Abu Dhabi sovereign wealth fund Mubadala is seeking to deepen its partnership with leading global asset manager BlackRock with plans to invest in Tata Power’s new Indian renewable energy arm.
A report by Mint, quoting sources, said BlackRock was planning to invest around US$500 million with Mubadala contributing US$200 million in the new unit, which will group together all Tata’s existing renewables assets, valued at around US$5 billion.
The two investors’ collaboration stretches back many years with a relationship the two sides claim works very well. In May 2020, Mubadala was one of an array of institutional investors and sovereign funds that participated in the acquisition of PNC Financial Services Group’s US$14 billion stake in BlackRock, which has assets under management totalling US$10 trillion.
They agreed a US$1.2 billion partnership in August in which BlackRock contributed US$700 million. The asset manager acquired a portfolio of assets from Mubadala’s first private equity fund, which launched in 2017 with US$2.5 billion of capital raised, and gave a US$400 million commitment to its US$1.6 billion MIC Capital Partners III fund, launched in 2019.
The Abu Dhabi investor is unique in the sovereign wealth fund universe in forging these sorts of transactions with other organizations. The partnership with BlackRock is not Mubadala’s only collaboration and in 2017 it won a US$2.5 billion commitment from Ardian.
As well as managing its own balance sheet, Mubadala manages a total of US$9 billion of third-party capital raised for funds across strategies that include private equity, public equities, venture capital and a Brazil-focused investments.
BlackRock itself rivals the size of the entire sovereign wealth industry with estimates of its AUM just a shade below the SWF consolidated AUM of US$10.9 trillion, according to the latest Global SWF data. Many SWFs have invested with BlackRock, due to its scale and its leadership various products, such as alternatives and ETFs.
Global SWF’s database includes an array mandates state-owned investors have awarded to the US-based global investor, as well as investments in funds across various asset classes, including bonds, real estate, infrastructure and renewables assets. Indeed, the breadth of investment capabilities of the investor behemoth has made BlackRock a favored partner and manager for state-owned investors, particularly sub-national funds in the US and Gulf SWFs. But it is in the area of combatting climate change that SWFs have increasingly sought BlackRock’s collaboration.
A sign of government faith in BlackRock’s management skills came last October when Saudi Arabia indicated that it was putting its new National Infrastructure Fund (NIF) under BlackRock’s management, utilizing central bank excess forex reserves to pour tens of billions of debt and equity finance into power, water and healthcare projects over the next decade. Saudi Arabia’s Public Investment Fund (PIF) is also working with BlackRock to develop an ESG framework ahead of a green bond issuance.
BlackRock’s partnerships also extend to Singapore’s Temasek. Last April, the two organizations agreed to team up to invest in private companies that use technology to reduce carbon emissions. The partnership - Decarbonization Partners – aims to launch a series of late-stage venture capital and early growth private equity investment funds and agreed to commit a combined US$600 million in initial capital to invest across the funds, which would also raise money from third-party investors and be managed by staff from both partners. The first fund has a target of US$1 billion.
Temasek CEO Dilhan Pillay said at the time, “Through collective efforts with like-minded partners, we will be able to create sustainable value for all of our stakeholders over the long term, and investors will have the opportunity to help deliver innovative solutions at scale to address climate challenges.”