India becomes investment darling for sovereign wealth and pension funds

India becomes investment darling for sovereign wealth and pension funds
Foreign institutional investor flows into Indian equities are $11 billion year-to-date, surpassing the total annual tally in each of the four previous years. (AFP)
Updated 21 June 2019

India becomes investment darling for sovereign wealth and pension funds

India becomes investment darling for sovereign wealth and pension funds
  • Wealth and state pension funds are expanding their horizons to private markets
  • The attention sovereign funds are giving India is like that they have paid to China

LONDON: Sovereign wealth funds are piling into India, buying stakes in everything from airports to renewable energy, attracted by political stability, a growing middle class and reforms making it more enticing for foreigners to invest.
Wealth and state pension funds are expanding their horizons to private markets, to complement an existing focus on stocks and bonds.
“India is popular with sovereign wealth funds,” said Tihir Sarkar, London-based partner at Cleary Gottlieb, which counts several prominent sovereign funds as clients.
“Almost every jurisdiction in the western world is raising the bar for entry for foreign investors but in India it’s the other way round. There’s also the attraction of the demographics and a lot of assets that sovereign funds like, such as infrastructure, where there’s a huge appetite for foreign funding.”
Indian Prime Minister Narendra Modi’s election win last month consolidated his Hindu nationalist party’s power base and is expected to stimulate further foreign investment.
Foreign institutional investor flows into Indian equities are $11 billion year-to-date, surpassing the total annual tally in each of the four previous years and setting 2019 on course for the highest annual inflows since 2012. India’s benchmark BSE index has soared nearly 10 percent year-to-date.
“The rapid rise of an educated middle class offers enormous opportunities for the deployment of long-term capital, the kind that sovereign wealth funds are ideally suited to provide,” said Ravi Menon, chief executive officer of HSBC Asset Management India.
The attention sovereign funds are giving India is like that they have paid to China, now clouded by a trade war with the United States, said a banker specializing in institutional investors. In the public markets, funds were focused on public equity and fixed income, he said. In the private market, momentum is also building.
Private equity deal activity in India surged to $19 billion in 2018, the highest level in at least a decade, according to PitchBook data. Sovereign wealth funds and pension funds participated in about two-thirds of that amount.
Among recent deals, Singapore’s GIC sovereign wealth fund and the Abu Dhabi Investment Authority (ADIA) this month agreed to make a further investment of $495 million in renewable energy firm Greenko Energy Holdings, which has wind, solar and hydro projects.
India is widening its use of solar and wind energy to help reduce its reliance on fossil fuels.
In April, ADIA and India’s National Investment & Infrastructure Fund (NIIF) agreed to buy a 49 percent stake in the airport unit of Indian conglomerate GVK Power & Infrastructure.
Another wealth fund is in talks on an infrastructure investment, while Canadian pension funds are seeking similar deals, said a source familiar with the matter.
Canada Pension Plan Investment Board and GIC earlier this year participated in a $145.8 million buyout of Oakridge International School, an operator of schools in India.
ADIA, the world’s third-biggest sovereign wealth fund, which has been investing in Indian equities and fixed income for years, has broadened its focus to include asset classes such as infrastructure, real estate and private equities, said people familiar with ADIA’s thinking.
Its increased interest in India is driven by the country’s strong growth potential, positive demographics and continued economic development, the people said. More than half of India’s 1.3 billion population is aged under 25.
The push comes as India and the United Arab Emirates seek to strengthen economic and trade ties.
Regulatory reforms are also bolstering sentiment and drawing in wealth funds.
Indian-based fund managers were from this year licensed to manage foreigners’ portfolio holdings in the country, where previously such assets had to be managed outside India.
Prashant Khemka, founder of White Oak Capital Management which advises London-listed Ashoka India Equity Investment Trust, said that change had helped kick-start the onshore fund management industry for foreign-sourced funds.
“This could be looked back on as an inflection point in the growth of the Indian fund management business,” said Khemka, one of four fund managers to gain such an approval so far. Institutional names, including sovereign wealth funds and pension funds, account for around two-thirds of his clients.
Bankruptcy resolution rules introduced in 2016 helped pave the way for ADIA’s $500 million investment earlier this year in a distressed debt fund.
The investment was seen as an effort to launch a secondary market in India’s mountain of distressed debt and help ease the burden on local banks.
But some say more reforms are needed.
A source close to several wealth and pension funds said many would like to see the government further overhaul tax rules, building upon a new goods and services tax that is credited with helping cut red tape, and undertake land and labor reforms.


