Abu Dhabi

is folding its US$263 billion

wealth fund ADQ

into a

sovereign entity

overseen by Crown Prince Sheikh Khaled bin Mohammed bin Zayed Al Nahyan, a significant overhaul that potentially thrusts the royal into the heart of the emirate’s dealmaking ambitions.

ADQ’s deal with

L’imad Holding Co.

, will create yet another investing behemoth in the emirate that’s already home to entities that control close to US$2 trillion in assets. The changes reflect Abu Dhabi’s vision to grow sovereign investment funds locally and globally, according to a statement.

“The creation of a new platform worth potentially US$500 billion, trumping ADQ, clearly elevates Khaled in terms of his strategic autonomy and strategic depth in Abu Dhabi,” said Andreas Krieg, a lecturer in Middle Eastern security issues at King’s College in London.

The development will be watched closely across the global financial community. Abu Dhabi’s state-backed firms have been among the world’s most active investors, doing deals across sectors ranging from finance to artificial intelligence. They are significant players in private markets, and have deployed sizable sums to hedge funds.

“If you look at the assets within ADQ, it is the backbone of the Abu Dhabi economy, and so this new sovereign wealth fund will be hugely influential and impactful,” said Diego Lopez, founder and managing director at Global SWF, which tracks wealth funds.

Chaired by Sheikh Khaled, L’imad will have operational, industrial and technological capabilities, in addition to investment platforms across private and public markets. That remit could make the royal a key figure in dealmaking, adding to his already powerful political role within the OPEC exporter.

Meanwhile, Jassem Al Zaabi, a prominent local executive and L’imad’s managing director and chief executive officer, will likely become an even more important part of Abu Dhabi’s dealmaking apparatus.

Division of Power

Sheikh Khaled, the eldest son of

United Arab Emirates

President and Abu Dhabi Ruler Sheikh Mohammed bin Zayed, was appointed crown prince in 2023. At the time, the ruler also promoted his siblings, expanding their responsibilities and portfolios — Sheikh Tahnoon bin Zayed, the

UAE’s

national security adviser, was named deputy ruler of the emirate and handed charge of the US$1 trillion Abu Dhabi Investment Authority.

That careful division of power — in a region where leadership can transition through brothers, cousins and sons — led to Sheikh Tahnoon playing an outsize role in the business of Abu Dhabi, while the crown prince focused on the political and social aspects of running the country. Friday’s move puts him at the heart of managing some of the emirate’s most important companies and elevates his role as a dealmaker.

The current ruler, Sheikh Mohammed, also played a key role at Mubadala Investment Co. before he took the top job.

The Al Nahyan ruling family is among the world’s richest, with a net worth of about US$300 billion, according to an analysis of their complex holdings by the Bloomberg Billionaires Index.

L’imad has already made waves on the global scene after it joined established Gulf wealth funds to back Paramount Skydance Corp.’s hostile bid for Warner Bros. Discovery Inc. It has since unveiled a board staffed with well-known names, including Mubadala chief executive Khaldoon Khalifa Al Mubarak.

Before Friday’s shakeup, Sheikh Tahnoon had been chairman of ADQ. Since its inception in 2018, the fund has emerged as one of the world’s fastest-growing sovereign investors.

It’s unclear what role he’ll have in the enlarged entity and he wasn’t mentioned in the statement. The developments come shortly after ADQ’s founding chief executive Mohammed Hassan Alsuwaidi stepped down to take up a new role at Lunate, the region’s largest alternatives manager.

ADQ’s portfolio spans everything from a stake in auction house Sotheby’s to Abu Dhabi’s flagship airline. It primarily focuses on helping develop the local economy, and more than a third of its roughly 280 deals over the past five years involved UAE-based companies.

The move to fold it under L’imad is likely to improve decision-making and agility, especially in areas of ADQ’s comparative advantage such as critical infrastructure and global supply chains, said Robert Mason, an associate professor at the Anwar Gargash Diplomatic Academy.

It fits as well into a broader theme of consolidation within Abu Dhabi, where the government has been merging entities to gain scale and become more competitive in the investment landscape.

International Holding Co. PJSC, the emirate’s largest listed company that’s also chaired by Sheikh Tahnoon, merged Multiply Group PJSC, 2PointZero, and Ghitha Holding PJSC in October to create a sprawling investment behemoth with US$33 billion in assets.

For its part, L’imad has said it is focused on building national champions across sectors including energy, real estate development and infrastructure, and the financial and banking sectors.

Abu Dhabi recently folded the owner of McLaren Automotive and its stake in Chinese electric vehicle maker Nio Inc. into L’imad. That move was aimed at building up the fund and simplifying the management of some of the city’s investments, people familiar with the matter said at the time.

L’imad first appeared on the Abu Dhabi scene late last year, after agreeing to buy a controlling stake in Modon Holding PSC — an Emirati property developer with a market value of about US$15 billion, from ADQ and IHC.

The deal with ADQ and centralization of power under Sheikh Khaled comes at a critical moment, according to Krieg at King’s College in London.

“It makes more sense to pool these resources and assets to make decisions and execute them swiftly at a time Abu Dhabi really needs to ramp up its geo-economic game as they’re under pressure from Saudi Arabia.”

Bloomberg.com

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