Abu Dhabi sovereign wealth fund ADQ’s $35bn investment into Egypt is the biggest FDI into the Middle East and Africa (MEA) to date and helps shore up the country’s dwindling foreign exchange reserves.

The deal, signed by Egypt’s minister of housing Assem El-Gazzar and UAE minister of investment Mohamed Al Suwaidi on February 23, sees ADQ commit $24bn to develop the Ras El-Hekma new city project along Egypt’s central Mediterranean coast and $11bn to other projects across the country. 

Data from greenfield investment monitor fDi Markets shows the $35bn pledge is the world’s fifth biggest announced FDI pledge on record, and the biggest to date in MEA. It beats the region’s previous record set by Infinity Power, which is backed by another Abu Dhabi sovereign wealth fund, Mubadala, last March when it committed to co-develop a $34bn green hydrogen project in Mauritania. 

Ras El-Helma is an ambitious project to turn 170 million sq m of its namesake peninsular, which sits 240 km to the west of Alexandria, into a business hub, financial centre, residential districts and a holiday destination. Plans for the development, in which the government will retain a 35% stake, also include a new free zone focused on IT, marina and international airport to the new city’s south. 

“ADQ intends to leverage Egyptian and international partners as part of its development and investment plans,” it said in a statement announcing the news. 

This is the latest example of a growing trend of sovereign wealth funds taking greenfield risk and investing directly into real assets.

Quick cash injection 

Egypt has been a magnet for large FDI commitments in recent years, attracting 18 megaprojects in the two years up to December 2023, according to fDi Markets, beaten only by the US (49), UK (28) and India (19). But while large pledges typically take some time before the capital is injected, ADQ is quickly delivering on its promise.

Work at the Ras El-Helma project is slated to start in early 2025. ADQ’s pledge comes at a key juncture for the North African country’s economy, which is suffering a severe foreign currency shortage caused by, among other factors, low foreign tourist numbers in the wake of the pandemic and fewer ships passing through the Suez Canal following attacks by Houthi rebels. 

Sources tell fDi that authorities are stopping and searching people in the street looking for dollars. The central bank has devalued the value of the local Egyptian pound three times since 2022.

“The immediate FDI will help the country overcome its current hard currency crunch,” Egypt’s prime minister Mostafa Madbouli Madbouly said at the signing ceremony on February 23.

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