Purchase of about a quarter of shares the phoenix by the ADQ fund of the Abu Dhabi government, is a significant step within the Emirati investment plan in Israel, announced in January 2021, to the extent of 10 billion dollars – so explains a senior international official who is very aware of the economic relationship between the countries.
● Who is the giant fund from Abu Dhabi that is buying the Phoenix company and who else is in the sights?
● Abu Dhabi releases 10 billion dollars for investment in Israel. This is how they will be invested
● Tourism and trade are booming, so why are investments still faltering? Two years to Abraham’s agreements
ADQ, according to publications in the Emirates, is the investment body chosen to lead the program, and the Phoenix deal, if it goes through, is a first step that will lead to further acquisitions and investments in the fields of energy, fintech, finance, high medical technology and more. For targeting large and leading companies in their field that belong to the business sector and not to the government.
Oil money translates into gaining political influence
In the Emirates, as in the other Gulf countries, revenues from oil and gas, which are their main source of wealth, are widely used for political purposes. Whenever there is a need to get closer to one country or another, a dedicated investment fund is established for that country. Funds with huge sums of about 10 billion dollars were established last year with Israel and recently also with Turkey and neighboring Oman. The ADQ Foundation is a political arm as mentioned, and with that its investments are made out of economic logic and after comprehensive tests, and not for philanthropic motives.
Let us remind you that two years and more have passed since the Abraham agreements and besides the enormous increase in the volume of trade between Israel and the United Arab Emirates, the Israeli expectations for significant investments by Emirati entities here have not been fully realized so far, with the exception of the purchase made last year of 22% of the Tamar gas reservoir for about one billion dollars by Movdela Petroleum , the energy arm of the Emirates National Wealth Fund.
In a recent conversation with a senior official from the Emirates, he implicitly criticized the conduct of the Israeli government bureaucracy in connection with various projects and mentioned the departure of the Emirati company DP WORLD from the tender for the privatization of the Port of Haifa due to allegations of burdensome bureaucracy.
A fund that manages $160 billion
The ADQ fund established in 2018 is one of several wealth funds of the Emirate of Abu Dhabi and it manages assets to the extent of nearly 160 billion dollars (the fifth largest in the Emirates and the third largest in Abu Dhabi). The fund focuses on three branches – energy including renewable energy, pharma and pharmaceuticals as well as transportation and international transportation and port operations. The insurance and finance industry is smaller in the fund but is developing rapidly.
It partially owns the airlines Etihad and WIZZ, which specializes in low-cost flights. It has previous investments in Israel, including in the cultured meat company Alf Farms and the Viola Funds Group. In total, the fund has invested nearly 7 billion dollars in the past two years, most of it in the countries of the region.
The fund is led as chairman by one of the most powerful figures in the business and political world of Abu Dhabi – Sheikh Tahanun bin Zayed – the brother of the ruler of the Emirates. That is, the investments are carried out in coordination and consultation with the country’s leadership. Therefore, the meaning of the transaction is of great importance, being perhaps an opening for further investments and a growing interest of The Emirates in investments in Israeli entities.
Tahanon bin Zayed, director of Abu Dhabi’s ADQ Wealth Fund / Photo: Associated Press, WAM
Another important meaning for the personality at the head of the foundation is that it is essentially a political/political arm alongside the economic aspect. And this is also the reason why this fund was chosen to manage a significant part of the investments in Israel.
The fund’s experts, and factors hired for this purpose, have been doing research and tests on large Israeli companies in recent months, to locate investment options. According to the same source, and in accordance with the Emirati policy so far, the criteria are relative size, a significant share of the relevant market, real growth potential, quality management and also the ability of the shareholders to influence. Another important principle for the emirates is opening a connection to the emirates themselves, that is, in every purchase they expect that the acquired company will establish operations in the emirates as well.
The political aspect – will Netanyahu support?
It is difficult to ignore the timing of the report about the expected deal, days before the expected inauguration of the next Netanyahu government, even if it is clear that the contacts and moves have been going on for months. On the Emirati side, and this is no secret, they are satisfied with the political decision in Israel, firstly because of the establishment of a stable government, which is necessary for the advancement of relations politically and economically. But also because of the return of Benjamin Netanyahu, the man who signed the Abraham Accords with them.
In the Gulf, they appreciate Netanyahu’s international political abilities and especially his resolute stand against Iran. Netanyahu, for his part, sees the agreements as the highlight of his tenure, announcing at every opportunity the desire to further promote relations with the Gulf states.
Therefore, it is expected that Netanyahu and his people will follow very closely the process of examining the transaction in the various authorities. Let’s remember that the Capital Market Authority has an acting position, and the new government needs to appoint a new manager.