Adia to broaden focus on India, China as returns slow in 2016

Abu Dhabi

Abu Dhabi Investment Authority (Adia), one of the world’s largest sovereign wealth funds, saw a drop in its twenty year annualised rates of returns in 2016 to 6.1 per cent from 6.5 per cent in 2015, marking the second consecutive year of lower returns.

Adia’s 20-year and 30-year annualised rates of return were 6.1 per cent and 6.9 per cent respectively as of December 31, 2016. The 30-year annualised rates of return dropped from 7.1 per cent in 2015 to 6.9 per cent in 2016.

In the 2016 review report released by the authority on Tuesday, Shaikh Hamed Bin Zayed Al Nahyan, Chairman of Abu Dhabi Crown Prince’s Court and Managing Director of Adia, said there were challenges that arose from political events throughout the year.

“When viewed as a whole, Adia ended 2016 on a positive note, with performance underpinned by respectable gains in global markets despite considerable headwinds from political events throughout the year,” he said in the report.

“As in 2015, these figures were impacted by the exclusion of strong returns in the mid-1980s and 1990s from the rolling averages, although Adia’s real rates of return remain consistent with historical levels.”

He added that Adia continued to focus on Asian giants China and India. The authority opened its first office in Hong Kong in 2016, a move that the managing director described as “a symbol of long term commitment to Asia and confidence in its continued growth.”

“In our private equities department, there was continued momentum towards increasing our exposure to direct private equity transactions, alongside our partners and broadening our focus in the rapidly developing Asian private equity markets, particularly China and India.”

Shaikh Hamed also said the continued importance of economic globalisation will require new approaches to investing and the shifting balance between traditional developed economies and the emerging economies has passed its tipping point.

“Economic growth in the decade ahead will be dominated by the emerging world. We expect that over two-thirds of the growth in global GDP over the coming years will come from those emerging economies, with roughly half coming from China and India alone.”

“A key challenge for Adia and other global investors is how to access this growth, and we welcome efforts in many of these countries to improve the openness and functioning of capital markets.”

According to the US based Sovereign Wealth Fund Institute, Adia is ranked second globally with total assets of $828 billion next to Government Pension Fund of Norway with assets of $922 billion.

The authority employs 1,750 people covering more than 60 nationalities with Europeans dominating the workforce with 29 per cent, followed by Emiratis 26 per cent and people from Asia Pacific constituting 23 per cent.

Adia is continuing to build its portfolio of assets in the renewable energy field with a significant investment in Greenko, a leading developer of wind, hydro and solar energy based in India and elsewhere, as well as adding to its portfolio in its other focus areas including energy more broadly, transport and utilities.