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In times like these, 'optimisation' appears to be the only reasonable economic policy, business approach or corporate strategy that will help the Middle East's oil and gas-dependent governments and companies navigate the financial doldrums in which the currently finds themselves mired. The leadership in Abu Dhabi seems to have done just that by recently deciding to pool the resources of two of its biggest investment corporations to create a single entity with such a huge and varied portfolio, so plump with ready-to-invest funds, that it can assist the emirate's economy in becoming investment-driven.
His Highness Sheikh Mohammed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi, Deputy Supreme Commander of the UAE Armed Forces and Chairman of the Abu Dhabi Executive Council, on June 29, ordered the merger of Mubadala Development Company and the International Petroleum Investment Company (IPIC), streamlining the country's investment strategy as it weathers a slump in oil prices that has dented the state's exchequer. The resolution will combine the two Abu Dhabi government-owned investment funds into a new body that will hold roughly $125bn in assets across businesses ranging from computer chips to renewable energy.
The decree from Sheikh Mohammed bin Zayed al-Nahyan emphasised the potential synergies realisable by the tie-up, in industries including, - most obviously - energy, where IPIC's activities are concentrated. Mubadala's mandate is more general - to invest at home and abroad across sectors the development of which is adjudged to advance Abu Dhabi's wider economic aims.
"The combined entity will realise synergies and growth in multiple sectors including the energy and utilities sector, technology, aerospace, industry, healthcare, real estate and financial investments," says the decree, details of which were made public by state news agency WAM. The decree continues: "It will also have the ability to contribute more significantly to the diversification of the economy, in line with the Abu Dhabi Plan and the country's long-term vision."
The move has been welcomed by all as wise and timely - one that would help the Abu Dhabi-led UAE build the foundation for a stable financial future and significantly reduce its reliance on fossil fuel revenues. "The merger has the potential to be very positive. Hopefully, the merged entity will be more efficient and have greater firepower...