade war that’s seen some investors look for opportunities amid market dislocations, ADQ Chief Executive Officer Mohamed Hassan Alsuwaidi is preaching the virtues of patience.

“We won’t go out guns blazing,” Alsuwaidi, also the United Arab Emirates’ minister of investment, said in a rare interview in Abu Dhabi. “We track, we trace, we take time. We are an investor that takes our time to understand the business, but we can respond quickly to a deal.”

That’s in sharp contrast from four years ago when the CEO said the fund, established in 2018, couldn't “move fast enough.” At the time, ADQ was frenetically building new platforms out of the assets it received from the government in sectors including logistics, energy and food.

In recent weeks, the fund forged a $25 billion partnership to invest in power generation for data centers and AI projects in the US, appealing to President Donald Trump’s drive to attract funds and bolstering the UAE’s push for AI supremacy. It's also been spearheading Abu Dhabi’s $35 billion foray into Egypt and is an active investor in Turkey.

Those deals underscore ADQ's importance to the UAE, despite the fact that it’s dwarfed by the emirate’s other wealth funds — Abu Dhabi Investment Authority and, to a lesser extent, Mubadala Investment Co.

Its portfolio has grown more international in recent years, with stakes in firms like agricultural trader Louis Dreyfus Co. At home, it controls one of the largest health-care providers in the Middle East, a port operator and Etihad Airways, which is preparing to go public in a listing that will further swell the size of the local bourse — also overseen by ADQ.

“We’ve systematically gone company by company, brought in the right management teams, put in the right systems for performance, put in the right strategies of focus,” Alsuwaidi said. Now, entities under its control have the tools and financial backing to expand overseas on their own.

The fund is now increasingly sought-out by Wall Street firms seeking to advise on and finance its deals. Research consultancy Global SWF estimates ADQ spent $11 billion last year, though Alsuwaidi pushed back on that number and said there's no set pace for how quickly the fund deploys its billions.

“It’s whatever the market allows us to deploy and what the right opportunity is,” he said. ADQ’s mandate is to fill gaps — “white spaces” — in Abu Dhabi’s economy, and unlike traditional wealth funds, it eschews investing in public markets and fixed income.

Instead, it operates more like a private equity fund — typically taking large, controlling stakes in firms within specific verticals, with a goal to grow its portfolio companies and list many of them locally.

“If you want to sell a business 100% or 51% or more, we’re the buyer,” Alsuwaidi said. “There is no other person in town who says, ‘I want to buy a 51% stake.’”

IMF Cuts Growth Outlook for Gulf Oil Producers After Price Slump - Bloomberg

IMF Cuts Growth Outlook for Gulf Oil Producers After Price Slump - Bloomberg

The International Monetary Fund downgraded its growth forecasts for oil exporting countries in the Middle East and North Africa, including Saudi Arabia and Iraq, citing escalating global trade tensions and lower energy prices.

The IMF cut the 2025 outlook for oil exporters in the region to 2.3%, 1.7 percentage points lower than the fund’s forecast from October. The projections were announced by the Washington based lender on Thursday in its latest regional economic outlook.

The IMF expects oil prices to decline to an average of $66.9 per barrel this year, nearly $6 below the October projection. It cited strong supply growth from non-OPEC+ countries and subdued demand because of a slowing global economy.

Prices for Brent crude have slumped around 15% this year to roughly $63 a barrel. That’s been down to the US-led trade wars and OPEC+ announcing a faster-than-expected increase in oil output.

Iraq got one of the largest downgrades. The IMF now expects its gross domestic product to contract 1.5% this year, rather than rise 4.1%, as was the presumption in October. Saudi Arabia’s outlook was lowered to 3% from 4.6%.

While non-oil growth is expected to be bolstered by infrastructure projects and other diversification efforts in the Gulf, the IMF says some government spending may be lowered in line with crude prices.

There’s been a “recalibration of investment spending plans resulting from softer oil prices, further amplified by the decline in oil prices from the recent escalation of trade tensions,” said the IMF.

