Abu Dhabi and Israel see collaboration in AgTech, FoodTech, Pharma and Space
06 Dec 2020
It’s doubtful the Israeli public has ever been treated to a media blitz by a foreign country like the one staged by the United Arab Emirates. Billboards on the main highways and news stories are only part of the phenomenon.
Dr. Tariq Bin Hendi, director general at Abu Dhabi Investment Office, is one of those behind the campaign. “We at the ADIO have a mandate to promote and showcase what we have to offer. I am glad they had an effect. You saw them and it’s working,” says Bin Hendi with a thumbs up gesture.
The ADIO is the government hub in Abu Dhabi, the biggest of the UAE’s seven emirates, responsible for attracting and facilitating foreign and domestic investment. In an interview with TheMarker, excerpted below, Bin Hendi talks about what Abu Dhabi is looking for from Israel and what opportunities it can offer Israeli investors and businesses as the two sides begin the first foray into bilateral business.
Bin Hendi has high hopes for the relationship. “I predict that you’re going to have some serious investment both ways in financial and nonfinancial opportunities. From a trade perspective, I see over the next five years, this is a multi-billion-dollar relationship, no doubt.”
Israelis are interested in Emiratis investing in Israel. Do Emiratis want to attract Israeli investment? Is it a competition?
“It’s not, but I think there is a third category that we have found that is becoming more and more common as part of the discussion and that is capital from the UAE investing into Israeli companies that are setting up in the UAE. That part in terms of the exchange of not just the financial capital but the human capital side of things is really driving a lot of the conversation. Some people believe that the only thing you get out of the UAE is capital because that is what they’ve heard or maybe that’s what they’ve seen. But when they come and they actually have discussions with us, they see that there is massive potential on the ground here in the UAE as well as accessing the region.”
The Israeli business community is trying to understand what areas Emiratis are looking for investment beyond food tech and agrotech.
“We’ll break it up into two buckets. The first bucket is financial return-driven investment. So you’ll be looking at how you can invest directly into any sector in Israel but also you can invest across sectors in Israel. We’ve been talking to a lot of Israeli funds, whether they be venture funds, private equity funds or traditional equity-bond funds to get diverse exposure across Israel."
“I’m looking across sectors and targeting things. Let’s address the things you mentioned around food and around agriculture. Today for me, if I’m looking at agriculture there are multiple issues I’m trying to tackle. One is how do I grow crops in the most water-efficient manner possible. So today, I’m looking at water efficiency, I’m looking at increasing yield, I’m looking at the management of the distribution of that crop from the farm to the consumer. Beyond that, I’m looking at food waste – how much of that food is being used and eaten versus being thrown away. We have both among the highest rates of food importation in the world but one of the highest rates of food waste because of transportation. If you’re importing blueberries, raspberries and strawberries from Europe and the U.S. across climates, you’re going to have a much shorter shelf life than if you’re growing it here and using technology to distribute it. Across that value chain, we’re looking at players to come and tweak each one."
“If I look at health care and at biotechnology, I am looking at what kind of stem cell research can I do for some of the unique genetic diseases that we have here in the GCC (Gulf Cooperation Council.) We are providing companies to come here and conduct human trials, access data, to plug into the hospitals that are already here, to develop new methods of surgical procedures."
“While the sectors are quite broad, we are looking at every single sub-segment across the core sectors and those are around agriculture, logistics, health care technology, pharmaceuticals – we believe there is a massive opportunity here in pharmaceuticals – advanced materials, downstream chemicals, and oil and gas. We have a list of all of these sectors where we offer incentives. Any Israeli companies that are involved in those segments are important."
“I’ll give you an example: Today I had a call with a very prominent individual in Israel with an Israeli satellite company. We have a space program here in the UAE and we’re looking at partners – how can I both utilize the technology that has been created, how can I help them come here and disseminate some of the knowledge they have created to our university students, who come from all over the world."
“The financial part is quite clear: Investors from the UAE are looking for how they can capitalize on what Israel offers across sectors, but for us and some of the most strategic investors, we’re looking for that mutual exchange."
“We’ve been very impressed by some Israeli investors that are coming to the UAE and looking, for example, at our real estate sector. They say, ‘Wow, you can get 7,8, 9% returns on Class A real estate in the UAE whereas in places like Tel Aviv or Jerusalem if you get 2, 2.5,3% you’re doing quite well. So they’re looking at this as a diversification play, and that applies across multiple sectors. So we are seeing a very healthy exchange of capital in these discussions.”
What is the difference between an Israeli investor and investors from other parts of the world?
“For a lot of Israeli investors or companies that are interested in investing in the UAE, they can’t get information fast enough. Whereas with other jurisdictions such as Europe and the U.S., they’ve had a long time to understand the country and what’s there. What we have found is that there is this push to get as much information and to get as many meetings as possible in as short a timeframe as can be. That is the No. 1 area where I see some difference, but I think that is a positive. People are so excited and we’re trying to understand each other."
“Most of my conversations with my Israeli investors and companies have revolved around looking at this from a more holistic perspective. They don’t ever approach it as ‘I just want your capital.’ It’s, ‘Okay, we can raise money from you, but by the way here are some of the other things that we offer. We have a fund, we’re invested in 40 companies. We’d love to raise capital at the fund level, but we’d also like all of our 40 companies to be engaged with you to be able to grow and access new revenue streams in the UAE. It’s been very blunt, very honest. That’s one thing I really respect the Israeli community for. They come in and they tell you immediately within the first 30 minutes of the meeting this is what our ambition is and this is what we want to accomplish.”
