Abu Dhabi’s largest investment fund is pushing deeper into the United States, real estate | Job Binary


(Bloomberg) — The $829 billion Abu Dhabi Investment Authority is pushing deeper into the U.S. and into real estate investments, capitalizing on opportunities brought by the pandemic.

After one of the busiest trading years ever, the emirate’s largest sovereign wealth fund has raised its North American target allocation range to 45-60% and expects real estate investment activity to remain high this year and beyond. its 2021 annual review was published on Thursday.

“Prospects for real estate investments remain attractive,” ADIA said. “Market fundamentals are well supported by rising compensation costs due to high inflation in labor and building materials, supply chain delays and other disruptions caused by the pandemic.”

Due to its large size, ADIA’s choices can have an impact around the world. It is already one of the largest investors in US real estate, and its recent deals include stakes in German railcars, a North American energy company and Indonesia’s largest internet company.

ADIA is among the Gulf States’ investment funds that are investing more in the United States to take advantage of opportunities created by the pandemic’s decline and growing fears of a global recession. Another Abu Dhabi investment firm, Royal Group, plans to spend up to $10 billion in US and European stocks to expand its global portfolio. In neighboring Saudi Arabia, the 620 billion dollar public investment fund has increased its investments in the United States.

“ADIA sought opportunities in regions and sub-regions with high long-term potential and continued to build direct exposure to private markets,” Hamed bin Zayed Al Nahyan, the fund’s CEO, said in a review. “It also benefited from positioning equity portfolios to take advantage of emerging trends, including opportunities arising from different governments’ responses to the pandemic.”

In 2021, ADIA’s private equity arm committed more capital than ever before with 40 investments, up from 25 in 2020, including 12 co-investments in early-stage companies alongside its venture capital partners. Direct investments and co-investments represented 58 percent of its total use in 2021, up from 55 percent in 2020, with the rest tied up in funds.

  • The allocation range of ADIA’s private equity funds was increased to 7–12% from 5–10%.
  • The range for developed Asia has been reduced to 5-10% from 5-15%, which ADIA said is consistent with the region’s relative weight in global indices.
  • ADIA’s 20-year annualized return to December last year was 7.3%, up from 6% the previous year.
  • Thirty-year annualized return was 7.3% compared to 7.2% in 2020
    • ADIA said the increases could be due to both the years left out of the calculations and the result in 2021, and that they highlight “our focus on long-term trends”.

ADIA’s private equity division will continue to focus on investments in technology, healthcare and digital consumer services. It expects “high competition to continue for attractive companies, an uncertain IPO market and the need to adapt to pandemic-related and geopolitical developments.”

In fixed income, the fund continues to develop its quantitative research capabilities to improve investment decision-making and deploy “more capital in less liquid fixed income areas, including private credit, to improve returns in a low-yield environment.”

On infrastructure, ADIA will focus on broader acquisitions and investments where it can deploy capital alongside its partners, it said.

Centralized operations

In 2021, ADIA established two new centralized functions and cut its middle and back offices. It also recently spun off real estate and infrastructure divisions, which are growing in importance as the fund increasingly looks to private markets. The net result of all these changes resulted in the fund losing 160 people, or almost 10% of its workforce, and now employs 1,520 people.

ADIA was established in 1976 to manage the excess oil revenues of Abu Dhabi, one of the world’s largest crude oil exporters. It is the city’s largest sovereign wealth fund, surpassing Mubadala Investment Co and ADQ, and one of the largest in the world.

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