What is the Abu Dhabi Investment Council?
Abu Dhabi Investment Council (ADIC) is a sovereign wealth fund owned by the government of Abu Dhabi, the capital city of the United Arab Emirates (UAE). ADIC is wholly owned and administered by the UAE and is funded by revenues generated by the country’s oil industry. ADIC invests these revenues in a variety of asset classes, including stocks, bonds, real estate, infrastructure and private equity.
The Abu Dhabi Investment Authority (ADIA), one of the world's largest sovereign wealth funds, spun of ADIC in 2007.
What Are Sovereign Wealth Funds (SWFs)?
Understanding the Abu Dhabi Investment Council (ADIC)
The Abu Dhabi Investment Council sought to invest the government’s surplus oil revenues in a globally diverse portfolio of actively managed strategies to generate positive risk-adjusted investment returns. Although the fund invests in assets around the world, the portfolio’s capital growth is used to expand Abu Dhabi’s economy and help local companies broaden their international exposure.
Money from a country's excess reserves, set aside for investment to benefit its economy and domestic population, typically composes a sovereign wealth fund (SWF). The funding for an SWF often comes from central bank reserves that accumulate due to budget and trade surpluses or revenue derived from the export of natural resource. Some countries launch SWFs to diversify their revenue streams. For instance, the UAE relies on oil exports for its wealth. Therefore, it devotes a portion of its reserves to wealth funds that invest in diversified assets to help protect the country from oil-related price and supply risks.
As of March 2018, ADIC accumulated $123 billion in total assets. First Abu Dhabi Bank, a longtime holding and the UAE's largest bank, remains as one of its most prominent domestic investments. Other holdings include Abu Dhabi Commercial Bank, Union National Bank and Al Hilal Bank, the latter of which ADIC founded. The wealth fund also maintains sizable investments in local insurance, investment and aviation companies.
Recent Merger of Abu Dhabi Investment Council
In March 2018, the UAE’s President issued a law merging ADIC into Mubadala Investment Company, another UAE sovereign wealth fund, in an effort to reduce costs, streamline operations and further diversify the UAE’s economy after an extended period of low oil prices. The merger of the two entities resulted in a combined investment portfolio of approximately $250 billion.
Mubadala Investment Company was founded in 2002 as part of Abu Dhabi’s endeavor to broaden its economy and create jobs by investing oil industry proceeds into profitable companies. Some of Mubadala better-known investments include positions in Advanced Micro Devices and EMI Music Publishing.