UAE’s Royal Group plans $10bn of investments

The group, chaired by United Arab Emirates National Security Adviser Sheikh Tahnoon bin Zayed Al Nahyan, sees this as an opportunity to offload some of its existing equity holdings, reduce its exposure to riskier assets and broaden its global portfolio, according to people familiar with the matter.

Although the final strategy is still being drawn up, investments in equities, fixed income and physical assets, such as real estate, are all being considered, the people said, asking not to be identified because the plans are private.

Officials at Royal Group didn’t respond to requests for comment.

A spokesman for its listed subsidiary, International Holding Company PJSC, said the firm isn’t in a position to comment on any subject on behalf of its shareholders.

Royal Group has favoured developing world

A pivot toward the US and Europe would mark a shift in strategy for Sheikh Tahnoon’s firm, which has until recently prioritized investments across the developing world, particularly in India.

In contrast, Mubadala Investment Co., the $250bn Abu Dhabi wealth fund headed by the emirate’s ruler Sheikh Mohammed bin Zayed, has a little more than 50% of its portfolio invested in the US and Europe.

Royal Group is hoping to take advantage of share prices already under pressure as expectations of a worldwide economic slowdown grow.

The S&P 500 Index has slumped 23% this year, while European equities slid into a bear market last month after dropping more than 20% from their January peak.

And even after this year’s misery, surging inflation, war in Ukraine, China’s slowdown, Bloomberg Economics expects 2023 could be worse.

The IMF on Tuesday cut its forecast for worldwide growth in 2023 and said that policies to tame high inflation may add risks to the global economy.

Any investment push into the US by Royal Group would come at a delicate juncture in relations between Western powers and the Gulf, with the White House condemning the latest oil production cut by OPEC+, where the UAE is an important player.

In neighbouring Saudi Arabia, the $620bn Public Investment Fund has been increasing its exposure to the US.

The PIF, as it’s known, is expanding its team in New York and recently invested more than $7bn to build new positions in US stocks as markets were battered by recession fears.

Royal Group, which helps to manage one of the world’s biggest family fortunes through a vast network of subsidiaries, has rapidly grown in clout, amassing a financial empire that rivals the region’s largest wealth funds.

It has also become a key vehicle for the oil-rich Gulf state’s diversification strategy.

Abu Dhabi has been consolidating more assets under the company’s umbrella, cementing Sheikh Tahnoon’s status as the royal family’s top businessman under the rule of his older brother, UAE President Sheikh Mohammed.

As well as holding the nation’s top national security job, Sheikh Tahnoon also chairs Abu Dhabi wealth fund ADQ, artificial intelligence firm Group 42 and the nation’s biggest lender First Abu Dhabi Bank.

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Last month Arabian Business reported a clutch of Abu Dhabi investment powerhouses including Abu Dhabi Global Market (ADGM) and Mubadala did a hard sell at the International Private Equity Market (IPEM) 2022 meeting in Cannes, France, projecting the emirate as the most suitable destination for investments.

The emirate’s investment biggies told investors from around the world that the emirate was committed to providing incoming businesses and investors with 360-degree support and connecting them to relevant opportunities to supercharge their growth.

IPEM, the top and largest private capital marketplace gatherings, is attended by key industry players in the private equity, venture capital, hedge fund and other financial sectors.