Our strategy is derived from the mandate given to ICD in its governing law:
- Consolidate and manage the existing portfolio of companies and investments of the Government of Dubai;
- Provide strategic oversight of the portfolio in order to enhance portfolio returns; and
- Efficiently deploy and recycle surplus capital by making new investments. These can be both local and international, which may strategically be important yet complementary to the existing investments of Dubai or purely for diversification.
The first limb of this strategy includes the consolidation of the Government of Dubai’s commercial assets. Significant progress was made on this aspect in the early part of ICD’s life, and the portfolio has remained relatively stable and our focus has, for some time now, been firmly directed towards portfolio management and new capital deployment.
As an institution with a mission to create wealth and long-term value, whilst also focusing on sustainability, we have several guiding principles designed to support and shape our investment selection processes.
- Emphasis should be placed on capital preservation and clearly demonstrated either commercially or structurally;
- All opportunities should be assessed on an entirely commercial basis, i.e. maximizing risk adjusted return;
- All investments should demonstrably provide either strategic or diversification benefits.
To complement these primary principles, we also acknowledge an overarching intent to secure equity-type returns, given the nature of our portfolio.
As reflected in our core values, we are committed to follow ethical practices in everything we do.
Our approach to asset allocation and investment selection is underpinned by the following features:
- Strong visibility of short and long-term cash flow and funding requirements to support robust capital budgeting;
- Real-time review and recalibration of market dynamics and trends to form forward looking views on asset class performance and shape our approach on possible allocation. This promotes the identification of:
– long-term structural trends around which we can develop investable hypotheses (thematic)
– potential market mispricing, market dislocations or special situations (opportunistic)
- Identification of sectors or opportunities that allow ICD to leverage its credentials, capabilities and know-how to provide clear points of differentiation from other competing capital providers;
- Consideration of existing commitments, particularly strategic investments, for which there may be clear and long-term commitment;
- Maintain sufficient liquidity to dynamically allocate and respond to market conditions.
Taking these features into consideration, asset allocation is determined, with the primary objective of defining the balance between strategic investments and diversification investments.
Tactical considerations and recommendations are then made, particularly in the case of the diversification investments. Such considerations draw heavily upon the market facing, forward-looking analysis referred to above.
Ultimately this culminates in an allocation between strategic, thematic and opportunistic opportunities. Within the latter two, we then allocate to specific industry verticals for the relevant investment team members to act upon and deliver.
As part of our investment approach we place significant emphasis on assessing corporate governance and we target companies with best-in-class structures and processes. Alongside this, during our period of ownership, we aim to continuously develop such structures to enhance effective decision making and value.