Abu Dhabi fund ADIA eyes direct private equity investments

The Abu Dhabi Investment Authority (ADIA), one of the biggest sovereign wealth funds in the world, is looking for direct investment opportunities in private equity and alternative investments after returns slowed in 2016, it said on Tuesday.

ADIA last year increased its exposure to direct private equity transactions and broadened its focus in Asian private equity markets particularly China and India, it said in its annual review.

ADIA’s 20-year and 30-year annualised rates of return in US dollar terms were 6.1 per cent and 6.9 per cent respectively in 2016. That compared with 6.5 per cent and 7.5 per cent respectively in 2015.

“As in 2015, these figures were impacted by the exclusion of strong returns in the mid-1980s and 1990s from the rolling averages, although ADIA’s real rates of return remain consistent with historical levels,” Sheikh Hamed bin Zayed al Nahyan, managing director of ADIA, said in the review.

Headquartered in the oil-rich capital of the United Arab Emirates, ADIA manages a global investment portfolio across more than two dozen asset classes. It does not disclose its assets but the U.S-based Sovereign Wealth Fund Institute, which tracks the industry estimates them at $792bn.

Sovereign wealth funds around the world are trying to find new avenues to boost returns in a period of relatively low interest rates and slow economic growth. Singapore’s GIC Pte Ltd warned last year of a decade of low growth.

In a drive to cut costs and gain more control, some state funds are striking their own private equity deals rather than relying on external fund managers.

ADIA also said its Alternative Investments department had launched a new Emerging Opportunities programme to invest in asset types that fall outside the remit of ADIA’s other departments. That programme will become active this year and help diversification, it added.

“Within our investment departments, we continued to expand our universe of investable asset classes and geographies, and deploy internal teams to proactively identify and originate attractive opportunities,” al Nahyan said.

“When viewed as a whole, ADIA ended 2016 on a positive note, with performance underpinned by respectable gains in global markets despite considerable headwinds from political events throughout the year.”

ADIA had 1,750 employees from 60-plus nationalities in 2016, up from 1,700 in 2015. One area of focus was ADIA Global Research, which appointed a Head of Economic Analysis and a Head of Energy Analysis, among other hires, to boost specialisation.