What do Invest AD and Seatown have in Common?

Ashby Monk

Over the past year or so, I’ve been watching with interest the evolution of the “entity” that is now known as “Invest AD”. Its origins go back to 1977 with the creation of the Abu Dhabi Investment Company. One of the UAE’s first SWFs, ADIC had an explicit mandate to invest on behalf of the government. However, ADIC was given a new mandate in 2007 to attract and manage third-party assets with a view to facilitating regional development. And in order to reflect this new focus, ADIC changed its name to Invest AD in mid-2009. In a sense, the fund was changed from a SWF into a “private” regional asset manager; albeit with a new mandate that remained closely aligned with Abu Dhabi’s plans and policies. Indeed, Invest AD plays into a broader plan (i.e. the “Abu Dhabi 2030 Vision”) to develop UAE’s financial services industry.

Today, Invest AD attracts cash from all over the world for investment almost exclusively in the MENA region. For example, it announced last week that it was launching a second PE fund targeting MENA. The government will invest $75 million and Invest AD expects to raise $325 million from outside investors. In addition, Invest AD is planning to list on a major stock exchange in the next few years. If successful, this would would represent a remarkable transformation; one of the oldest SWFs, which is to this day owned by the Abu Dhabi Investment Council, may soon be a publicly traded asset manager, akin to State Street or JP Morgan.

Part of the reason I’ve been so interested in Invest AD’s evolution is because I think Singapore may be copying the UAE’s moves.  In the same way that the Abu Dhabi Investment Council has spun off Invest AD, so to has Temasek spun off Seatown. Both Invest AD and Seatown are “private” institutional investors that are (or will be) open to third-party investors. I can see a variety of reasons for why these SWFs are setting up these new companies:

  1. They are trying to drop the SWF stigma.
  2. They are attempting to use external assets to achieve sovereign objectives.
  3. They want to have their investment strategies “blessed” by private and commercial investors (this will help with domestic legitimacy).
  4. They are trying to implement private sector compensation and rewards systems that might be irreconcilable with ‘public service’.
  5. They are looking to set up an institution that can engage in risky or politically sensitive investments abroad.
  6. And maybe…just maybe…they are actually trying to make some money on asset management fees.

Whatever the case, the evolution of Invest AD and the unveiling of Seatown have been interesting developments over the past year that are worth paying watching.

7 Responses to “What do Invest AD and Seatown have in Common?”

  1. 1 rien huizer March 9, 2010 at 7:59 am


    How can an asset management business be a fund? And how can a largely privately owned asset management business be sovereign? I think Singapore has nothing to worry about Seatown’s status (although it may be covertly working for the national interest). Sometimes the mention of Abu Dhabi (not a UN member, hence not fully sovereign) as the owner of a SWF (for instance ADIA) makes one wonder to what extent SWFs can be defined at all. I always thought that this label was supposed to make investment banking clients feel more important than others, and that that was the main significance of it. But I am afraid that there are not many entities that are purely funds, are directly and fully owned by a UN member, invest predominantlty abroad, have no other residual claimants than the UN member and do not better satisfy the definitions of conglomerate, SOE or pension fund…

  2. 2 Ashby Monk March 9, 2010 at 12:22 pm

    Fair points. I guess that position would know the Alaska PF or any sub-national fund down to something other than a SWF too. Maybe SWF should stand for “State Wealth Fund”…

    • 3 rien huizer March 9, 2010 at 10:18 pm

      Now we are talking..

      • 4 rien huizer March 9, 2010 at 10:31 pm

        Too impatient. Sent comment before finishing it. Perhaps state general savings funds? Anyway, the creation and management of state wealth (as a contrast to state debt and in competition with citizen’s private interests) is an interesting phenomenon in political economy, and it is becoming more popular.Sovereign debt was also a bit of an investment banking jargon item, typically referring to gvt debt denominated in foreign currency and often owned by foreign investors. We all know what too much of that (almost) did to the elites of Asia (foreign nuisance) and we may well keep it in mind because the latest world financial hiccup has shown how easily private debt morphs into state liability, via support to banking systems (or lack of it, see Iceland…)

  3. 5 Ashby Monk March 10, 2010 at 12:02 pm

    Ah yes. We’ve got two flows here: What’s private has too often become public as of late. And with SWFs, what used to be public is now flowing into the private. Veeeeerrrryyyy interesting.

  4. 6 rien huizer March 10, 2010 at 9:20 pm

    In fact, totally unscientifically, during the past three years (rich) democracies in got much deeper into debt and some (not all!) (poor) non-democracies into wealth. Perhaps old mr Plato (Harry) Lee from Singapore is right..Better to have a wealthy state than hedonistic citizens and better a state run by Giuardians than on run by mobs.

  5. 7 Ashby Monk March 11, 2010 at 10:09 am

    I hope you’re wrong on the last point! There is a doctoral thesis in there somewhere…

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This website is a project of Professor Gordon L. Clark and Dr. Ashby Monk of the School of Geography and the Environment at the University of Oxford. Their research on sovereign wealth funds is funded by the Leverhulme Trust and The Rotman International Centre for Pension Management.

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