Conflict between world’s top wheat exporters may raise Egypt’s costs by $955m

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DUBAI: Abu Dhabi Investment Authority, or ADIA, one of the world’s largest sovereign wealth funds, has cut dozens of jobs over the past year as part of a one billion dirham ($272.29 million) cost saving program, two sources told Reuters.

The cost savings will help Abu Dhabi’s sovereign wealth fund, which manages $700 billion in assets, divert money into new projects such as quantitative research and development.

ADIA, which manages capital on behalf of the oil rich Abu Dhabi government, has focused on trimming its bloated management team, cutting expensive, long-tenured staff who have worked there for decades, said the sources, declining to be identified as the matter is not public.

The fund had a cost-saving target of around one billion dirhams which has been communicated internally to management, said the sources.

A spokesperson for ADIA said the fund “continuously evaluates its operations to ensure its capabilities, structures and processes are aligned with long term objectives, and enable ADIA to evolve with the investment environment.”

The changes are aimed at making ADIA, which was set up in 1976 to invest the emirate’s petro-dollar surpluses, nimbler and efficient, sources say.

The fund has been focusing on how to integrate investment decisions with machine learning and artificial intelligence following in the footsteps of Singapore’s state funds GIC and Temasek.

In 2020, it merged its external and internal equities teams and closed its internal Japanese equities desk.

The changes led to the creation of an equities department, the core portfolio department, as well as the Central Investment Services department.

ADIA’s moves are aimed at empowering front-line managers, consolidating technology systems, and simplifying governance structures, one of the sources said.

“We expect the fund to slightly tilt towards private markets, and to start allocating capital into more innovative and perhaps aggressive strategies and products,” said Diego Lopez, managing director at Global SWF, a sovereign wealth fund consultancy.

He said Gulf sovereign wealth funds are flush with liquidity, after the good results of 2020 and 2021, and the increase in oil prices.

“We estimate that ADIA had a single-year return of 20.9 percent in 2020, and expect 2021 was very strong, too,” Lopez said.

“Such excess of capital and firepower is allowing – and pressuring – the fund to rethink their strategy and align with the new economy and new themes.”

ADIA had a workforce of 1,680, the fund said in last year’s annual review.

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