The Abu Dhabi Investment Authority (ADIA), one of the world’s largest sovereign wealth funds, is expanding its hedge fund investment strategy with the acquisition of a minority stake in Canadian investment platform Innocap Investment Management Inc. The sovereign wealth fund, valued at $1 trillion, will gradually increase its holdings in Innocap to 10% over the coming years, according to a statement released.
As part of the agreement, Mohammed Sghayer Khalaf Al Qubaisi, Deputy Director of ADIA’s Alternative Investments Department, is set to join the board of Innocap once the stake reaches the 10% threshold. Financial terms of the transaction were not disclosed.
In recent years, ADIA has broadened its approach to hedge fund investments, working with a wider array of managers and setting more ambitious return targets. The sovereign wealth fund’s hedge fund division is now actively engaging with managers utilizing diverse strategies, including equity-related long-only, long-short, quantitative, and market-neutral approaches, as reported by Bloomberg News.
Innocap operates a managed accounts platform that allows investors to allocate capital to multiple hedge funds while maintaining full transparency and control over their investments. This platform is designed to offer lower fees compared to traditional fund structures.
As part of its growing involvement with hedge funds and equities, ADIA has chosen Innocap to handle certain segments of its hedge fund and equity investments, the statement revealed. The platform has seen substantial growth, with about $83 billion allocated across 340 funds, as outlined on Innocap’s website. The platform has become a popular tool among large investors and multistrategy hedge funds, providing a streamlined channel for capital deployment.
“Innocap’s shareholders recognize a clear shift in the industry towards dedicated managed accounts, which is notably driven by institutional allocators’ commitment to their fiduciary duty,” the company stated in its announcement.
Managed accounts, which gained popularity after the 2008 financial crisis, offer clients increased transparency and flexibility, allowing them to avoid the challenges of hard-to-sell assets. Today, they are evolving into a favored method for deploying capital in both established hedge funds and new startups. For example, a significant portion of Millennium Management’s $72 billion in capital is managed externally through managed accounts.
Innocap, which counts among its shareholders senior management, Caisse de Depot et Placement du Quebec, Bank of New York Mellon Corp., Walter Global Asset Management, and BNP Paribas SA, also announced plans to open an office in Abu Dhabi later this year.
Established in 1976 to invest the UAE’s surplus oil revenues and diversify its economy, ADIA has long been one of the largest investors in global hedge funds, having also backed Bobby Jain’s $5.3 billion hedge fund startup.
This move marks another significant step in ADIA’s strategy to strengthen its foothold in the global hedge fund market and enhance its alternative investment portfolio.
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