Saudi Arabian youth use less cash as Kingdom pushes for cashless society

Saudi Arabian youth use less cash as Kingdom pushes for cashless society
Updated 04 August 2021

Saudi Arabian youth use less cash as Kingdom pushes for cashless society

Saudi Arabian youth use less cash as Kingdom pushes for cashless society
  • Only 18 percent of Saudis aged between 16 and 22 years use cash
  • Almost half of people 60 and above use cash

RIYADH: Youth in Saudi Arabia are using less cash compared to other age groups, a sign that the Kingdom’s plans to create a cashless society is on course.

Only 18 percent of Saudis aged between 16 and 22 years use cash, while almost half of people who are 60 and above use cash till date, a report by Fintech Saudi showed.

The report also showed that 20 percent of the population in central region of Saudi Arabia, which includes the capital Riyadh, use cash in their everyday transactions, while 37 percent of those living in the western region use paper money in their daily dealings.

However, paper currency is far from total demise even as the overall number of transactions carried out using cash have declined. Fintech Saudi’s survey results showed that around 60 percent of individuals Kingdom-wide still rely on paper money at least once a week and one out of four people in Saudi use cash every day.

Under Saudi Vision 2030, the Kingdom aims to increase the number of non-cash transactions to 70 percent in 2025.

“The COVID-19 outbreak has led to an acceleration in cashless activity with digital payments increasing by 75 percent over the past year, whilst cash withdrawals from ATMs and other payment points have declined by 30 percent over the same period,” the report said.


UAE’s ADNOC sells first cargo of blue ammonia to Japan

UAE’s ADNOC sells first cargo of blue ammonia to Japan
Updated 04 August 2021

UAE’s ADNOC sells first cargo of blue ammonia to Japan

UAE’s ADNOC sells first cargo of blue ammonia to Japan
  • Shipments were sold at an attractive premium to grey ammonia
  • CO2 from the ammonia production process will be captured and transferred to Al Reyadah

ABU DHABI: Abu Dhabi National Oil Company (ADNOC) said it has partnered with Fertiglobe to sell its first cargo of blue ammonia to Itochu in Japan, for use in fertilizer production.

The shipments represent the first production milestone of a planned scale-up of blue ammonia production capabilities in Abu Dhabi, which is expected to include a low-cost debottlenecking program at Fertiglobe’s Fertil site, UAE state news service WAM reported, citing a statement from ADNOC.

They were sold at an attractive premium to grey ammonia, underscoring the favorable economics for blue ammonia as an emerging source of low-carbon energy, it said.

Ammonia is a carrier fuel for hydrogen. A report earlier this year by Dii Desert Energy and Roland Berger said the Gulf region could create a $200 billion green hydrogen industry by 2050. The Gulf benefits from its strategic geographic location between European and Asian markets.

Green hydrogen is created with renewable energy and water, while blue hydrogen uses the traditional Haber-Bosch method but captures the carbon emissions.

CO2 from the ammonia production process will be captured and transferred to Al Reyadah, the first commercial-scale carbon capture plant in the Middle East and the world’s first commercial facility to capture CO2 from the iron and steel industry. The CO2 is subsequently used in ADNOC Onshore’s Rumaitha and Bab fields where it is stored underground. Each year, Al Reyadah captures up to 800,000 tons of CO2 from local UAE steel production.

Fertiglobe, the world’s largest seaborne exporter of nitrogen fertilizers, is a 58:42 joint venture between Dutch-listed chemical producer OCI and ADNOC. In June, Fertiglobe, ADNOC and ADQ said they would partner in a one million metric ton per annum blue ammonia project at TA’ZIZ in Ruwais, subject to regulatory approvals.

In April, it was reported that ADNOC and OCI had hired banks, including Morgan Stanley and Citigroup, for a possible $7 billion IPO of Fertiglobe.

“Today’s announcement builds upon ADNOC’s commitment to expanding the UAE’s position as a regional leader in the production of hydrogen and its carrier fuels, meeting the needs of critical global export markets such as Japan,” said Sultan Ahmed Al Jaber, minister of industry and advanced technology and ADNOC group CEO.

Ammonia can be used as a low-carbon fuel across a wide range of industrial applications, including transportation, power generation, refining and industries, including steel, wastewater treatment, cement and fertilizer production. For Japan, in particular, hydrogen and its carrier fuels, such as blue ammonia, are expected to play an important role in the country’s ongoing industrial decarbonization efforts.


UAE, China agree to cooperate on money laundering, terrorism financing

UAE, China agree to cooperate on money laundering, terrorism financing
Updated 04 August 2021

UAE, China agree to cooperate on money laundering, terrorism financing

UAE, China agree to cooperate on money laundering, terrorism financing
  • Countries will share financial transaction information

ABU DHABI: The Financial Information Unit of the UAE’s central bank has signed a memorandum of understanding with the China Anti-Money Laundering Monitoring and Analysis Center to share financial information to aid the combating of money laundering and terrorism financing.

