Economy

ADQ: how Abu Dhabi’s ‘baby’ fund is finding its feet

July 19, 2024, 4:52 AM

ADQ's holdings include Abu Dhabi National Energy Company (Taqa) and are worth almost $200 billion

ADQ is Abu Dhabi’s third SWF
$199bn of assets
Huge projects in Egypt and Jordan

Abu Dhabi sovereign wealth fund ADQ may be the younger, smaller sibling of ADIA and Mubadala but there are no signs of an inferiority complex as it executes billion-dollar deals at home and overseas.

Most notable was the $35 billion agreement signed with the Egyptian government in February this year to develop Ras El Hekma, a deal that helped spur new life into Egypt’s ailing economy.

While that took up the lion’s share of the headlines, ADQ has continued to be busy with a $5 billion investment in infrastructure and other projects in Jordan announced in May.

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This is in spite of the uncertain outlook for interest rates and diverging growth performances in some of the world’s largest economies.

This week ADQ announced it had increased the size of a revolving credit facility from $2.5 billion to $4 billion, lengthening its term by six months to mature in June 2027. A $2 billion term loan facility has also been extended by 36 months to mature in December 2027, according to a filing on Abu Dhabi Securities Exchange.

Growing profits

ADQ – Abu Dhabi Development Holding Co, to give it its full name – was established in 2018 and is chaired by Sheikh Tahnoon bin Zayed Al-Nahyan, who is the UAE’s national security adviser and the brother of its president.

Abu Dhabi’s government transferred its stakes in 13 companies to ADQ in 2019. These included Abu Dhabi Power Corporation (since merged with Taqa), Abu Dhabi Ports Co, Etihad Rail, Abu Dhabi Health Services Company, National Health Insurance Company (Daman) and Abu Dhabi Airports Company.

ADQ’s portfolio boasted AED721 billion ($196 billion) worth of assets in its 2023 financial statement. It now spans about 25 companies across sectors including utilities, transportation, healthcare, agriculture and real estate.

The fund, its subsidiaries and shareholdings revealed a net profit of AED16.1 billion last year, boosted by a 12 percent year-on-year increase in revenues to AED111.7 billion.

Its most significant annual revenue increases came from its subsidiaries in aviation; water, electricity and wastewater treatment; and ports, marine and logistics services. Revenue from oil, gas and power fell.

It is the 10th-largest sovereign wealth fund in the world, according to data from analyst Global SWF, and the 16th-largest fund when public pension funds are also considered.

In May, ADQ issued its first bonds, selling $2.5 billion of debt on the London Stock Exchange, in what the company said at the time marked a “significant step” in diversifying its funding sources.

In a statement it said the money raised through the bond sale would be used as “growth capital” and to “facilitate further investments in strategic initiatives”.

The fund is also investigating opportunities in new disruptive technologies such as generative AI.