Appetite for risk
Do Emirati investors have a bigger appetite for risk than other investors?
“If you’re looking at some of our sovereign wealth funds or government-related entities, it’s always a multifaceted investment approach. We like to invest where we know we’re building long-term relationships. But if you look at the general investment community here, you have investors who are quite keen on taking risk. If you consider that over the last 20 years we were building from nothing, out of the desert — (that) has been a risk and many people have taken that risk."
“I think when you look at our investor base, and from the conversations we’re having, a lot of them are saying we’re very keen on investing and we’re willing to take a risk on Israeli technology companies. That’s the message that has come out of Israel — we’re Startup Nation.”
What about the mix of private and government capital? Earlier this month, our former finance minister, Moshe Kahlon, teamed up with an American businessman and member of the Abu Dhabi royal family. This is something that we in Israel are not used to.
“I don’t know much about that transaction. What I can say is that the way our community is structured: We have a lot of faith in our leadership, so when we see our leadership deploying capital, many of the investors base will look at this an as opportunity and say, ‘Okay, if the government is willing to take a chance on it, we should also be deploying capital and doing something similar.”
What is the difference between investing in the UAE and investing in other places?
“One of the key things is that we’re constantly engaging with the private sector to see how we can adapt to it. One of the recent things that we did was that we took the Abu Dhabi Global Market common law practice, which is U.K. common law practice, and applied it across Abu Dhabi. Today if you want to come and set up in Abu Dhabi, your judicial governance will be British common law. You can also follow UAE law. You have different jurisdictions that do different things. So it’s actually quite an accommodating infrastructure.”
One of the advantages Israelis see in the agreement with the UAE is that it can serve as a gateway to the Arab world. What main advantage does the UAE see from the agreement?
“The UAE has always positioned itself as a gateway, as an interconnector of people. We’re a very small country but we have very solid international relationships and we try to bring that connectivity."
“Today we’ve set a precedent – there’s a benchmark and baseline for how our relationship can be built. What we now want to do is host all of our Israeli counterparts, we want to show them what this country is made of and we want to help them access the wider region. Today, nothing happens in isolation. We have common issues that all of us face and one of them is youth and youth unemployment. This is something that affects all of us, including Israel."
“We view our relationship with Israel, as well as most of our relationships today, as one of exchanging knowledge, creating new opportunities for people and, more importantly, being able to de-risk people’s experiences when they come and set up here. Four months ago we could not have imagined having such a conversation, you and I.”
Israel is having quiet talks with Saudi Arabia about normalization. How is it that the UAE was the first to do it?
“Our leadership is very proactive. We’re always looking for solutions to common issues that affect the region and we always try to take the lead in many of these conversations because we’re focused on building the strongest relationships that we can with all our neighbors and on a global level."
“While I can’t speak specifically about what may or may not be happening between Israel and the kingdom (Saudi Arabia), one thing I can say is that we’ve set a baseline, a benchmark for how you can have a narrative with a new partner and have it actually be positive. My view is that when you look at COVID-19 and what happened this year and the pressures that so many people are under, people were looking for something to give them optimism, to give them hope – something new, something different."
“When the Abraham Accords were announced, you could almost hear a collective sigh of relief that, wow, this is something for us to explore. It’s like somebody saying, ‘Hey, Tariq, you want to climb Kilmanjaro?’ I’m like, ‘That sounds exciting and interesting.’ That’s the same reaction from me for someone saying, ‘Hey, you want to go to Tel Aviv or Jerusalem?’ It’s like, ‘Yeah, that’s fantastic.’”
Only a small part of your population has citizenship?
“One thing that has been quite interesting about the UAE and our development over the last 50 years as a country is that we’ve been able to create quite a symbiotic business community – there is no one culture that dominates. But you have within each community, for instance, the Indian community will trade among themselves in a similar manner to how they would trade among themselves in India. But when they trade with non-Indian companies in the UAE, it’s a slightly different approach.
“We want to continue to grow our population by bringing in the best people from around the world whether they’re starting a business or working in one of our institutions. What we’ve done here is a very good job of making people feel welcome. Now what we’re trying to do is to create a proper integration and you can see this through long-term residencies, potential paths to citizenship. We’re now rewarding the folks who have been here for a long time.”
How does the fact that the UAE isn’t a democracy affect those coming to do business with you?
“You have people here from every walk of life. You have people ...who came here with nothing but a suitcase and built multi-billion-dollar companies. I think for us, one thing we have that works quite well is that we have a very flat leadership structure. Today, if we need to effect any kind of policy or regulatory change, the private sector informs us, we take that directly to the leaders who are responsible for changing that and make the change.
“You may have seen this in the past few weeks in the announcements around alcohol consumption, cohabitation and so forth and also the laws around 100% foreign ownership. Today you can open a business without a local partner and that is a massive change for the region and for how we have operated for the last 48 years. This is a testament to the fact that while we may not have the same political structure that exists in Israel,we have a very engaged political system and a system that allows for change.”