Given how uncertain and volatile the global economic and political landscape currently is, with market uncertainty pervasive and investor confidence deteriorating, global private equity firms are on the lookout for stable, new markets where they can be certain not just of promising returns on investment but also an investor-friendly regime.
As a result, the UAE, with its pro-business environment, excellent infrastructure, relatively diversified economy and political stability, is quickly emerging as a preferred investment destination, renowned international investors Laurence Fink and Henry Kravis said at a panel discussion hosted at the Majlis Mohamed bin Zayed.
The discussion, entitled Adnoc as a catalyst for foreign direct investment: a global investment perspective, was held at Abu Dhabi’s Al Bateen Palace on Sunday and was attended by Sheikh Hamed bin Zayed Al Nahyan, Chief of the Abu Dhabi Crown Prince Court, as well as other dignitaries.
Fink and Kravis’ remarks were extremely topical considering that just hours earlier, their respective firms, BlackRock and Kohlberg Kravis Roberts & Company (KKR), had signed a landmark pipeline infrastructure investment agreement with Abu Dhabi National Oil Company (Adnoc).
The agreement is set to unlock $4 billion in value from Abu Dhabi’s crude oil pipelines and marks the first infrastructure partnership between leading global institutional investors and a national oil company in the Middle East. It is certain to pave the way for further significant foreign direct investment (FDI) into Abu Dhabi and the UAE.
Kravis, co-founder, co-chairman and co-CEO of KKR, kicked off the panel discussion by saying he was delighted to take part in this discussion of Adnoc’s “capital modernisation” agenda and the “vision for economic transformation” of His Highness Sheikh Mohamed bin Zayed, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces.
Kravis, who co-founded KKR in 1976 and is known as one of the pioneers of the private equity industry, said Sunday’s landmark deal “sets an important precedent in the market that can demonstrate the potential for value-add foreign investment across UAE”.
With approximately $200 billion in assets under its management, KKR invests capital across the world with the aim of being a partner in supporting economic development, growing companies and meeting the needs of its clients.
Fink, the founder, chairman and CEO of BlackRock, said it was “a privilege to be asked to be part of the Majlis”, adding that “information exchanges such as this bring investors and countries together and create a closer community.”
Fink is one of the most respected investors and business leaders in the world. He founded BlackRock in 1988 with seven partners, and under his leadership, the firm has grown into a global powerhouse in investment management. Today, BlackRock manages more money than any other investment firm in the world, with around $6 trillion in assets under management.
Kravis and Fink, whose firms are at the forefront of global infrastructure investing, went on to discuss global investment trends and opportunities for partnership in Abu Dhabi and the UAE and the importance of FDI in the country. FDI in the UAE has increased by 21 per cent between 2015 and 2017 to reach $10.4 billion. The United Kingdom, India and Saudi Arabia are the main investors in the country, with the bulk of the funds concentrated in the trade, real estate, energy, finance and insurance, manufacturing and construction sectors, the Majlis heard.
During the course of the discussion, Kravis and Fink covered key trends that affect the global and Middle East investment landscape. Drawing on their experience in investing across American, European, and Asian markets, the international investors discussed the potential for FDI and how their firms approach emerging foreign investment destinations like the UAE. The Majlis also heard why BlackRock and KKR decided to invest in UAE infrastructure assets, and why they feel it is becoming an increasingly attractive global investment destination.
Earlier in the day, Kravis and Fink joined Dr Sultan bin Ahmad Sultan Al Jaber, UAE Minister of State and Adnoc Group CEO, to sign a pioneering, multi-billion dollar investment partnership agreement between Adnoc, KKR and BlackRock. Under the terms of the innovative agreement, the investors will pay around $4 billion for a 23-year lease in the 18 pipelines that carry crude and condensate. Sovereignty of the infrastructure and the management of the pipeline operations will remain with Adnoc.
The partnership “paves the way for further significant foreign direct investment in the UAE”, Dr Al Jaber said. “Adnoc has been undergoing a significant business transformation, underpinned by innovative partnerships and investments that are key to unlocking and maximising value across our full portfolio.”
Following the wise guidance of the UAE leadership, Adnoc has been transforming into a more commercially-focused and performance-driven organisation and has hit significant milestones regularly over the last three years. Today’s deal with BlackRock and KKR represents the next major step in the delivery of this smart growth strategy, demonstrating its expanded partnership model and more proactive management of its assets and capital. The Abu Dhabi government-owned oil giant received an AA long-term credit rating, the region’s highest, from Fitch Ratings last week.