Thursday 17 January 2019

Mubadala eyes global deals with $250bn portfolio

ABU DHABI, May 10, 2018

Abu Dhabi’s Mubadala Investment Company is looking at bigger deals and is set to scout for investments more widely and boost its presence over more industries, mainly after its recent tie-up with another local fund doubled its size, reported Bloomberg.

The combination of Mubadala and the Abu Dhabi Investment Council in March created an entity with more than $250 billion of assets, enough to join an exclusive club of sovereign wealth funds and national state pension plans that compete globally with private equity for the largest acquisitions, stated the report citing its top official.

"With that scale we have the ability to look at deal flow all over the world," remarked CEO Khaldoon Al Mubarak.

"It allows us to have a larger, diversified portfolio, in terms of both geography and sectors, and that gives us a better investment profile," Al Mubarak said in an interview with Bloomberg Television in Malta, New York.

Created in 2002, Mubadala is part of Abu Dhabi’s efforts to diversify its economy by turning oil revenue into profitable investments while also attracting expertise and jobs.

After merging with Abu Dhabi’s International Petroleum Investment Co., Mubadala last month said 2017 revenue rose 14 per cent. It used its “integrated portfolio” to increase stakes in existing companies, sell mature assets and enter new sectors in international markets, said the top official.

The fund consolidation is part of a broader evolution in Abu Dhabi’s approach to managing its capital after crude prices fell in recent years. The emirate’s two largest lenders -- National Bank of Abu Dhabi and First Gulf Bank -- were also combined last year to create First Abu Dhabi Bank.

The fund’s objective, Al Mubarak stressed, is still to generate “an attractive rate of return,” and it now has the financial firepower to pursue opportunities previously out of reach.

There have been other changes. While Mubadala was once a buy-and-hold investor, since January Al Mubarak has embarked on initial public offerings for two companies in its portfolio, Emirates Global Aluminium PJSC and Cepsa Trading SA.

“The culture of these investment companies, the ones I’ve been involved with, was about accumulating assets and then just maintaining it,” said Al Mubarak in the interview.

“The shift that has happened over the last couple of years, that I’ve tried to push at Mubadala today, is a monetization strategy that makes sense, not with a view to cash out but with a view to reinvest,” he stated.

Al Mubarak expects EGA to go public in the second half of this year or early 2019. Mubadala has also hired banks to manage a share sale for Cepsa, a Spanish energy company, which will “hopefully” happen this year.

The fund also is considering the sale of a majority stake in EMI Music Publishing, which owns the rights to some 2.1 million songs, and is in talks with Sony Corp. and its other partners in that investment, he added.

Tags: abu dhabi | investment | Mubadala |

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