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Abu Dhabi’s Sovereign Wealth Giant Shifts Gears

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Sheikh Hamed bin Zayed Al Nahyan, ADIA's Managing Director

Sheikh Hamed bin Zayed Al Nahyan, ADIA’s Managing Director

The Abu Dhabi Investment Authority (ADIA) achieved significant breakthroughs for 2012. Annualized returns for 2012, 20-year return (percent annualized) were 7.6%. For 2011, the 20-year return was 6.9%. A positive performance for 2012, ADIA profited from a hard weight in public equities, akin to Norway’s GPFG gain in asset value. Achieved significant breakthroughs in 2012 include the movement toward in-house management in alternatives and a shift to emerging markets.

ADIA’s Investment in Human Capital
Globally, elephantine public investors constantly seek ways to minimize fees, hence the increased interest of in-house investment management. Private equity, real estate and infrastructure are growing assets classes for ADIA given the low-yield environment. These alternative asset classes are costlier to access compared to bonds or public equities. One way to lower fees in alternatives is to take a direct approach to investing.

ADIA has committed substantial resources to recruit industry professionals to Abu Dhabi.

Our estimate of US$627 billion for the asset size of ADIA relates to the employee size of the organization. In 2012, there were around 1,400 employees working for ADIA from 1,275 in 2011. Approximately 75% of assets are managed by external managers – a decreasing percentage from previous years. In 2011, 80% of assets were managed externally. Abu Dhabi’s sovereign wealth fund has taken steps; they have built up capabilities in their internal equities team.

ADIA has worked aggressively to attract talent to Abu Dhabi, paying compensation above what other Western sovereign wealth funds and pensions pay. Other Gulf state-owned investors like the Qatar Investment Authority are following a similar route by enhancing their investment teams to purchase assets or companies directly, rather through funds.

Notable ADIA hires include Marc Keirstead as chief financial officer of ADIA’s private equity department. He came onboard in October 2012 from the Canada Pension Plan Investment Board. Another key hire was John McCarthy who serves as ADIA’s global head of infrastructure. John McCarthy joins ADIA from Deutsche Bank where he was managing director and global head of RREEF Infrastructure since 2005.

ADIA not only focuses on recruiting overseas talent, they aim to beef up talent within their nation. ADIA launched “Year One Academy” which aims to provide UAE nationals opportunities to receive training and experience in all asset classes at ADIA.

Shift to Emerging Markets[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

DOJ Investing Tesla Over Musk Comments

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The U.S. Department of Justice (DOJ) is conducting a fraud investigation over Tesla as its CEO Elon Musk made public statements on twitter. This is a criminal probe. In addition, earlier, SWFI reported the U.S. Securities and Exchange Commission (SEC) is conducting a civil inquiry into Elon Musk regarding his statements.

This all surrounds Musk tweeting in August that he was thinking of taking Tesla private and had “funding secured” for the transaction. Both government authorities are seeing if Musk misled investors and violated federal securities laws with his public statements.

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Marsh & McLennan Companies to Acquire JLT Group

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Marsh & McLennan Companies, Inc. (MMC), a global professional services firm offering clients advice and solutions in risk, strategy and people, announced that it has reached an agreement to acquire Jardine Lloyd Thompson Group plc (JLT), a provider of insurance, reinsurance and employee benefits related advice, brokerage and associated services. The transaction has been approved by the Board of Directors of each of MMC and JLT. JLT’s largest shareholder, Jardine Matheson Holdings, and JLT directors who collectively represent 40.5% of the issued and outstanding JLT shares in support of the transaction.

[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Indigo Ag Raises Series E Round

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Indigo Ag, Inc. raised US$ 250 million in a Series E funding round. The company is focused on creating innovative microbial products that increase crop yields in the face of environmental, disease, and pest stress. The investors in this round include Baillie Gifford, Investment Corporation of Dubai, the Alaska Permanent Fund Corporation, and the company’s founder, Flagship Pioneering. After the Series E, in total, Indigo has raised over US$ 650 million.

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