From Gazelle to Abu Dhabi

Abu Dhabi got its name meaning “Father of the Gazelle” based on legends that some wandering gazelles led a tribe to fresh water. Our group of 32 journeyed into a complex city that was rapidly modernizing yet also hanging on tight to its traditional cultural allures. The city houses the beautiful Ethiad Towers (popularized by Fast 7’s extremely realistic scene where UAE’s very own Lykan HyperSport jumped between the towers), the Sheikh Zayed Grand Mosque showing the country’s deep Islamic root, and numerous thought leaders with their own approaches to entrench Abu Dhabi from its oil reliance.

For our first company visit, we interacted with the Strategic Office of the Abu Dhabi Crown Prince, a think tank providing independent advisory to the Crown Prince. Abu Dhabi is currently the world’s 6th largest oil producer yet Abu Dhabi but is also trying to develop it’s other strong industries such as petrochemicals and aluminum smelting. As this was the first presentation of the trip, we got a perfectly timed overview of the entire UAE including lesser known emirates such as Sharjah (which we visited in later days) and Fujariah (a strategically important location due to its location east of the strait between UAE and Iran). It was incredibly interesting to see the office’s acknowledgement of challenges the country has other than diversification, such as its lower participation rate and low efficiency rate.

As we moved on to Alsa Engineering, which focuses on pipeline construction, we saw its growth that is directly fueled by the oil prices as well as challenges such as sustaining true competitive advantages especially with increasing competition. The company spoke about competitive advantages such as all matters of the company (team, facilities, and project experience) being in-house yet  the differentiation in the pipeline industry is largely sensitive to pricing so whether or not this competitive advantage will have a large effect will be seen in the coming days. At Abu Dhabi Investment Authority (ADIA), we got an extremely unique look into a sovereign wealth fund that invests its excess oil profits into low term wealth creation. In the last 40 years, ADIA has earned 8% annual return, helping ensure the longevity of the fund. What was extremely insightful is to see their investment decision process which was deigned to be very team oriented and investments never based on one person’s opinion. For a country that is already relatively reliant on one export, this strategy was well designed to limit the risk to any one particular bad exposure.

At Strategy&, we got an overview of the entire Middle East and North Africa (MENA) region, realizing the diverse economic dynamics of the region. One striking figure was the oil price breakeven point – UAE needs oil prices per barrel to be around $76 to break even while Kuwait, for example 64, and Oman and Bahrain having significantly higher break even prices at $109 and $132.  Our final visit in Abu Dhabi was the Mubadala Development Company where we got an inside look into how the organization acts as a catalyst for Abu Dhabi’s vision of being more economically diversified; the company makes long term domestic investments in Aerospace, Tech, Energy, Healthcare, Real Estate, and Capital.

To balance our trip, here are some pictures of the ever so good looking CBS group in front of famous Abu Dhabi landmarks:

Group Ethiad-1
CBS in front of Ethiad Towers
Group Emirates Palace-1
CBS at Emirates Palace
Group Grand Mosque-1
CBS at Grand Mosque

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