Cover story: How Dubai’s AIX Investment Group is forging sports partnerships to propel growth

There is no understating the importance of diversification as a sound growth strategy.

However, for Dubai-based AIX Investment Group, it is not only a viable economic pursuit, but a means to keep the brand in the reckoning.

It is this centrifugal approach, coupled with a strong focus to support aspiring talent, that has propelled the advisory firm’s journey beyond the traditional world of finance and helped it forge its first global motorsport collaboration in 2022.

The face of this partnership is the 21-year-old American-Spanish single-seat car racer, Brad Benavides of PHM Racing by Charouz, whom AIX has pledged to sponsor for the FIA Formula 2 championship this year.

Racing since the age of 12 and no stranger to speed, Benavides has competed in the Formula Renault Eurocup, the Formula Regional European Championship by Alpine and the Euroformula Open. Having competed in FIA Formula 3 last year, Benavides finished eighth during a Sprint Race at Belgium’s Spa-Francorchamps.

This year, Benavides plans to debut and compete in the FIA Formula 2 season, which will kick off in Sakhir, Bahrain on March 3. It will then move in the direction of Saudi Arabia and proceed onto Melbourne in Australia.

The campaign, which will comprise 14 rounds, will make its penultimate stop at Monza in Italy, with the season wrapping up at Abu Dhabi’s Yas Marina Circuit in November.

Meanwhile, AIX’s ambitions for cross-industry collaborations haven’t halted at the racetrack – in fact, they’ve transcended beyond street circuits towards stadium midfields. The group is also the main sponsor of Fursan Hispania FC, a football club led by Michel Salgado, an erstwhile Real Madrid football player.

The club provides professional training to young aspirants in the UAE to develop their skills. In 2021, the firm also sponsored RC Celta de Vigo – a La Liga Santander team, with the partnership aligning both entities for a period of three years. The firm is also the main benefactor of the Iker Casillas Academy Dubai, by virtue of a partnership inked with football legend Iker Casillas.

“Via its multiple partnerships, the company is proud to be a part of an initiative that improves access to training activities, raises awareness about the significance of sports, as well as supports regional talent,” explains Fadi Dabbagh – board president at AIX Investment Group.

“The partnerships assure training of future aspiring talent via programmes devised by industry experts to develop and enhance the skills of players.”

Nuclear strengths
Venturing into unchartered territory yet staying committed to its core strengths has been AIX’s conspicuous strategy. The advisory firm continued to pursue a multifaceted approach and expanded its existing product portfolio by launching a fixed-income instrument – AIX Bond – last year.

The security has a 36-month maturity, is listed on the Vienna Stock Exchange and offers quarterly returns of 4.5 per cent.

The new debt instrument was not only well received by existing investors, but has also become a bridging factor between the company and its potential clientele who historically displayed keenness to invest in similar financial products.

“We have always had structured products [in our portfolio] which have helped us amass a large pool of clientele. However, to add to the requirements of seasoned investors we wanted to structure an offering that would cater to their needs; therefore, the firm introduced this product, which is a fixed-income high-yielding bond,” adds Harish Prithvi, AIX’s chief operating officer.

The group recently launched a property-backed instrument – AIX Property Secure – that allows investors to collateralise their investment via a real estate asset, helping generate 20 per cent in rental returns.

Prithvi explains that investors that prefer a form of collateral against their investment instead of standard securities generally lean towards this product.

“Investors that hail from the subcontinent and the Middle East and who prefer tangible assets, have shown considerable interest in this product. Such investors prefer financial instruments where properties can be used as a collateral, hence it helps cater to a niche pool of customers,” he notes.

Conventional investment options, such as real estate, have stood the test of time, and continue to gain traction. Real estate was also identified by Knight Frank as one of the top five wealth trends for 2023.

This trend is going strong locally as well – in 2022, 80,216 investors registered 115,183 new real estate investments in Dubai, valued at $71.9bn. The past year also saw the completion of 55 real estate projects worth $3.24bn in the emirate, growing 57 per cent in number and 8 per cent in value.

