Abu Dhabi Investment Company (ADIC), the Middle Eastern investment firm, and UBS Global Asset Management have held the first close of a jointly managed fund that will tap major infrastructure development in the MENA region. With a target of $600 million, the joint venture has raised $250 million so far.
ADIC-UBS Infrastructure Fund I, which was formed in 2008, will invest in transport networks, power, water, and health and education facilities at a time when governments are pushing ahead with ambitious infrastructure spending plans. Independent research commissioned by the fund indicates that over $400bn of infrastructure development is planned for the Middle East and North Africa over the next decade, according to a statement.
“The Middle East is often seen as a source of capital but we want to highlight to investors that there are also great investment opportunities here,” says Mark Thompson, chief executive of ADIC-UBS Infrastructure Investment, based in Abu Dhabi.
Many governments in the region have set aside surpluses from oil revenues for infrastructure development but they are also increasingly turning to institutional investors for the capital to help meet demand, ADIC says.
“Infrastructure in the region is still being developed and there’s a massive need for equity,” says Thompson.
“In these very difficult times in global markets, investors are very selective,” says Vincent Gilles, CIO of ADIC-UBS Infrastructure Investment. “Our team, which combines experienced and talented individuals from both UBS Global Asset Management and ADIC, has over 80 years of investment experience and in-depth knowledge of this region. Most of the fund’s investments will be in ‘greenfield’ assets but because we are talking about primarily government concessions or long-term contracts with solid partners, cash flows are predictable and the risks less than in pure private sector deals.”
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