Middle East sovereign wealth giant ADIA preps for private equity headwinds

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The $690bn-managing Abu Dhabi Investment Authority is steeling itself for headwinds in the private equity market following signs of increasing caution in the market last year.

ADIA said in its annual report that private equity’s record-breaking 2018 looked set for significant headwinds, citing signs that the prolonged bull equity market could be entering its latter stages.

The sovereign investor said its private equity division would continue to favour opportunities with “defensive or structured characteristics that will prove resilient across market cycles”.

It cited healthcare and the digitisation of financial services products as strong opportunities, as well as companies helping industrials sector businesses retool for the digital age.

It said key areas in industrials included sustainability, with a focus on energy efficiency, food safety and security, and water and waste management, as well as opportunities emerging from the growth of industrial connected devices, which will fuel demand for capital in areas such as automation, robotics, machine learning and cybersecurity.

The LP said 2018 was “a year of firsts” for ADIA’s private equities department, particularly in its now mature principal investing activities.

It said, “Since 2012, PED has built a substantial team of professionals with direct transaction experience organised by region and across five industry sub‑sectors.

“In 2018, investments sourced by this team in collaboration with its partners comprised approximately 40 per cent of PED’s overall new commitments, a new high, and up from around 30 per cent in 2017.

“The total value of new principal investments by PED increased 50 per cent in 2018 compared to 2017, and has more than doubled since 2016.”

It said it made 15 principal investments across its core PE sectors in 2018, with two transactions involving a total commitment of more than $1bn.

They comprised the acquisition of a significant minority stake in Pensions Insurance Corp, a leading player in the UK’s bulk‑purchase annuity sector, and an investment into UPL Corp, the international operating unit of Indian agrochemicals solutions provider UPL Ltd.

ADIA said the UPL deal was also a demonstration of its private equity division’s increased focus on the Asia‑Pacific region, which included investments in China and India during the year.

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