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New Abu Dhabi asset manager Lunate has invested in 25 deals so far this year, buying stakes in companies from private equity firm CVC to India’s National Stock Exchange.
Managing partner Khalifa al-Suwaidi told the Financial Times that the firm, which officially launched in January, had already invested $5bn this year and hopes to deploy $8-10bn a year, making it an attractive potential client for money managers looking to raise funds.
The dealmaking comes as oil-rich Abu Dhabi seeks to attract foreign hedge funds and asset managers to set up in its financial centre, advertising itself as the “Capital of Capital”.
Lunate manages assets for Abu Dhabi sovereign investor ADQ and others, and is owned by its three managing partners and Chimera Investment. Chimera is part of the sprawling business empire of Sheikh Tahnoon bin Zayed al-Nahyan, the United Arab Emirates’ national security adviser and chair of ADQ.
Abu Dhabi has several sovereign investment funds, including ADIA, Mubadala and AI-focused MGX. But Suwaidi said the emirate was keen to support an independently managed “local champion”. Lunate has also been awarded a UAE licence to manage employee savings schemes, and has launched several passive funds.
Some in the industry, however, question the extent of Lunate’s independence.
The firm says it has $105bn of assets under management, including the investments it has made this year, and future commitments from ADQ totalling around $47bn.
This is in addition to the alternative investments portfolio it manages on behalf of ADQ, which was worth around $34bn in 2023 according to ADQ’s bond prospectus; and legacy investments of undisclosed value managed on behalf of Chimera.
It declined to comment on whether it was charging management fees on the assets that had been committed but not yet deployed, saying the details were “confidential, in line with industry practice”.
Lunate also owns Alterra, a $30bn climate fund with international firms BlackRock, TPG and Brookfield, to which ADQ has committed $6.5bn. Lunate includes Alterra in its assets under management.
The firm also declined to comment on whether its managing partners had contributed their own funds.
Until now, among Lunate’s few publicised deals were two acquisitions — stakes in a Dubai office tower and the Abu Dhabi national oil company’s listed pipelines business — and one joint venture, with New York-listed alternative asset manager Blue Owl Capital. The joint venture has invested in healthcare private equity firm Linden Capital Partners.
One Emirati finance executive said it was “quite complex to make sense of what is going on at Lunate,” and that “it feels like another pool of sovereign wealth money”. Another characterised Lunate’s relationship with Abu Dhabi’s sovereign funds as “right hand to left hand”.
Suwaidi insists Lunate is independent, pointing out that it manages money for more than 10 clients aside from ADQ and Chimera. He declined to name any of them, citing confidentiality, but said it had recently signed on a large family office in the Middle East.
“I think it’s very natural for Abu Dhabi to think about supporting a local champion that is the largest in the region as of now,” Suwaidi said.
Nonetheless, its ties to ADQ are strong. ADQ’s chief executive Mohamed Hassan Alsuwaidi is chair of Lunate, and ADQ’s former chief investment officer Murtaza Hussain is one of Lunate’s managing partners. ADQ’s bond prospectus states that its alternative investments team “were hired by Lunate”, although Suwaidi said that Lunate had not hired the entire employee group.
Meanwhile, Lunate’s nearly 200 employees have been busy. Suwaidi said the business had looked at 550 possible transactions, but ultimately chose just 25. He declined to give the size of any of Lunate’s investments, but said its “sweet spot” was to invest $100-300mn.
Although it says it is not sector specific, the deals Lunate disclosed to the FT skewed towards financial services.
The “whole strategy is really around co-investment and sometimes co-underwriting,” Suwaidi said.
Its main strategy — some 45 per cent of its assets — is to invest in funds. Lunate said it has made 12 fund investments this year.
Fund investing enables Lunate to build relationships with global asset managers and private equity firms, Suwaidi said. These then share opportunities with Lunate, “generat[ing] our direct and co-investment deal flow,” its second-largest strategy.
Lunate also has a special opportunities strategy “for IPO, pre-IPO, where access is an advantage,” and a long-term capital strategy to generate yield.
Suwaidi said Lunate had invested in several initial public offerings this year, but only disclosed two: Parkin, a state-controlled parking company listed in Dubai, and European private equity group CVC Capital.
Additional reporting by Eric Platt in New York