All the same, the direct impact of changes in tariffs is “generally limited” on the GCC because of the tariff exemption on energy exports and the limited non-oil exports to the US, the lender said.

The whole MENA region is expected to grow 2.6% this year, 1.4 percentage points lower than October’s estimate.

OPEC Puzzle: Understanding the #Saudi Push for Lower Oil Prices - Bloomberg ht @JavierBlas

OPEC Puzzle: Understanding the Saudi Push for Lower Oil Prices - Bloomberg

Cartels have one – and only one - raison d'être: push prices higher. OPEC, the most famous of all of them, is a textbook example. So why is Saudi Arabia, which leads the group, driving prices down?

Ostensibly, the kingdom is trying to reestablish discipline among rogue producers: Kazakhstan, Iraq and the United Arab Emirates are cheating on their output targets. To force them to relent, Riyadh is voting at OPEC+ meetings for higher production for the whole group, hoping that the ensuing price decline forces the troublemakers into line.

The explanation makes a lot of sense. First, because the cheating is real, it’s getting worse and the unruly countries have ignored warnings. Second, because Saudi Arabia has done it before, launching price wars against OPEC cheaters in 1985-86, 1998 and 2020.

Yet, I’m unconvinced that's all there's to it.

To appreciate Saudi oil policy, it always helps to focus on what the kingdom does, rather than on what it says – whether in public or private. The doing is quite transparent: higher production, which results in lower oil prices. Importantly, Riyadh has made no effort to talk up the market. In fact, the opposite is true. In recent days, the Saudis have quietly sent a message to others in OPEC and beyond: We can live with low oil prices. And reading between the lines, Riyadh seems to be aiming to keep Brent crude below $70 a barrel, and perhaps even lower, a significant departure from its previous so-called Saudi First policy of sustaining prices as close to $100 as possible.

Understanding the new approach is critical ahead of the next meeting of the group of eight OPEC+ countries, scheduled for May 5. The desire to punish the cheaters is one explanation for the shift. But Kazakhstan sounds more like collateral benefit of a new policy rather than its main reason. Saudi oil policy is multidimensional: it may have several objectives at once. So here are some educated guesses about Riyadh’s key considerations:

1) Saudi Arabia has realized its previous policy of “as close to $100-a-barrel as possible” was unsustainable as it would require further production cuts. To sustain high prices, Saudi output last year was the lowest since 2011. If Riyadh had maintained the policy of high prices, it probably wouldn’t be able to increase production in either 2025 and 2026. The outlook beyond that — in 2027 or 2028 — looked increasingly difficult for an expansion, potentially condemning Riyadh to lower-forever output.

2) Saudi Energy Minister Prince Abdulaziz bin Salman has long acknowledged, at least in private, that Riyadh had benefited from US sanctions on two OPEC+ rivals: Iran and Venezuela. If either was producing anything close to their pre-sanctions level, Saudi Arabia would have long confronted lower prices or lower production – or both. Prince Abdulaziz has also operated under the assumption that the sanctions wouldn’t last forever. If Riyadh feels that day is approaching – say because the White House is negotiating with Tehran – it probably would help to increase production ahead of potential OPEC+ negotiations about how to handle the return of currently idle capacity.

3) Saudi Arabia doesn’t only fight price wars against OPEC+ rivals; historically, it has also battled external producers — the biggest being the US. In 2014-16, it flooded the market to crush US shale producers. Famously, former Saudi oil minister Ali al-Naimi told American drillers in February 2016 they could “lower costs, borrow cash or liquidate” in the face of sub-$50-a-barrel prices. But declaring another price war against shale would be politically difficult for Riyadh. True, Donald Trump wants lower oil prices, even if that hurts its domestic energy industry. But I’m not sure American lawmakers – think of Senator Ted Cruz of Texas and Lisa Murkowski of Alaska, for example – agree.

4) For nearly a decade, Saudi Arabia has worked closely with Russia. But that relationship, which admittedly has lasted longer than many initially anticipated, feels more transactional than strategic. Russian President Vladimir Putin is courting Trump, and Moscow could one day turn its back on Riyadh. Perhaps the Saudis sense a change in tone in the Kremlin and are hedging their bets, increasing production before an actual split emerges.

