Tracking State Holding Companies and Sovereign Investors of the UAE


State-backed enterprises, often grouped into holding companies, still dominate the economy of the UAE -despite some privatization – and are among the leaders of its economic development plans.

ByRachel Ziemba

With their significant role in domestic economic development, state companies like Dubai World or its subsidiaries also lead outward investment, a tendency shared with other GCC countries.

Last Updated February 28 2008

This note attempts a partial survey of a spectrum of state-backed institutions including holding companies like Dubai World, sovereign wealth funds like ADIA, investment corporations like Istithmar and energy companies like TAQA– all of which have been involved in high profile investment abroad recently. It also includes some entities who have domestic economic development as their charge though it is an incomplete list. With many institutions overlapping, they can be confusing to distinguish the different entities. Their management also tends to overlap – with many of the same rulers and heads of key institutions sitting on multiple boards. The line between the holdings of the government, the ruling family and the private sector often blurs. Some states have created multiple entities with seemingly similar remits, perhaps to encourage competition, perhaps as a trial, further complicating the outlook. Recent restructuring (merging Dubai World’s two main property developers for one) to refine investment strategies could avoid some of the overlap though.

Despite the still strong state role in the domestic economy and overseas investment, the private sector has been developing and some of state-owned enterprises are now quasi-private. Many of the mega projects are at least in part public-private partnerships and some of the flagship state companies are being considered for partial privatization though the time line and likelihood is uncertain.

Dubai and Abu Dhabi have a well established set of institutions for domestic and foreign investment, in most cases focused by sectors. Now many of the poorer emirates are following their lead, establishing investment corporations to channel investment in and in some cases back out. There are even a new institutions at the federal level.

UAE federal government

The Emirates Investment Authority, announced in 2007, is intended to invest the surplus reserves of the federal government. It is not yet known whether it will be making overseas acquisitions or what reserves it might receive to invest. The UAE’s budget is mostly contributed by Abu Dhabi and Dubai and usually balances with little surplus. It is possible that it may receive funds from other existing capital or that it could be a coordinating body for the federal governments investment –However, the reserves of the UAE central bank have nearly doubled in 2007 – exceeding $48 billion by the end of September (most recent available data). Like many other institutions, many of those on the EIA’s board are high ranking members of the UAE’s governing council and heads of other institutions such as Dubai World, IPIC and key state banks.


Abu Dhabi Investment Council is the coordinating body for Abu Dhabi’s investment inside and outside the emirate. Its subsidiaries include the Abu Dhabi Investment Authority (ADIA) and the Abu Dhabi Investment Company (ADIC). It will also set investment policies and will be allowed to invest inside the Emirate unlike ADIA. The Abu Dhabi Economic Development Council will facilitate public and private partnerships. Sheikh Khalifa, Abu Dhabi’s ruler is the chairman of both the Investment Council and ADIA. Landon Thomas suggested that it may now be receiving a share of the surplus which used to go exclusively to ADIA.

Abu Dhabi Investment Authority (ADIA) receives the bulk of Abu Dhabi’s fiscal surplus from oil. ADIA is thought to be the largest sovereign wealth fund, managing an estimated $650-700 billion primarily as a portfolio investor. Though little about its holdings or strategy has been disclosed, it is thought to have high exposure to equity and alternatives as well as emerging markets (see Euromoney for the most complete analysis). It entrusts as much as 70-80% of assets to external managers, with portions of all asset classes managed internally and externally. The existence of a separate direct investment arm (Mubadala, below) and its desire to remain below the radar may have limited its concentrated bets. However, it has taken some larger stakes in 2007 (including stakes near or above 5% in Citi, EFG Hermes). Landon Thomas profiles the small but growing share of ADIA’s portfolio managed directly by the strategic investment arm established in 2006 – thought to be $30 billion.

