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This year, Abu Dhabi-based Mubadala Investments took advantage of falling valuations of tech companies to make a series of investments in small and mid-sized tech companies around the world.
Mubadala was formed in 2017 by the merger of Abu Dhabi’s state-owned International Petroleum Investment Company (IPIC) and the Mubadala Development Company to invest domestically and internationally. In December 2021, it had assets under management (AUM) of AED1.05 trillion ($284 billion). Other sovereign funds based in the UAE capital include the Abu Dhabi Investment Authority (ADIA) and ADQ.
“While other Gulf economies like to keep everything under one umbrella, Abu Dhabi likes to have separate funds under different chairs; it’s not a one-size-fits-all solution,” said Diego López, Managing Director, Global SWF .
Ahmed Saeed al-Calily, chief strategy and risk officer, told Global SWF that Mubadala is targeting various sectors including technology, life sciences, renewable energy and fintech, priorities reflected in Mubadala’s recent Spending frenzy.
Last month, Mubadala led a $400 million funding round for Wefox that valued the Berlin-based insurtech company at $4.5 billion; it also participated in a $800 million investment in Swedish fintech Klarna financing.
In June, the Mubadala consortium agreed to buy Stockholm-based biopharma delivery company Envirotainer for 2.8 billion euros. In May, Mubadala participated in a $300 million funding round for California-based payments company SpotOn and announced it was part of a consortium that acquired a majority stake in software developer Salesloft in December.
In February, Mubadala partnered with Warburg Pincus to buy a majority stake in Pharma Intelligence, which provides clinical trial data, and in March raised $768 million for Getir, valuing the Turkish grocery delivery app at $11.8 billion.
While shares of blue-chip tech companies like Meta and Tesla are down more than 50% in 2022, private company valuations have also plunged. For example, Mubadala’s investment in Klarna values the company at 85% less than its perceived value in 2021.
According to the latest data, dating back to December 31, 2021, Mubadala has around 10 prominent subsidiaries such as Al Yah Satellite Communications Company, which completed an initial public offering of AED 2.7 billion last year, and then Listing on the Abu Dhabi Stock Exchange was also last year. Other subsidiaries include Canada’s NOVA Chemicals Corp., hydrocarbons trader Dolphin Investment Co. and semiconductor maker GlobalFoundries Inc., which raised about $2.6 billion in an IPO, when Nasdaq raised funds in 2021 most companies.
Aldar Properties, oil and gas company OMV and chemical maker Borealis are affiliates of Mubadala; it also owns 50 percent of the joint venture Emirates Global Aluminium and 61.4 percent of Spanish oil producer Cepsa.
Mubadala’s 2021 net profit was AED34.6 billion, up from AED9.1 billion a year earlier. Revenue rose 35.8% to AED56.4 billion in the same period. About 33% of Mubadala’s revenue last year came from petrochemicals and 43% from semiconductors.
The most recent, possibly opportunistic, acquisitions are part of a broader strategy. Between 2017 and 2021, Mubadala invested about $1.4 billion in 75 startups, or less than 1 percent of its total portfolio, according to Global SWF estimates.
“There is a clear concentration risk. Of course, Mubadala cares about financial returns, but that’s not the only goal,” said Javier Capapé, director of sovereign wealth research at IE University’s Spanish Center for Governance of Change. “Equally important is the development of new economic sectors that will provide jobs and ultimately stable returns or income.”
Geographically, 25% of Mubadala’s assets are valued domestically, with 38% in North America and 17% in Europe, followed by East Asia (12%), Latin America (2%), South Asia (2%), etc. (4% ).
Mubadala’s al-Calily told Global SWF that his organization aims to double its size over the next decade and will do so through active investment management, global partnerships, “conservative use” of leverage and currency for existing assets to finance its expansion. Its most recent divestments include the sale of four commercial towers in Abu Dhabi Global Market to subsidiary Aldar Properties last month for AED 4.3 billion. In June, Mubadala agreed to sell a large stake in Abu Dhabi Future Energy Company (Masdar) to two other state-owned companies, ADNOC and Abu Dhabi National Energy Company (TAQA).
“Mubadala has had a huge impact on Abu Dhabi [economic] Diversify by creating subsidiaries and incubating VCs [venture capital] ecosystem,” Lopez added.
(Reporting by Matt Smith; Editing by Saipan Scalia)
(seban.scaria@lseg.com)
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