5) Finally, the Saudis are in talks with the US about several issues: defense guarantees, weapons contracts, Iran and a Saudi civilian nuclear program. Oil surely plays a role in those talks. Trump is heading to Riyadh in May, making the country part of his second foreign trip (the first one was the unscheduled trip to Rome for the Pope’s funeral).

Ultimately, many of those considerations will inform the Saudi rationale to let oil prices drop. One of them will be the main driver, while the others would be collateral benefits. Keeping Kazakhstan in line is more likely among part of the latter than the former.

Gulf bourses end mixed on oil price fall, weak US economic data | Reuters

Gulf bourses end mixed on oil price fall, weak US economic data | Reuters

Stock markets in the Gulf ended mixed on Thursday amid falling oil prices and weaker-than-expected U.S. GDP data.

The U.S. economy contracted in the first quarter, largely because of a surge in imports as businesses sought to avoid expected tariffs.

Risks are high that U.S. President Donald Trump's tariff policies could push the global economy into a recession this year, a Reuters poll found on Monday.

Saudi Arabia's benchmark index (.TASI), opens new tab declined 1.1%, weighed down by a 0.9% fall in Al Rajhi Bank (1120.SE), opens new tab and a 2.2% slide in the country's biggest lender Saudi National Bank (1180.SE), opens new tab.

Oil giant Saudi Aramco (2222.SE), opens new tab also fell 0.6%.

Oil prices — a catalyst for the Gulf's financial markets — fell, extending a steep decline the previous session due to signs that Saudi Arabia, the world's largest crude exporter, could raise production and data showing a contraction in the U.S. economy, the world's top oil consumer.

Meanwhile, Saudi Arabia's economy grew in the first quarter, supported by activity in the non-oil sector as the kingdom pushes on with diversifying away from hydrocarbons.

Dubai's main share index (.DFMGI), opens new tab declined 0.7%; Commercial Bank of Dubai (CBD.DU), opens new tab fell 8.9%, snapping a four-day winning streak.

In Abu Dhabi, the index (.FTFADGI), opens new tab edged 0.2% higher, helped by a 0.4% rise in conglomerate International Holding (IHC.AD), opens new tab.

The Qatari benchmark (.QSI), opens new tab eased 0.1%, with petrochemical maker Industries Qatar (IQCD.QA), opens new tab retreating 2.9%.

Outside the Gulf, Egypt's blue-chip index (.EGX30), opens new tab rose 0.3%, with Commercial International Bank (COMI.CA), opens new tab gaining 1.3%.

BNY gets licence for #Saudi regional HQ as global banks grow presence | Reuters

BNY gets licence for Saudi regional HQ as global banks grow presence | Reuters

Bank of New York Mellon (BK.N), opens new tab has received a licence to set up a regional headquarters in Saudi Arabia, it said on Thursday, joining others lured by incentives as the kingdom seeks to boost its appeal as a financial hub.

Riyadh has been looking to attract more companies to set up their regional headquarters in the kingdom by offering tax breaks as Crown Prince Mohammed bin Salman looks to wean the economy off oil by attracting foreign investment.

Saudi Arabia's new rules mandate foreign firms to have regional headquarters in the kingdom before they can access lucrative government contracts.

In May 2024, Goldman Sachs (GS.N), opens new tab received a licence to set up its regional headquarters in Riyadh. U.S. lender Citigroup (C.N), opens new tab secured a similar approval late last year.

The Middle East has emerged as a crucial growth market for global banks like BNY, driven by a surge in sovereign wealth fund activity, large-scale infrastructure investments, and deepening capital markets across the Gulf.

As regional economies diversify beyond oil and attract foreign capital through reforms and regulatory upgrades, international financial institutions are ramping up their presence to tap into new business opportunities in asset servicing, custody, and advisory.

The new regional headquarters in Riyadh will offer strategic, administrative and corporate support for BNY's operations across the Middle East, the custodian bank said.