Abu Dhabi’s top wealth fund boosts private equity allocation

The Abu Dhabi Investment Authority (ADIA) increased its target allocation to private equity to 12%-17% of its total portfolio, up from the previous range of 10%-15%, according to its 2023 annual review released on Thursday. Allocations to other asset classes, such as developed market equities and real estate, remained unchanged.

Abu Dhabi’s top wealth fund boosts private equity allocation

This shift towards private equity comes in the context of a challenging year for the sector, as rising interest rates led to the lowest dealmaking activity in five years, as noted in the review. Despite these hurdles, ADIA’s private equity division completed over 20 direct investments exceeding $150 million each. The fund also reinvested in some existing portfolio companies to capitalize on growth opportunities, including acquisitions.

Critical role of private credit providers

The review further highlighted that last year’s market disruptions saw private credit providers playing an increasingly critical role in funding leveraged buyouts. ADIA expanded its presence in this area, backing several investment platforms like Jefferies Credit Partners' Direct Lending BDC and Overland Advisors, a joint venture between Centerbridge and Wells Fargo focused on non-sponsored middle-market direct lending.