Young: UAE's Sovereign Wealth Different to Neighbors

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00:00I know that you've been looking at this region very closely. This is a big deal in the UAE.

00:06What do you make of the decision out of the IHC to merge these three entities together

00:11with seemingly disparate investment interests in different sectors?

00:18That's right. Well, thanks, Jamana. Yeah, I mean, this is really interesting as a strategy.

00:23And I think the UAE and Abu Dhabi in particular has really pursued a different strategy in terms

00:28of its sovereign wealth funds and its sovereign investment vehicles than some of the neighbors.

00:33And so what IHC has done in this case is basically spin off three companies, which are across a wide variety of sectors,

00:40from energy to infrastructure to wellness and beauty to food and agriculture,

00:46and to put them into sort of a new holding company, which is worth probably about $33 billion,

00:53which is about a third of what the value of IHC has been.

00:57So in some ways, it's like an incubate model. It's like a way to say, you know,

01:03here are the sectors that matter in terms of diversification, but also the sectors that can grow as,

01:10you know, some of these companies are homegrown UAE companies, gives them a platform to get bigger,

01:16to grow across the region, and then to go onto a global scale.

01:19So it is certainly like a force.

01:25Well, I was going to say, you know, how does the UAE strategy in this respect differ from other countries around the Gulf?

01:32Because there are many different types of sovereign wealth funds,

01:36and then you've got the state-owned organizations, the enterprises as well.

01:39And each one of them seems to be developing a specific niche or a specific area of expertise.

01:47Yeah. So in the UAE, we have the major sovereign wealth funds like ADIA,

01:52which is sort of the traditional model of a sovereign wealth fund, which invests mostly externally.

01:58And in traditional sectors, mostly in equity markets, a lot concentrated in North America.

02:04And then you have a fund like Mubadala, which is really more about diversification,

02:10about energy infrastructure, about alternative investments.

02:14And then a fund like ADQ, which has been more regionally focused,

02:18which has a little bit more flexibility in terms of its interest of engagement,

02:23perhaps in the region and supporting the development of firms in neighboring countries.

02:30IHC is really something different altogether.

02:33It's a holding company, and it's not a sovereign wealth fund.

02:38It's a holding company that is mostly owned by Royal Group,

02:42which is really a family holding of the royal family of Abu Dhabi,

02:45or the ruling family of Abu Dhabi, the Al-Nayan family.

02:48So that's a very different model than what you see in other GCC states.

02:53But I think IHC has sort of promoted itself as part of this overall diversification

03:01and national development agenda, even though its resources come from perhaps a different place,

03:08more of a private family holding rather than holdings that would be considered part of the state government.

03:16Yeah. Yeah. Yeah. Interesting distinction. Important distinction there as well.

03:20Well, 2.0 were slated to IPO this year anyway.

03:25Of course, now that the merger is taking place, that's not going to happen.

03:29Do you think that this, you know, the fact that this joint group is going to be listed on the ADX

03:36was an additional incentive for the group to combine these three entities together?

03:44Right. So, you know, the option of being on a trading platform, which is, you know,

03:51IHC has used this to its advantage as well, you know, gives the opportunity for the value of those shares to grow.

03:57It also is an opportunity to leverage against the value of these companies so they can borrow.

04:05And, you know, in an ideal space, then we also get more information about their performance,

04:10and it opens them up to investors from, you know, very different classes.

04:14Right now, I would say that, you know, these companies are still very new.

04:20I mean, 2.0 itself is a relatively very, very new company.

04:25So they've basically been new holding companies from a large holding company

04:29that then are transferred additional assets.

04:33This particular deal is really structured as a share swap.

04:37But, yes, it will live on the ADX and will be able to attract potentially new investors

04:45and people who want to buy into the company and this potential growth opportunity.

04:52But, you know, this is an exchange, Abu Dhabi exchange, which is also still new in itself, right?

04:59And so there's not a tremendous amount of movement and activity on that exchange,

05:06and it can be dominated by a few companies.

05:10Yeah.

05:11Karen, I just want to broaden this out a little bit,

05:13because increasingly you hear of countries around the world taking a vested interest

05:19in protecting some of their own industries.

05:21You saw it with the rare earths move potentially out of China.

05:25You see it increasingly with President Trump taking stakes even in some technology companies.

05:30Is this part and parcel, do you think, of a global move towards more state intervention?

05:36Is this part and parcel of capitalism in sectors that are deemed to be very strategic?

05:39Absolutely.

05:40I mean, we are seeing a trend line globally that is very supportive of state capitalism,

05:46of the idea of an attractiveness of state ownership and state intervention,

05:51particularly in critical infrastructure and in the parts of the economy that are seen as most vulnerable

05:58to geopolitical tensions, to trade wars, and to the things that we need to grow,

06:05particularly in our energy sector.

06:07So this has become very popular in very open, liberalized, democratic market economies,

06:13as well as this is a mechanism which has been used for a long time within economies which are open

06:19but are largely controlled by state firms and state interests.

06:24thank you that in the United States.

06:41Your name is Fabian

06:44Chief Police said in Washington State of America

06:48based OHC

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