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Posted on August 29, 2022
Oil-based sovereign wealth funds are benefiting from this commodity cycle as global energy prices remain high. This comes after years of low oil prices putting pressure on the finances of Gulf Cooperation Council members. The asset management divisions of the Abu Dhabi Investment Authority (ADIA) have undergone a major transformation. ADIA remains focused on private market companies targeting various geographic markets, including the US, India and parts of Europe. Before the COVID-19 pandemic, ADIA had plans to increase allocations to infrastructure, real estate and private equity.
large balance sheet
ADIA and Singapore’s GIC Private Limited are keen to use their large balance sheets to fund private equity buyouts in the US. For example, in the second half of 2022, Bain Capital, LP and a wholly owned subsidiary of ADIA signed a definitive agreement to acquire Merchants Automotive Group, DBA Merchants Fleet and Merchants Auto. Merchants Fleet is an American fleet management company.
In Europe, ADIA has partnered with Global Infrastructure Partners to acquire a 72.55% stake in European rail vehicle lessor VTG Aktiengesellschaft (VTG) from Morgan Stanley Infrastructure Partners through Warwick Holding GmbH and Hamburg-based foundation Joachim Herz Stiftung.
China Biotechnology
In Asia, ADIA is targeting promising sectors such as e-commerce, real estate and biotechnology. ADIA recently invested in China-based Sironax, a clinical-stage biotechnology company focused on discovering and globally developing new treatments for patients with degenerative diseases of the elderly. In the same month, ADIA and GIC injected capital into China-based plasma products maker Taibang Bio Group.
ADIA Transaction Amount and Annual Transaction Volume (Direct Transactions)
Source: Sovereign Wealth Fund Institute (SWFI). Transaction Type: New Securities Issuance and Transaction.
Cash-rich sovereign investors are changing their investment strategies as the world is beset by inflation and central banks are forced to do something (raise interest rates). ADIA doesn’t appear to be slowing down in the private equity and private markets investing space.
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