ADIC, the first investment company in the UAE and a key financial services firm was founded in 1977. It was jointly owned by ADIA and the National Bank of Abu Dhabi (NBAD). Until recently, its investment services were available only to government clients like ADIA, ADNOC and the finance department but it will now raise funds from the public. To that end, it recently announced a joint venture with UBS to invest in infrastructure in the MENA region (including Turkey). In the spring of 2007, the FT reported that each of ADIC’s three sections, focusing on real estate, private equity and infrastructure respectively intended to raise between $500- 750 million from institutions and high net worth individuals. At that time, it had $200 million in private equity funds. Its focus was thought to be targeted to the UAE, GCC and MENA region. Infrastructure investments include Jordan’s Queen Alia Airport.

International Petroleum Investment Company (IPIC), started as a joint venture between the Abu Dhabi National Oil Company and ADIA in 2004, invests in oil and gas companies overseas. IPIC announced plans to double its $12.4b portfolio to $20 billion within five year. In 2006, its refineries produced over 2mbd and its petrochemical plants over 45 tons . Since its expansion began in 2004, IPIC has invested in Pakistan, Egypt Oman as well as in Japan, Korea, Spain and Austria (OMV) and is planning a petrochemical plant in Kazakhstan. Its projects in process include a pipeline to Fujairah’s port, which would allow over half of Abu Dhabi’s oil to bypass the Strait of Hormuz, which could be blocked by Iran. Avoiding the Strait might also lower shipping costs, avoiding the risk premium associated with the Strait. Many of IPIC’s purchases and a planned joint venture with OMV help build up its technological knowledge.

TAQA (Abu Dhabi National Energy Company) is an energy investment company, 51% of which is owned by the Abu Dhabi government. Through its subsidiaries, which are partly owned and managed by international utilities, TAQA provides 85% for electricity consumed in Abu Dhabi. It has holdings in nine countries including Africa and Asia, the North Sea and Canada’s oil sands. In part, these purchases may be intended both to share technology, diversify sources and to put a price floor for oil – its interests in Canadian oil sands are only viable with oil price over $50-60 a barrel. It has borrowed funds to finance a part of its purchases.

Mubadala is the direct investment arm of the Abu Dhabi government. It has stakes in Ferrari, the private equity firm Carlyle, SR Technik among others. It partnered with other UAE state enterprises Dubal, dubai’s aluminum company and ADNOC to invest in aluminum smelters and oil explorationrespectively. It recently announced plans to increase its, it has stakes in aerospace – and yesterday suggested a renewed push into the area, an interest it shares with companies in Dubai and other GCC states. It has also signed MOUs with Boeing in which the company would help Abu Dhabi plan projects and build related components. . In addition to its foreign holdings it also has stakes in some of Abu Dhabi’s state banks.


Investment Corporation of Dubai (ICD) is described at the investment arm of the Dubai government, having received the stakes in state and quasi-state owned enterprises from Dubai’s ministry of finance upon its creation in 2006. As such it is the parent of Dubai World, Emirates airline, Dubai Alumnium (Dubal), the National bank of Dubai, Shuaa Capital and Dubai Islamic Bank, Emaar, Dubai World Trade Centre and Jebel Ali Free Zone (the full portfolio is listed on its website). The board of ICD is headed by Sheikh Mohammed al Maktoum and includes high ranking members of the Dubai government and the heads of many of the largest holdings including Dubai World and the state banks. As well as supporting the outward investments of its underlying holdings, the ICD itself may now be investing abroad – it announced investment in India’s Bharti Airtel last month and ICD’s CEO suggested that Dubai was amassing a fund of up to $20b to invest in Korea. It has also bid for Spanish property group Inmobilia Colonial – which the FT suggested would be the first international foray and a shift from its primarily passive government stakes in banks, holding companies in the UAE.

Dubai World is the holding company for many of Dubai’s state enterprises including Dubai Ports World, Dubai Aerospace and others. An IPO for Dubai Ports World last year raised $5 billion – other of Dubai World’s companies, especially those in property have raised funds on the credit markets.