The dynamics of the local economic ecosystem as well as the regulations governing the real estate landscape, have been instrumental in creating a thriving backdrop which has encouraged buyers to choose Dubai for investment purposes.

“In the past three years, property prices in Dubai have risen. Unlike other global markets, Dubai’s property market has had multiple factors influencing the price hike – it was one of the few major economies that opened up to the world [in the wake of the Covid-19 pandemic]. Luxury properties have witnessed additional demand and a notable rise [in prices] too. Not that the general market hasn’t seen an uptick but the appreciation in the luxury market has been more significant. The number of investors looking to invest in Dubai is only increasing and the supply will fall short owing to the demand. Hence, the property market in Dubai isn’t going to slow down anytime soon.”

Furthermore, the company’s optimism towards investment opportunities is not misplaced, as the local wealth landscape offers a promising snapshot – the UAE represented 10.2 per cent of the Middle East and Africa’s financial wealth in 2021, having risen 6.4 per cent each year since 2016 to reach $0.7tn, a Boston Consulting Group (BCG) report has revealed. Furthermore, the country’s financial wealth is expected to rise to $1tn by 2026.

In 2021, approximately 41 per cent of the UAE’s wealth was derived from ultra-high-net-worth individuals (UHNWIs), who were worth more than $100m. This is expected to rise to 43 per cent by 2026. Meanwhile, people with above $1m in wealth held 28 per cent of the country’s wealth in 2021, the BCG report added.

Prevailing sentiment
A number of overwhelming challenges – whether environmental, health-related or economic in nature – have dominated global discourse in recent years.

These challenges, be it the Eastern European crisis, soaring interest rates or the aftermath of the pandemic – have not only propelled businesses and economies to change course and adapt but have also, in a relatively inconspicuous way, altered the approach and preferences of individuals and investors.

“Long before the current market state, we sailed through a three-year pandemic period. This has already changed the risk appetite of investors – it has been a global behavioural change that has dictated avenues where investors would plough their money. A lot of them have cashed in on the downtrend that came with the pandemic in 2020,” notes Prithvi.

“As for the investment trends that will dominate the current year, we foresee a rise in demand for low-risk and fixed-income products because of prevailing market conditions,” he adds.

However, irrespective of changing market dynamics and altered investment preferences, Dabbagh dispels long-standing myths around the notion of a ‘perfect investment portfolio’, which he feels is ‘non-existent’.

“Investments always come with a certain amount of risk. There is no perfect investment portfolio or product. One can always have a fail-safe structure in their investments,” he says, adding: “At AIX, we have a simple 70/30 rule – have a 70 per cent exposure in a fixed-income portfolio and 30 per cent exposure in a variable-income one. While a variable-income portfolio comes with risk, its fixed-income peer has almost none.

Therefore, the inherent risk an investor is exposed to, on account of his/her variable investments, is covered by its fixed-income counterpart. This balances the entire portfolio,” says Dabbagh.

Come tomorrow
AIX pursues a versatile growth strategy not only in terms of product expansion but market penetration as well.

The advisory firm, which was set up in Europe a decade and a half ago, plans to strengthen its core offerings, dig deeper in existing markets, and cast a wider net geographically.

“Our expansion plans are quite clear – we aim to increase our stronghold in Zurich (Switzerland) and Doha (Qatar) – the two markets AIX has recently launched in. Additionally, we plan to increase our operations and bandwidth within the region, expand our team as well as continue to evaluate new geographic markets this year,” notes Prithvi.

Apart from relentless efforts to improve its current investment structure and product yields, the company plans to launch a new fund this year, regulated and licensed by the Cayman Islands Monetary Authority in line with the Dubai International Financial Centre (DIFC).

“The company is also looking into a property fund, that is in the initial stages of development. We are in discussions with several developers across the UAE and expect the product to take shape in the later part
of this year,” he adds.

When quizzed on whether ROI (return on investment) reigns supreme among an investor’s priorities, Prithvi responds as only a seasoned financial advisor would.

“ROI is a driving factor that motivates an individual to invest, but it’s not the most important element. The first thing any investor generally considers is the structure of the investment, its safety and then the returns.”