Meet The Royal Sheikh: The Mastermind Behind UAE’s $1 Trillion Market Boom (image-X/jmollel)
The United Arab Emirates (UAE) is on the brink of a historic achievement, with its stock exchanges set to host companies valued at an impressive $1 trillion. This milestone underscores the incredible rise of the country’s market, propelled by the outstanding performance of the Abu Dhabi Securities Exchange (ADX), overseen by the UAE”s wealthiest and most influential city-state.
At the heart of this economic success story lies Sheikh Tahnoon bin Zayed Al Nahyan, a royal family member and a pivotal figure in Abu Dhabi”s business landscape. Sheikh Tahnoon”s extensive influence permeates every aspect of the ADX, with his companies or those under his purview commanding a substantial 65% weighting in the benchmark FTSE ADX General Index as of March 31.
Leading the charge is his conglomerate, International Holding Co. (IHC), boasting investments ranging from Rihanna”s lingerie line to Elon Musk”s SpaceX. With its origins rooted in a fish farming company, IHC”s meteoric rise, up more than 400-fold since 2019 and valued at nearly $240 billion, surpasses industry giants like Walt Disney Co. and McDonald”s Corp.
What sets Sheikh Tahnoon apart is not just his business acumen but also his strategic positioning within the UAE”s economic framework. As one of Abu Dhabi”s deputy rulers, national security adviser, and brother to the president, he wields unparalleled control, steering about $1.5 trillion through sovereign funds and overseeing vital sectors.
It does not end there. Sheikh Tahnoon”s influence extends beyond the financial realm, embodying the UAE”s broader economic dreams. His strategic acquisitions, such as a stake in Zambia”s Mopani copper mine, reflect a concerted effort to diversify the economy away from oil-centric wealth, a cornerstone of the country”s prosperity since the 1950s. He is also the business chief of the world’s wealthiest and Abu Dhabi’s ruling Al Nahyan family. The sheikh wields about $1.5 trillion, most of which comes through the sovereign funds headed by him.
Despite the market”s resounding success, global investors eyeing the UAE”s potential face challenges navigating its unique structure. Despite not being a ruler or a prince, the concentration of control in Sheikh Tahnoon”s hands, while creating economic advantages, also raises questions about equity and minority shareholder protection, highlighted Steffen Hertog, an associate professor at the London School of Economics.
IHC”s CEO, Syed Basar Shueb, asserts that the company welcomes all investors, including global players, amid concerns about access and fairness. However, the dominance of local stakeholders and intricate ties pose hurdles for international investors seeking a foothold in the market.
The UAE”s emphasis on attracting foreign investment is evident in recent policy shifts, including allowing foreigners to own 100% of businesses across industries. Privatisation initiatives and successful IPOs tied to Sheikh Tahnoon”s empire highlight efforts to boost market participation and the global capital influx. Out of the ten best-performing IPOs in the country since 2021, five belong to Sheikh Tahnoon’s empire or are controlled by the sovereign funds he looks over.
The Al Nahyan family plans to transform the country into a financial center. They expect the rising value of the stock market will bring with it international capital and opportunities for local investors to put their money in the emirates, according to Bloomberg.
However, challenges persist, including liquidity issues, transparency concerns, and complexities in valuations and governance. Head of Emerging Markets at Lazard Asset Management LLC, James Donald, stated that the Middle East ranks as one of the hardest regions for investors to get information about companies that they want to trade with. For instance, Sheikh Tahnoon’s PureHealth Holding PJSC’s last year’s IPO prospectus only had five pages in the section on financial holdings. Notably, it had no management discussion of the results and only had the basic information.
Investors navigating the UAE”s market landscape must grapple with these complexities, recognising both the opportunities and the nuances that define the region”s economic realm. With dozens of private firms having been transferred by Abu Dhabi to IHC, the company’s cash and cash equivalent hit a whopping $20 billion in 2023 from $80 million in 2018.
The head of one of the world”s largest sovereign wealth funds, Sheikh Tahnoon bin Zayed Al Nahyan, is no doubt a central figure driving the UAE”s economic transformation, embodying ambition and influence in the rapidly evolving UAE.
(With Inputs From Bloomberg)
