The newest overhaul of Abu Dhabi Investment Authority began during the height of the pandemic, when stranded executives spent weeks writing ideas on white boards in the wealth fund’s skyscraper headquarters.
The enforced pause in normal business helped to turbocharge ADIA’s ongoing review of its business, leading to some of the most sweeping changes ever seen at the 46-year-old, $829 billion sovereign wealth fund. Not only did ADIA overhaul its internal structure and processes, it redefined how it would take future investment decisions.
Due to its sheer size, ADIA’s choices can have an impact around the world. It is one of the biggest investors in US real estate, and its recent deals include stakes in German railcars, North American energy and Indonesia’s biggest internet firm. It’s eyeing even more opportunities in private markets.
“Competition for returns has intensified, but the entire business of investing is being transformed by technology and that is an ongoing processes that is influencing all parts of the industry. And this will continue to change and at an increasingly fast pace,” according to an emailed response from a spokesman for the fund.
“That’s why we identified the need to become more dynamic and agile, as a way to build flexibility into our organisation so that we are ready to respond to these changes,” he said.
In the past two years, investment teams focusing on Japanese, Latin American, South African and emerging Europe stocks at the fund have been shut down, with their mandates outsourced to external managers or passed to internal passive funds. ADIA merged its internal and external equities department into one.
Even more striking was the launch last year of an in-house science lab, staffed with quants, physicists, artificial intelligence and computer experts recruited from hedge funds or academia. It was a statement of intent about pivoting to data-driven and analytical investing, something other leading sovereign funds such as GIC Pte and Temasek Holdings Pte have also been exploring.
And the changes keep coming. Last year, ADIA set up two new centralized functions and trimmed its middle and back offices. It recently also separated the real estate and infrastructure departments, which are both gaining in importance as the fund looks increasingly to private markets.
