Name: Fortune Global Forum 2023: Sovereign Wealth And Sustainable Growth
Uploaded: 2023-11-29
Duration: 18 min 18 s
Description: Khaled Al Shamlan Al Marri,, Deputy Chief Executive Officer, Disruptive Investments, Mubadala Dr. Ridha D. M. Wirakusumah, Chief Executive Officer, Indonesia Investment Authority In conversation with: Peter Vanham, FORTUNE

Khaled Al Shamlan Al Marri,, Deputy Chief Executive Officer, Disruptive Investments, Mubadala Dr. Ridha D. M. Wirakusumah, Chief Executive Officer, Indonesia Investment Authority In conversation with: Peter Vanham, FORTUNE

Fortune Global Forum 2023: Sovereign Wealth And Sustainable Growth 

Conferences

Khaled Al Shamlan Al Marri,, Deputy Chief Executive Officer, Disruptive Investments, Mubadala Dr. Ridha D. M. Wirakusumah, Chief Executive Officer, Indonesia Investment Authority Peter Vanham, FORTUNE

Little Bola's commitment to deploying capital purposely echoes the vision of the uae's founding father through investments that are durable global and above all responsible our strategy to invest in industries, shaping the future, supports our vision of a brighter tomorrow. Ladies and gentlemen, please welcome Fortune, executive editor Peter Vanner. Welcome back, everyone. I hope you enjoyed that break. Well, it's time to talk about something very important right now in the world, sovereign wealth funds have about $11 trillion of assets under management. The Middle East Asia and North Africa have actually the largest set of sovereign wealth funds and several of them are right here, including of course, the Abu Dhabi Investment Authority and Mubadala. The funds are important sources of capital of innovation and they help to spur growth. That's obvious to anyone who knows them. But in a world grappling with things like high inflation, geopolitical tensions, digital transformation and climate risks all things we've talked about today. Sovereign wealth funds are navigating an increasingly complex landscape so they must adapt to these challenges. See the diversification, sorry and sustainable investments to safeguard and enhance their wealth in an ever changing world. So let's talk about how they do that. Joining us are Khalid Al Shamlan, Al Marri, the Deputy Chief Executive Officer of Disruptive Investments at Mubadala and Dr Rita Wida Kusama, the Chief Executive Officer of the Indonesia Investment Authority. Welcome to you. Thank you. Well, welcome to both of you and I should also say the same. Thank you for having us here. Of course, we're talking about very important things. Uh But before we get to those very important things, I want to ask you um what are disruptive investments because you are responsible for disruptive investments? Yeah, the name is very scary but it's not as scary as it sounds. Uh Well, good afternoon to everyone. It's a great pleasure to be here. Thank you for the invitation. Um My name is Khalid and I, I'm here from Mobile and Investment company. Uh Disruptive Investments. To your question is one of four platforms within Mubadala that is mandated to oversee uh three businesses. One is growth. Uh We invest in tech growth uh globally. Number two, we oversee a credit, business, private debt, middle market lending and three, we oversee dedicated country investment programs. So the name disruptive really came from the fact that when we started, we were more on the tech early stage growth uh focusing on disruptive technologies. Uh but it doesn't seem that the name uh is, is what we do today and we are seriously considering looking at the name again. That's excellent. And of course, to be clear, that is perhaps also to show that you're different from traditional sovereign wealth funds who are like portfolio investors who spread their money into the market. I take perhaps one or 2% in large public listed companies, whereas you might take a much larger share indeed of scale ups or other companies. I said, I think the um if you look at uh sovereign World funds today, um they have evolved in the past 10 to 15 years uh in terms of the role that they play and in terms of their investment strategies, if you look 1015 years ago, several world funds uh were more focused on indirect investing, more of the endowment model investing in funds. Uh But today, you'll find that they are becoming a lot more active in direct investing, they're a lot more active in taking control. Um And you will also find that uh a lot of those sore we funds today uh are forging much more effective, much stronger partnership with private GPS. So and indeed with each other, you mentioned because you worked together on some investments with your colleague in Indonesia. Yes, and we continue to do so and Mr Ra, I'm sure he's going to touch on some of the exciting investments. I don't want to steal the th but you know, we've done some great stuff together, but it's interesting evolution, isn't it? And it really is also interesting in the perspective in the, in the, in the context that we're meeting today, which is a world of course, in constant change and where there is a need of someone driving the global economy in a certain direction. One of the obvious directions that the world economy needs to turn in uh is towards being more sustainable, to being more aware of, of the climate changing and doing something about that. Let me ask both of you and, and let me start with you, Dr Rita, what does that reflect? How does that reflect in your investment