The Abu Dhabi Investment Authority (ADIA) is acquiring a minority stake in Innocap Investment Management, a Canadian platform that streamlines capital allocation to multiple hedge funds, according to a report by Bloomberg.
Over the next few years, a subsidiary of the $1tn sovereign wealth fund will increase its ownership to 10%, as per a statement released on Tuesday. At that stage, Mohammed Sghayer Khalaf Al Qubaisi, ADIA’s Deputy Director Of Alternative Investments, will join Innocap’s board.
Financial terms of the deal were not disclosed.
ADIA, known for its state-backed investments, has expanded its collaboration with hedge funds. Its equities department has set higher return targets and now partners with managers specialising in diverse strategies, including long-only, long-short, quantitative, and market-neutral approaches.
Innocap operates a managed accounts platform that enables investors to allocate funds across multiple hedge funds with greater transparency, control, and lower fees. According to the statement, ADIA has selected Innocap to manage portions of its hedge fund and equity exposures.
The platform has become increasingly popular, particularly among large investors and multistrategy hedge funds seeking efficient ways to allocate capital. Innocap’s platform has processed $83bn across 340 funds, according to its website.
“Innocap’s shareholders recognise a clear shift in the industry towards dedicated managed accounts which is notably driven by institutional allocators’ commitment to their fiduciary duty,” the firm said in the statement.
Managed accounts, which gained traction following the financial crisis for their transparency and liquidity, are now a favoured tool for rapidly deploying capital into established firms and hedge fund startups. For instance, roughly 10% of Millennium Management’s $72bn in capital is managed externally through such accounts, Bloomberg News reported.
Innocap, whose shareholders include its senior management, Caisse de Dépôt et Placement du Québec, Bank of New York Mellon, Walter Global Asset Management, and BNP Paribas SA, also plans to open an office in Abu Dhabi this year.
Established in 1976, the ADIA was created to invest the emirate’s surplus energy revenues, support economic diversification, and prepare the UAE’s capital for a post-oil future. ADIA has emerged as one of the world’s largest hedge fund investors, including allocating capital to Bobby Jain’s $5.3bn startup.
