Abu Dhabi royal family office reveals how it tapped institutional capital
The head of one of the world’s largest family offices has said that increased disclosure and improved internal processes by leading family offices will be crucial to unlocking future growth in emerging economies.
Ahmed Mansour, CEO, private department of the crown prince of Abu Dhabi, Sheikh Mohammed Bin Khalid Al Nahyan, said that greater co-operation between sovereign wealth funds (SWFs), family offices and development banks would be crucial in the future.
“These three parties are three sides of the triangle that hold the wealth that can help markets and economies develop.
The slowing of the global economy means these they are needed to help economies take off. Currently the [required] cooperation does not exist,” he said at the Sovereign Wealth Fund Institute’s (SWFI) Global Wealth Conference in London on May 29.
In September 2022, the department issued a $300 million sukuk on the London Stock Exchange, the culmination of a process of internal transformation to appeal to external investors that had taken more than two years.
The importance of the Middle East to Asian institutional investors, family offices and asset managers has increased in the recent years on the back of strengthening diplomatic ties between the two regions, and growing demand by both Asian and Middle Eastern asset owners for diversification.
In September, Saudi Arabi had committed $20 billion to the India Middle East-Europe Economic Corridor (IMEC) a new project to foster connectivity and economic integration, widely seen as a counter move to China’s Belt and Road Initiative.
HSBC forecasts that annual trade between the GCC and emerging Asian countries, including China, will overtake that between GCC and advanced economies including the US, and Europe, by 2026.
Among several multi-family offices that have opened or plan to open subsidiaries in the Middle East on the back of investors’ growing demand, $23 billion Noah Holdings, one of China’s leading wealth managers, announced plans to secure a Dubai business licence by the end of this year.
GROWING APPEAL
Mansour pointed to contrasting philosophies, investment objectives and attitudes to risk, in the three groups, pointing to the journey of his own fund in reshaping its risk and disclosure framework.
In particular he emphasised the need for family offices to release information required by joint venture partners, and to collect and present data in a format that is required by the more institutionalised approaches used by sovereign funds and banks.
“Family offices are, for the major part, private and so want to keep hold of their data, and don’t want to divulge that. For us, investors and banks were very supportive [but] the shareholders were traditional and felt that confidentiality should always be in place, so to convince them to move to public from private was a serious challenge.
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And we had to … show how we look at credit risk and to improve standards, to align our corporate and capital structure in line with international standards. It was a long journey for us to implement, and we engaged accountants and auditors until we reached the goal. But we’ve come to the point that we believe [our] growth in future needs co-operation with other investors and banks,” he said.
He added that the changes had facilitated recent efforts to source funds from UAE citizens to invest alongside the fund, and emphasised the benefits available to other family offices that could emulate this approach.
“The benefits are diversifying the funding source of private offices, which will help them to [generate] higher returns.”
SLOW PROGRESS
A straw poll of the audience, conducted by Bridget Kurstin, senior research fellow, Said Business School, at the University of Oxford, who was moderating the session featuring Mansour, revealed the relative paucity of ventures currently between SWFs and family offices.
Roughly one in five audience members revealed they had engaged in collaborations between family offices and SWFs (on either side), significantly more than those who were planning collaborations.
“One of the problems for sovereign funds is the scarcity of information about family offices, their investment interests and appetites,” said Kurstin.
She pointed to a literature survey she had recently completed of the 48 leading business and finance journals, in which she found only two articles about family offices.