strategy? Does that mean that you now only invest in, let's say green technologies or does it still mean that you do that as a part? But you hedge your, your bet or your risk? Well, thank you and thank you for, for inviting me here. Um We are relatively a new sovereign wealth fund. We just started um almost three years ago. Uh We focus on four main areas, infrastructure which includes transport and logistic infrastructure. Um Digital um includes digital infrastructures and digital commerce, um healthcare. And lastly the um the green or renewable energy um we extremely paying attention to the purpose of what we are investing and we want to make a difference in every single thing that we do. Um In fact, in all those four areas that we mentioned, um our fund has grown maybe over 80% in the last uh since we started. But um it is rather peculiar that the best performing areas of investment is actually in the green energy. The best performing investments are in green energy. In fact, that's the one that we are coveting, which they don't want to steal the under we are investing in uh in, in, in geothermal. Um We alongside with one of the um Mazda portfolio companies we invested in in one of the largest um geothermal company. And as you know, Indonesia has a lot of um geothermal energy because it sits on the, you know, ring of fire. Um The performance has been up, you know, 70% since we brought the company public in, in February. I mean, that's very encouraging, of course, because, you know, sovereign wealth funds, you have a large uh assets amount of assets under management individually, but together we've heard $11 trillion of assets under management, you can really move the needle. Uh So let me get uh get back to you Khaled when you do that. Um Does that mean that you are in that sense different than, for example, the revenue side of the UAE the, the the oil companies? Uh for example, in that you do go all in on green technologies. I don't think that we're different. I think um climate change is, is a global uh challenge. Um It's a global mission. Um and us being part of the global community, uh We do feel the responsibility to contribute and play a part in addressing that challenge. Um And I think every uh organization in its own capacity has its own strategy in terms of addressing the climate change challenge. And in Mubadala, this is very central uh to our investment strategy. As a matter of fact, uh every investment that we look at it has to pass through an ESG slash climate change criteria. Um Does that include then that there is a timeline for you to no longer invest, for example in fossil fuels? Well, there is a timeline for us to get to net 0 2050 in line with yes, in line with the U A government. And there are a lot of measures that we have started taking and we continue to find new measures to take to, to reach to our goal. And as a matter of fact, we have a fully dedicated function within the organization that's overseeing and spearheading these initiatives to make sure that we track well vis a vis our objectives, right? But so there is no specific timeline to exit fossil fuel investments. That's not part of that net zero. There is a specific timeline to ensure that we reach net zero and that's that 2050. Exactly. That's 2050 with the government. OK. That's very clear. You mentioned the ESG framework as central to your agenda when you make investments. I want to ask the same question to you, Dr Rita. Tell us how you use frameworks like ESG or the responsible investment framework in your investments in the US we've seen there's increasingly a backlash against the concepts of ESG uh it seems to me like for both of you, that's absolutely not the case, this is central to your investment. These could you elaborate on that? Look, um Indonesia is a developing nation. Um If you talk about uh changing from fossil fuels to renewables, many of Indonesian are not even having enough electrification, for example. So a lot of things you have to, to put things in perspective. Um we talk about building infrastructure still, whereas if you go into UAE everything is extremely smooth in terms of the roads and, and the ports and stuff like that. So when it comes to um on the very topical investment, um topics of, of renewables, you either talk about um reducing carbon footprint or creating uh carbon credit. Now, uh we have done um quite a number of things on that area. That's one of our four pillars. Um And in every single one of our investments ESD has become not only part of our filters, but also part of differentiation, but those differentiating versus other investors who are. So we have what we call ourselves, not only just an ESD team, but we also put a filter in terms of ESD to deal. Um We will not get into the company where we cannot make a difference in the areas of ESD, for example, um differentiating towards the company, you were able to make a difference to you, but you need to temper the expectation because, you know, at least in our market, um many companies don't even think along the lines of, of the Yes, yes. Um So we have a lot of work still needs to be done on the on the reducing carbon footprint. We have done the um the geothermal, for example, we also have done the platform on the energy transition because you cannot just jump into renewable energy without solving right, the you know, the coal fired power plant which we have now are going to transition um a few