The MOU will see the two authorities exchanging transaction information related to their respective investigations, in accordance with the local laws and regulations applicable in both countries, the UAE’s state news agency WAM reported.

The agreement was signed by Ali Faisal Baalawi, head of the Financial Information Unit in the UAE, and Zhou Yunjun, director general of the China Center for Anti-Money Laundering Monitoring and Analysis.

“We will continue our unremitting joint efforts to confront all suspicious activities at the regional and international levels, and we will endeavor to reduce the threats these activities pose to the stability and integrity of the global financial system,” said Baalwai.

The UAE has become the largest market for Chinese exports, and the second largest trading partner for China in the Arab world, said Zhou.


Riyadh-based Al startup Intelmatix completes first investment round

Riyadh-based Al startup Intelmatix completes first investment round
Updated 04 August 2021

Riyadh-based Al startup Intelmatix completes first investment round

Riyadh-based Al startup Intelmatix completes first investment round
  • Size of funding round not disclosed
  • Investors include STV, Sultan Holdings

RIYADH: Saudi Arabia-based AI startup Intelmatix has closed its first investment round led by STV, Mena’s largest venture capital fund, and Sultan Holdings, a leading strategic investor in some of Mena’s largest companies.

“Artificial Intelligence offers opportunities worth billions,” Intelmatix Co-Founder and CEO Anas Alfaris, Wamda reported, citing a statement. “In the Saudi Arabian market alone, Location Intelligence opportunities exceed SR2 billion annually, and globally, the value is more than SR100 billion each year.”

Intelmatix, headquartered in the Saudi capital Riyadh, said on its official Twitter account it is pleased to announce the closing and launch of its operations in Riyadh, London and Boston.

“We recognize the revolution occurring today in the business world due to artificial intelligence and advanced analytics,” said Sultan Holdings Chairman Naif Bin Sultan Bin Muhammad bin Saud Al Kabeer. “For us, Intelmatix is more than an investment, it is a key strategic step to advance the prospects of AI adoption and enablement in the business sector.”

Intelmatix, founded by MIT graduates, is a pioneer in accessible AI and advanced analytics that deliver technologies that improve operations, productivity, growth, and sustainability for governments and the private sector.

“The Intelmatix team is made of the brightest minds in the region, and they have the ability and vision to make the company a major global AI player,” STV’s founder and CEO, Abdulrahman Tarabzouni said.

Global technology foresight firms report that the revenues from artificial intelligence in the Middle East will exceed SR1 trillion during the next 10 years, half of which is expected to be in the Saudi market, where AI will contribute at least SR500 billion to the Saudi economy by 2030.


Dubai airport expects passenger surge as UAE eases travel curbs

Dubai airport expects passenger surge as UAE eases travel curbs
Updated 04 August 2021

Dubai airport expects passenger surge as UAE eases travel curbs

Dubai airport expects passenger surge as UAE eases travel curbs
  • UAE said it would scrap on Aug. 5 a transit flight ban

DUBAI: Dubai’s state airport operator expects a “surge” in passenger traffic over the coming weeks and months, its chief executive said on Wednesday, after the United Arab Emirates announced an easing of travel restrictions from African and Asian countries.
The Gulf state, a major international travel hub, on Tuesday said it would scrap on Aug. 5 a transit flight ban which Emirates airline later said applied to passengers traveling from 12 countries, including major market India.
The UAE will also lift this week an entry ban on those who had visited India, Pakistan, Sri Lanka, Nepal, Nigeria or Uganda over the past 14 days for those with valid residencies and who are certified by Emirati authorities as fully vaccinated.
Dubai Airports Chief Executive Paul Griffiths said Dubai International was “ready to accommodate the anticipated surge in the coming weeks and months” once restrictions ease.
The Indian subcontinent is traditionally the largest source market for Dubai International, which is one of the world’s busiest airports and the hub for state airline Emirates.
Griffiths said the easing of entry restrictions on inbound travelers from South Asia as well as Nigeria and Uganda would allow for thousands of UAE residents to return.
“It’s a great development from both a social and economic standpoint,” he said.
Those traveling to the UAE or transiting through its airports need to meet various conditions including presenting a negative polymerase chain reaction (PCR) coronavirus test prior to departure.
Dubai International Airport is targeting 8 percent growth in passenger traffic this year to 28 million. It handled 86.4 million in 2019, the year before the pandemic struck.