Abu Dhabi Investment Authority

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Abu Dhabi Investment Authority
Type Sovereign wealth fund
Industry Institutional investor
Founded 1976; 38 years ago (1976)
Headquarters Abu Dhabi, United Arab Emirates
Key people

Sheikh Khalifa bin Zayed Al Nahyan, Chairman

Sheikh Hamed bin Zayed Al Nahyan, Managing Director
Total assets Unpublished (estimated $300 - $875 billion)[1]
Website Official website

The Abu Dhabi Investment Authority (ADIA) is a sovereign wealth fund owned by Emirate of Abu Dhabi (in United Arab Emirates) founded for the purpose of investing funds on behalf of the Government of the Emirate of Abu Dhabi. It manages the Emirate’s excess oil reserves, estimated to be as much as $500 billion. Its portfolio grows at an annual rate of about 10% compounded.[2]

ADIA has never published how much it has in assets but estimates have been between $800 billion to approximately $875 billion USD.[1] The Sovereign Wealth Fund Institute puts the figure at US$773 billion.[3]

History[edit]

In 1967, Abu Dhabi emirate created the Financial Investments Board which operated within its Department of Finance and was responsible for managing the Emirate's excess oil revenues. However, in 1976, Sheikh Zayed bin Sultan Al Nahyan, the founding President of the United Arab Emirates and leader of Abu Dhabi made the decision to create the Abu Dhabi Investment Authority instead and separate it from the government as an arms-length organization with its own management.[4] The goal was to invest the Abu Dhabi government’s surpluses across various asset classes, with low risk.[5] At the time it was novel for a government to invest its reserves in anything other than gold or short-term credit. Even today, investment in short-term paper remains the strategy for the vast majority of countries.[5][citation needed]

Investments[edit]

ADIA manages a substantial amount of capital, and is one of the world's larger investment funds.[citation needed] Due to its size, the fund has been influential in international finance. In 2008, ADIA co-chaired the International Working Group of 26 sovereign wealth funds that produced the "Generally Accepted Principles and Practices of sovereign wealth funds" (known as the Santiago Principles). These principles were created to demonstrate to home and recipient countries and the international financial markets that sovereign wealth funds had robust internal frameworks and governance practices and that their investments were made only on an economic and financial basis.[6]

20-year and 30-year annualized rates of return for the ADIA portfolio were 7.6% and 8.1%, respectively, as of 31 December 2010.[7] ADIA is one of the largest sovereign wealth funds in the world. [8]

Today ADIA invests in all the international markets – equities, fixed income and treasury, infrastructure, real estate, private equity and alternatives (hedge funds and commodity trading advisers – CTAs).[5] ADIA's global portfolio is broken down into sub-funds covering a specific asset class. Each asset class has its own fund managers and in-house analysts covering it. Almost every asset class is managed both internally and externally. Overall between 70% and 80% of the organization’s assets are managed outside, and over the last few years the fund has become more indexed which given its unique asset liability structure is somewhat perplexing. The Abu Dhabi Investment Authority (ADIA) is a major purchaser of U.S. institutional real estate through various sub-entities. It often buys partial interest ownerships with leading real estate managers.[9]

Many of ADIA's investments have decreased substantially since investments were made at market peaks in 2007 and 2008. The $7 billion investment in Citigroup has lost approximately 90% of its value as of 26 Nov 2009, 2 years after it acquired a sizable stake in the bank. Its investments in global real-estate at the market top in 2008 have also decreased substantially in value. Though it talks of its long term success in generating returns, the fact that its moved closer to the index and manages most of its funds through external third party fund managers shows that its tolerance for risk taking is greatly diminished over the years. However, ADIA's ratio of third-party fund managers is being actively managed. In 2006, between 70% and 80% of the organization’s assets were managed outside with an aim to bring that down to between 60% and 70%.Some products have a higher proportion of funds placed with external managers than others.[5] {{who}}.

On 27 May 2013, ADIA published its 2012 Review, with an overview of its activities during the past year as well as an explanation of its approach to investing – strategy, governance and risk management.[10]

Board of directors[edit]

The board members currently serve for a period of three years, and can be renewed. They are appointed by Emiri decree. The current board dates back to the April 2010 reshuffle (Emiri decree n°4/2010) and it was fully renewed April 2013. Its current constitution is as follows:

Former important board members include :

Key personnel[edit]

As of 2013, members of ADIA's investment and management team (in alphabetical order) include:[11]

  • Tom Arnold, Head of Americas, Real Estate
  • Glen Beamson, Chief Technology Officer
  • Jean-Paul Villain, Chief Strategist
  • Ted Chu, Chief Economist
  • Keith Collins, Chief Accounting Officer
  • Pascal Duhamel, Head of European Real Estate Investments
  • Gregory Eckersley, Global Head of Internal Equities
  • Eduardo Favrin, Head of Latin America Operations
  • Marc Keirstead, Chief Financial Officer, Private Equities Department
  • James Kester, Chief Investment Officer, Private Equities
  • Colm Lanigan, Head of Principal Investments, Private Equities Department
  • John McCarthy, Global Head of Infrastructure
  • Bill Schwab, Global Head of Real Estate
  • Brian Shepard, Global Head of International Operations
  • Ben Weston, Global Head of Alternative Investments

References[edit]

  1. ^ a b "Asset-backed insecurity". The Economist. 17 January 2008. 
  2. ^ "Money and mystery: Adia unveils its secrets". Euromoney. April 2006. 
  3. ^ "Sovereign Wealth Fund Rankings". SWF Institute. Retrieved 4 July 2014. 
  4. ^ "ADIA Review 2009". 
  5. ^ a b c d "Money and mystery: Adia unveils its secrets". April 2006. 
  6. ^ "Generally Accepted Principles and Practices (GAPP)—Santiago Principles". 
  7. ^ "ADIA Review 2010". 
  8. ^ http://www.swfinstitute.org/fund-rankings/ Sovereign Wealth Fund Institute Retrieved 25 July 2014
  9. ^ http://www.swfinstitute.org/swf-article/the-abu-dhabi-investment-authority-is-a-buyer-of-hotels-47998/ Sovereign Wealth Fund Institute Retrieved 21 August 2013
  10. ^ "Abu Dhabi Investment Authority Publishes 2012 ADIA Review". Dubai Chronicle. 27 May 2013. Retrieved 14 June 2013. 
  11. ^ "ADIA Media & Resources". Abu Dhabi Investment Authority. 27 May 2013. Retrieved 14 June 2013. 

External links[edit]