The first fund has been launched on the Abu Dhabi Global Market (ADGM), in a move that is likely to herald a fresh burst of activity from the capital’s new financial free zone.
Abu Dhabi Financial Group (ADFG), the fast-growing investment manager, is to manage the Goldilocks Investment Company through the ADGM platform. Four other collective investment funds have also been registered with ADGM by their managers.
ADGM’s chairman, Ahmed Al Sayegh, said the market was also considering licence applications from 12 more financial companies, which are being processed, and that the number of companies listed there now stood at 170, including non-financial regulated firms.
“This endorsement is noteworthy given the backdrop of slow global economic growth, volatile market conditions and the reduction of global footprint by financial institutions,” he said.
The Dh735 million Goldilocks fund, set up 18 months ago, is a new kind of investment vehicle for the UAE, its chief executive, Jassim Alseddiqi, said.
“The fund aims to seek out equities with a compelling risk-reward profile, where our involvement can act as a catalyst to increase value for all stakeholders by way of improvement of management trends and governance, among other strategies,” he said.
He said this was a “pioneering investment strategy called ‘constructivism’ – or constructive activism – a first for the region”.
Activist investor funds are common – and sometimes controversial – in western markets where they sometimes seek to impose a new strategy on underperforming managements.
“We will be discussing with the boards to see how we can help in restructuring and business development,” he said.
It is believed the new fund, which will be open to regional and international investors but will only invest in equities on the UAE exchanges, will eventually be traded on a special platform being set up in the ADGM.
ADFG, which has US$4.7 billion of assets under management, has invested in high-profile situations before. Earlier this year, it bought a 48.3 per cent stake in Shuaa Capital, the investment bank formerly controlled by the Government of Dubai. It is also a 10 per cent shareholder in Gulf Finance House, the Bahrain-based and Dubai-listed Islamic financial institution.
Investments such as this, Mr Alseddiqi said, had helped the Goldilocks fund to show a 101 per cent increase in value since the start of this year, compared with single-digit increases from the Adu Dhabi Securities Exchange and the Dubai Financial Market.
“Through Goldilocks, ADFG will continue to seek out opportunities in equity markets where it can positively transform a company’s fortune, revitalising the business strategy and providing the impetus to spur it on the future success,” he said.
On his decision to list the Goldilocks fund on ADGM, Mr Alseddiqi said: “We are an Abu Dhabi institution and we have a high regard for the credibility of ADGM. There is real wealth in Abu Dhabi, which is the hub of banking in the GCC.”
Mr Al Sayegh said: “Home-grown entities and stakeholders have always been one of the vital and sustaining pillars of international financial centres. Linked by the mission of advancing Abu Dhabi’s plans and economic ambition, we will explore all opportunities to support our local institutions to become regional and global champions.”
He said: “With ADFG as our first fund, we are pleased to have in total five domiciled funds established to date. In addition, 24 special-purpose vehicles were set up in the past year, with ADS Securities among the early adopters.”
It is believed at least one big Abu Dhabi institution is considering setting up in the ADGM jurisdiction on Al Maryah Island.
The four other funds that have gained admission to ADGM are: the Hospitality Property Fund, Logistics Reit, The Residential Reit and Sportativa.
Follow The National’s Business section on Twitter