Dubai World’s investment arm Istithmar, has invested the surplus cash from domestic property holdings in private equity and property abroad – managing assets over $10 billion. As they grow, Dubai World has been restructuring some of these investment companies, having merged its two main real estate arms Nakheel and Isthithmar Real Estate last fall to create a new property development vehicle managing over $52 billion in properties. Istithmar itself was renamedIstithmar World with three subdivisions: Istithmar World Capital which invests in private equity and alternatives, Istithmar World Aviation which will invest in aerospace globally (encompassing the holdings in spiceJet, SR Technic and Dubai Aerospace – and capitalizing on the interest in corporate jets in the region) and Istithmar World Ventures which will seek out greenfield investment and startups (investments include joint ventures in climate change mitigation) Istithmar World Capital has deployed $3b to acquire stakes in over 50 companies worth $6b – and Istithmar World as a whole is intended to be self-funding by 2010.

Dubai Holding – is a holding company belonging to Sheikh Mohammed, grouping together his interests in state companies.

Most of its overseas holdings have been acquired through its investment arm, Dubai International Capital (DIC). DIC, established in 2004, has around $14b in assets under management including stakes of EADS, Tussaud’s and Sony. Like Istithmar capital comes from sales of property or other profits from other parts of Dubai holding. DIC’s funds including its Global Strategic Equities and MENA infrastructure fund accept outside investment, including some other SWFs (Qatar, for one) and its board has emerged as a who’s who of investment. It intends to increase its holdings in public and private equity to $25 billion by 2010, with perhaps $5b (or 1/5 of the total portfolio in Asia – India, China and Japan). To date, managers suggested,
Asia makes up as much as 30% of its EM portfolio – the rest might be focused on MENA.

Dubai Investment Group is also a subsidiary of Dubai holding – at times the line between DIG and DIC has seemed unclear. Its focus is primarily as a fund of funds, investing largely in banks and financial institutions. It was originally called the Investment Office at its creation in 2005. It has a wide range of subsidiaries which invest in financial institutions, manufacturing, real estate, Sharia-compliant investments among others.

The other five emirates have been less active overseas. Most (Sharjah is an exception with its manufacturing/reexport base) still rely in part of subsidies from the Federal government. Many are now trying to capitalize on proximity to and lower costs than Dubai and Abu Dhabi by setting up export zones and investment vehicles of their own. Most of investment vehicles are primarily focused on attracting inward FDI and chanelling it towards selected sectors rather than investing the proceeds outside. This may change as development proceeds and some of the other emirates try to follow the path blazed by Abu Dhabi and Dubai. The Northern Emirates have also received investment from many of the investment vehicles mentioned above. In the 1970s oil boom, many tried to set up investment banks to receive a share of the oil wealth. This is an incomplete list with several entities with different goals grouped together.

Ras Al Khaimah, has experienced some of the highest levels of growth and investment among the northern emirates in recent years and recently received its own credit rating. The Ras al Khaimah Investment Authority (RAKIA), created in 2005 and headed by Sheikh Saqr Bin Mohammed Al Qasimi, ruler of Ras Al Khaimah, was intended to attract inward investment in a variety of sectors ranging from ceramics to resources. It now is venturing outside also. Its new subsidiary, the RAK Metals and Minerals Investments (RMMI) arm recently signed an MOU to export coal with Sumatra province and plans to invest in India and China, taking advantage of growing demand for metals in emerging Asia. In all, RAKIA and RMMI plan to invest over $1 billion in resource and infrastructure projects in Africa and Asia. Rakeen, its property development arm is involved in a number of projects abroad. RAK Petroleum is investing in various energy projects in the UAE and Oman, with the output to provide power for Ras Al Khaimah.

Sharjah Investment Centre is being developed by the Saudi-based real estate development firm SNASCO. Sharjah also has a number of export zones, including one targeted specifically on attracting Chinese investment.

Ajman Investment and Development Authority is focused on real estate development, primarily within Ajman.

Fujairah has been trying to capitalize on its position as the only Emirate on the gulf of Oman and thus outside of the Persian gulf. Shipments thus can avoid the political risks and security premium costs of passing through the Strait of Hormuz. The Fujairah Investment Establishment, the investment arm of the Fujarah government partnered with Dubai Investments to form El Taif Investments, a private equity firm with an initial capital of $132m. Though based in Fujairah, it will not be limited to investments there or in the Emirates. Fujairah authorities hope that the availability of such funds and the projects they support will attract more foreign investment. The lack of private property has likely been an obstacle to investment – all property belonged to the sheikh.