coal power plant. And so of course, you have that responsibility not just for the world, but specifically for your own country has its own needs as you outlined earlier. And that explains that you have that transition plan including other technologies, you mentioned geothermal as the one that is most relevant to you in your investments, which is the the renewal that you are most interested in or invested in. It is actually part of mustard, which is one of our portfolio companies. Uh It is one of their core themes that they're focusing on out of many other themes I want to move. And if there's any questions from the audience, please raise your hand, we might have time for one question. But if not, I want to move in this last part of the conversation towards the other two trends that are shaping the global economy, you know, globalization versus de globalization and technology. We heard a lot about A I and we're going to continue to hear about that. How do those two filters play into your investments? Do you seek out specifically to make investments in A I? And if so do you, do you do that in a certain part of the world or do you remain committed to a truly global economy? It's a very good question. And I think, you know, A I is, is a hot topic and everybody talks about A I these days. Um And, and we have to be also mindful of all the issues and the challenges from a legal, ethical business perspective that come with A I. Um But also we have to recognize that we are still at the beginning of the A I kind of uh journey if you look at, for example, Chad GP T just went out in less than 12 months. So, really kind of innings, right? That's very early. So, uh and, and we have not a single major company, you know, or corporation has seen real use of A I yet or impact. So it's still in the early stage. So we're being um very delicate and very careful with how we uh approach investing in A I. We look at A I in two ways, one is as an investment destination. Um And we have a dedicated tech program that adopt A I as one of the themes. However, we're more focused on the application side of A I rather than the core large language models. So we look applications exactly. We look at, you know A I enabled businesses. For example, we invest in uh drug discovery companies that use A I to improve the timeline for drug discovery. We invested in an A I company that actually work with call center operators to make them do what they do better is that you, you, because of course, you, you, you, you stress the importance of safety and having safeguards, making sure that you are careful when you make these investments. Um Do you have similar considerations when it comes to geopolitics that, that you, you want to play it safe, for example, by investing in industrial applications rather than the more uh uh the elements that are more contested? I think, listen, we're, we're, we're an investor, right? We're uh we operate in the business and the investment uh world. So we always try to look at things from uh from an investment perspective while also being mindful uh of all other kind of, you know, issues and challenges around it and trying to navigate uh some of these issues uh in a way that is, you know, very careful and very deliberate. Um Let me ask you the same question uh Rita. But in another way because you know, you've mentioned that your four criteria A lot of them are based on infrastructure, right? Helping the economic development needs of your country and, and, and the place you invest in, where does A I track for you, where you stand in your journey? I would say that we're not there yet. Uh we our needs and our investments are more basic. Uh but from the investors perspective, we have been partnering with the likes of the Mubadala and the AD and G I CS, many pension funds in Europe and Canada and stuff like that. Investments as investments. Um we are applying technology in all of our portfolio investments. Uh A lot of our investments are more basic but much more rewarding um in a number of areas because it is much more rewarding to, to invest in the developing nations at times as you can actually box in the risk and still getting the returns that are actually above um the market, right? And we should not forget that, of course, uh you operate in a part of the world that that still has a lot of those basic infrastructure needs. Um And that do, does that also mean that in that sense, there's not really an opportunity to leapfrog there is to a i huge opportunities. Now think about it this way, right, Indonesia, supposedly, if we, if we, if we are tracking right, uh will become the fifth largest economy by 2040 right? We have 280 million people. Um between 15 to 64 years, age um accounts for about 70% of our populations. Um 30 years and younger is actually about 50% and we are still growing very fast. The younger generations are so much more tech savvy. Um And we are, we are using a lot of applications and we are actually one of the fastest growing in terms of internet and data and stuff like that. Um Our data centers are now we invested in one and we are equipping them. It seems to me like you're doing both. Um And I want to thank both of you because we've come to the end of our conversation uh for letting us into your world, how you make investments and how you move the needle in the global economy. So uh Dr Rita uh and Khaled, thank you so much for this discussion. Thank you. Thank you.