Today's Edition
MAYS IBRAHIM (ABU DHABI)
The Abu Dhabi Fund for Development (ADFD) is sharpening its use of equity investments as a targeted tool to mobilise private capital in emerging markets, while keeping concessional loans and grants at the core of its broader development finance model, according to Rashed Al Kaabi, the fund's deputy director general and director of the investment portfolio.
In a recent interview with Aletihad, Al Kaabi explained that ADFD selects between equity, concessional loans and grants not by sector or geography, but by the nature of the development challenge at hand.
Concessional loans remain reserved for sovereign-led infrastructure projects with predictable cash flows, while grants continue to support high-impact initiatives in fragile contexts where financial returns are not expected.
Equity, by contrast, is used where private-sector participation and long-term institutional strengthening are central to scaling impact.
That approach translated into six core equity transactions in 2025, worth roughly Dh562 million against a committed envelope of about Dh630 million – a modest but growing slice of ADFD's cumulative development operations, which now total approximately Dh249.66 billion across decades of lending, grants and investment activity.
Concentrated in Asia, Anchored in Healthcare
The Fund's 2025 equity portfolio is concentrated in India, Vietnam, Indonesia and Uzbekistan, with additional reach into Cambodia and Thailand through its Phase Education platform.
Healthcare represents the single largest sectoral concentration, spanning pharmaceutical research and manufacturing through hospital care via holdings in Aragen Life Sciences, SIS Hospital and Tam Tri Hospital.
Other investments, including Korzinka in Uzbekistan, the Phase Education platform, and the Waldorf Astoria Jakarta, extend exposure into food security and logistics, K–12 education, and climate-aligned hospitality infrastructure respectively.
Sector prioritisation flows from ADFD's Development Mandate and Strategy 2030, which identifies six core priority areas – health, education, power, water and public health, agriculture, and infrastructure – alongside cross-cutting themes of innovation, technology, climate change and women's economic participation.
Every prospective investment is classified by its Investment Committee as Direct, Partial or Indirect against these themes, a system Al Kaabi said guards against "aggregation bias" and keeps impact reporting tied to actual investment structure rather than thematic association.
Climate as a Fourth Pillar
Climate alignment, Al Kaabi explained, is assessed using the same Direct/Partial/Indirect framework, drawing on external benchmarks such as Science Based Targets initiative (SBTi) pathways and IFC Performance Standards.
Aragen Life Sciences, Korzinka and the Waldorf Astoria Jakarta carry direct climate alignment, while newer healthcare platforms such as SIS Hospital and Tam Tri Hospital are working towards fuller integration through post-investment ESG action plans.
Al Kaabi pointed to ADFD's 2.8%, roughly Dh110.2 million stake in Aragen Life Sciences as the clearest example of financial and development returns reinforcing one another.
The Indian contract research and manufacturing organisation serves more than 450 global pharmaceutical clients, including Novartis, Amgen, Merck and GSK, is expanding its biologics capacity, and is eyeing a potential IPO in 2026–2027.
Aragen also holds EcoVadis Platinum certification – placing it in the top 1% of companies globally – and SBTi-validated targets aligned with a 1.5°C pathway, while supporting high-skilled employment hubs in Hyderabad, Bengaluru and Visakhapatnam.
Looking ahead, Al Kaabi said ADFD's equity strategy will keep leaning into catalytic capital and private sector mobilisation as global pressures reshape development finance.
The Fund plans to lean more heavily on partnerships with established fund managers and global institutions, using recognised frameworks to strengthen bankability and draw in co-investors, while keeping climate mitigation and adaptation central to new deals.
