Dubai intends to establish a new investment fund to drive investments in strategically important projects, adding to a suite of state-backed wealth funds in the region managing nearly $4 trillion.
Establishing the Investment Fund in Dubai
The Dubai investment fund will hold assets worth billions of dollars and will invest government funds both locally and internationally, according to the government news agency WAM. The fund will also have the ability to create companies and investment funds, as well as purchase or merge companies.
Head of the Investment Fund
Sheikh Maktoum bin Mohammed, Deputy Ruler of Dubai, will be the head of the fund. The fund will include stakes in a $33 billion utility company, the Salik toll operator, and Dubai Taxi, which was allocated to the private sector during the past year.
Fund Objectives
The fund will focus on investing in stocks, bonds, and securities to achieve sustainable returns, and it may explore opportunities in local or international financial markets, according to the government news agency WAM.
Benefits from Sovereign Wealth Funds
Sovereign wealth funds bring asset management into the 21st century where industry experts can manage them in a way that engages investors in a friendly manner. Tarek Fadlallah, CEO of the Asset Management Unit at Nomura Holdings in the Middle East, stated, “When a country owns many assets, it is obliged to manage them responsibly. Historically, there have been different ways to manage assets – some assets were under the Ministry of Finance while others were overseen by the regulatory bodies of utilities, and so on.”
Sovereign Wealth
The government conglomerate Dubai World will be linked to the new fund “while maintaining its legal identity,” according to the government news agency WAM. Dubai World’s assets include DP World, which has helped transform the city into a global trade hub through the Jebel Ali Port. It is unclear whether these assets will be transferred to the new fund.
Wealth Funds in Dubai and Abu Dhabi
The emirate already has a sovereign wealth fund, the Dubai Investment Fund, which is valued at $341 billion. The fund owns Emirates Group, the parent company of the emirate’s airline, and is headed by Crown Prince Sheikh Hamdan bin Mohammed Al Maktoum.
Neighboring Abu Dhabi houses the Abu Dhabi Investment Authority, Mubadala Investment Company, and ADQ. These entities and others in the region, including Saudi Arabia’s Public Investment Fund and Qatar Investment Authority, have spent billions globally over the past few years to diversify Gulf economies away from oil and gain geopolitical influence.
Wealth funds are experiencing a moment in the Gulf where governments own the vast majority of revenue-generating assets, according to Fadlallah from Nomura.
Read more:
– Dubai revives privatization program after a year with Dubai Taxi shares going public
– Salik toll operator shares rise 20% on first trading day
– Abu Dhabi Investment Fund plans to merge bioscience assets ahead of IPO
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