Upward Trajectory

How would you assess the performance of the UAE capital markets following the 4Q2017 listing of 10% of ADNOC’s fuel distribution business?

Overall, it is an excellent point in time for the economy of Abu Dhabi and the UAE in general. ADNOC’s listing was not only successful, but was also well managed and important for the diversity it added to the financial platform of the Emirate. Furthermore, the impact on the stock exchange was also positive, as it set the scene for other transactions in the near future. The Abu Dhabi Global Market (ADGM) has also started on the right foot, and the distinction in terms of jurisdiction, law, and independence between the global and local market will ensure that many companies will initiate activities there in the coming quarters as well. It is heartening to see that even though ADGM started after the Dubai International Finance Center (DIFC), it is already setting up a platform not only targeting traditional markets, but also the development of cryptocurrencies and blockchain-related activities.

What is the most promising sector that might offer the highest return on investment?

Real estate has always been the traditional backbone of any industry, and here at Al Nahdha, one-third of our investment is focused on real estate development, both internationally and locally. We recently had a high-level private viewing for the Al Fahid project, which is developed by Al Fahid Development Company and will take four years to finish. This is a great time for the property market to relaunch itself because by the time construction projects are finished, in three to five years, the economy will have picked up again. At the moment, the market is slow in terms of rental and sales, though things are moving. Investors would rather engage in buying off-plan and paying their investment in four to five years than buying completed housing and paying the entire amount all in once. A normal return on real estate investment is around eight to 10 years, and if the return matches that, it is a great investment.

Can you walk us through your private equity activity?

We are large direct investors in private companies in the UAE while historically having invested globally via funds. Recently, that has begun to change as we have looked at taking direct stakes in international businesses ourselves or co-investing alongside our partners. We have also enhanced our private equity activity with building a venture capital book, also driven by investments in top funds in the industry as well as a fast-growing portfolio of direct investments. In terms of sectors in both private equity and venture capital, we usually seek to diversify our substantial financial services and real estate exposure via a concerted focus on consumer facing businesses such as retail, food and beverage, healthcare, and education and expect to continue to do so through the coming years.

What is the best way to mitigate exposure to regional geopolitical events?

Although we are currently on a solid footing, there is always the potential for a correction driven by local or global geopolitical events. Al Nahdha is a long-term investor and usually looks to take advantage of these short-term dislocations locally and globally in line with our strategy. We also aim to consistently reduce the volatility of our returns via a combination of prudent risk management, hedging using various products, and, most importantly, keeping a keen eye on both the past and future five years to maintain a balance. The UAE is energetic enough to make things happen economically, whether in a boom or bear market. Overall, I see the stock markets growing positively long term, and regulation tightening and benefiting investors. By the third or fourth quarter of 2018, we expect to see a change in the trajectory of real estate activity in UAE, which we expect will start growing positively.