UAE $500M digital energy fund to support DEI for compute applications

Hodler Investments, a UAE-based investment company headquartered in the Dubai Silicon Oasis, announced its plan for a $500M Digital Energy Infrastructure (DEI) fund, offering investors and clients the opportunity to invest in distributed energy infrastructure for compute applications.

The fund will be established as a closed-ended exempt fund, subject to compliance and regulatory approvals. The DEI fund has already secured soft commitments from lead investors and in-kind contributions in addition to offtake partners seeking energy and connectivity for AI and digital asset mining operations.

Currently the DEI fund is expected to have a size of between $250M and $500M, including in-kind commitments with a value not exceeding the total capital commitments. The Fund’s capital commitments will be focused on providing Limited Partners exposure to, an existing energy envelope with offtake commitments and deal-flow from a portfolio of companies with high growth potential and proven business models. Hodler has secured over US$300M in exclusive deal-flow across the Middle East, North America, Australia, Asia and Africa.

The DEI fund will offer professional investors and clients the opportunity to invest in utility-like income generating assets and distributed energy infrastructure for compute applications that adopt innovative methods for carbon capture, storage & utilization.

The DEI fund’s investment mandate covers the entire digital energy value chain, including sectors such as clean energy, power generation (IPPs), data mining (ASICs, GPUs, etc…) for blockchain, Decentralized Physical Infrastructure (DePIN), AI, cloud, and other compute cluster applications with a focus on achieving zero-emissions across the majority of the fund’s portfolio.

Investments will include vertical startups in DeFi, Blockchain, AI, and more

Additionally, the DEI fund will allocate capital investments toward vertical technology startups, operating platforms and software that add value to the fund’s portfolio. The fund will seek to acquire early to growth stage modern software technology companies that are active in digital infrastructure and software applications that support the development and growth of FinTech, DeFi, Web3, blockchain and AI.

Hodler has appointed and engaged Ento Capital Management Ltd, a well-established asset manager in DIFC regulated by DFSA with a Shari’a compliant window for ethical investing, to advise on, structure, establish and manage the DEI fund.

Mohamed El Masri, Managing Director, Hodler Investments, states, “We are proud to be leading this mission out of the UAE, building on the nation’s strategy to develop a digital economy while encompassing sustainability at the core. We are committed to contributing to energy security and reducing energy poverty.”

It is estimated that global spending on the construction of new data centers is expected to surpass US$49 billion by 2030 (source: MicKinsey & Company). With over US$1.0 trillion funding gap in renewable energy, it is believed to be an opportune time to lay the groundwork to power the advancement of compute infrastructure for a vibrant digital economy.

Ahmed Ebrahim, also a Managing Director at Hodler, noted that the fund is capitalizing on an existing pipeline of deals and projects that have been vetted.

Sustainable energy to meet growing demand for compute power

The DEI fund aims to utilize technologies such as blockchain, AI, digital asset mining, and other solutions combined with energy resources to strengthen the feasibility of sustainable energy infrastructure to meet the growing compute power demands while contributing to power grid stability for more equitable energy systems globally.

The utilities sector has seen exponential growth in energy demand from modern compute applications. Data center electricity consumption stood at around 240-340 TWh (source: EIA).

Alaa Al Ali, Founder and Group CEO of UAE conglomerate Gewan Holding, with strong investments in energy projects, noted that their decision to join the DEI fund stems from their belief that the digital economies of the future cannot grow without globally distributed sustainable energy infrastructure.

He adds, “We are confident in our stakeholders and our collective effort to build sovereign digital energy infrastructure. We see the Fund as an effective vehicle to support the UAE’s Digital Economy Strategy.”

Amer Al Osh, Chief Development Officer at Gewan Holding discussed how the team is establishing a compliant structure subject to regulatory approval, and notes that the recent UAE regulations surrounding digital assets, and AI laws allows for improved investor sentiment for this type of asset class.

Cryptopotlian reporting by Lara Abdul Malak