One cannot talk about the development of the United Arab Emirates without mentioning Mubadala (the Arabic word for exchange). Oil was first discovered in the Umm Shaif field in 1958, and since the unification of the Emirates, the UAE has made its mission to diversify the economy so that growth is self-sustaining once its oil runs out. The best way to achieve that ambition is through leading investment and development organizations.
Mubadala Development Company (MDC) was established in 2002 to drive diversification of the UAE economy while also delivering social returns to Abu Dhabi. In 2017, MDC merged with the International Petroleum Investment Company (IPIC) to establish Mubadala Investment Company (MIC), with the ambition of being a global investor, while continuing to support the development and diversification of the UAE economy.
A year later, the Abu Dhabi Investment Council (ADIC), joined the Mubadala group, doubling the value of its AuM with a globally diversified portfolio. Today, the combined entity has holdings across most industries in 50+ countries and is an important part of Abu Dhabi’s economic engine and Economic Vision 2030.
For its significant contribution to the development of Abu Dhabi and the UAE, for its leadership in pursuing global partnerships, for its unparalleled investment and divestment activity displayed throughout the year, and, in general, for its contribution to the advancement of the SWF industry, Global SWF believes that Mubadala Investment Company is a worthy recipient of the 2021 Fund of the Year award. We spoke with Ahmed Saeed Al Calily, its Chief Strategy & Risk Officer, about the fund’s performance and ambitions.
[GSWF] How has the fund’s strategy changed over the last 20 years and how will it continue to evolve?
[MIC] Mubadala’s journey has reflected the growth and evolution of Abu Dhabi itself: always forward-leaning, looking to future possibilities and how to leverage the strengths of today to create opportunities for generations to come. Mubadala arrived in its current form by complementing substantial organic growth with two significant mergers, while successfully evolving from a local development company into a globally recognized best-in-class investor.
Today, Mubadala is a global, unique, and responsible investor with an ambition to double its size over the next decade. Our organizational structure, strategy and global partnerships are meant to take advantage of a range of investments, particularly in sectors with significant “tailwinds”, including technology, life sciences, renewable energy and fintech to name a few. We will also seek opportunities in more traditional sectors.
Investing responsibly has always been central to Mubadala’s approach, focusing on both financial and social returns. With our evolution, we have continued to drive and institutionalize our approach to ESG principles and factors. Our dual focus of driving value-accretive diversified economic growth within the UAE, combined with deploying capital into global investments seeking positive economic trends and market dynamics, is well-grounded within our organization.
[GSWF] The investment landscape of Abu Dhabi has changed dramatically in the past five years with the merger of some funds and the emergence of others. How does this align with the Economic Vision 2030?
[MIC] Mubadala’s mandate has always been to create sustainable financial returns for our shareholder. Following the inauguration of MIC in 2017, ADIC joined the group in 2018. This is an acknowledgment of our Leadership’s belief in the strength that comes from collaboration and from integrating diverse perspectives and backgrounds.
As a responsible investor, we are committed to supporting the economic diversification of Abu Dhabi while leaving a positive lasting impact on the communities where we invest worldwide. As we progress with our activities and ambitions, we will continue to align ourselves with the Economic Vision 2030 including supporting a large empowered private sector, maintaining strong and diverse international relationships, and optimizing the UAE’s resources.
Mubadala is looking to create the next new clusters such as supporting the energy transition. Our recent partnership with ADNOC and TAQA will propel Masdar’s renewable capacity to more than 50GW by 2030 and create a global clean energy powerhouse. This partnership will also support the UAE’s role in the energy transition and contribute to its strategic goal of achieving carbon neutrality by 2050, while becoming a global leader in green hydrogen.
[GSWF] How will Mubadala fund its ambitious growth plans? Do you expect to make distributions?
[MIC] Mubadala has set the ambitious goal of doubling our portfolio while maintaining sustainable financial returns, supporting Abu Dhabi’s diversification and positively impacting the communities where we invest. Reaching our target will require a dynamic approach comprised of active management of our investments and growing our global partnerships as well as the appropriate and conservative use of leverage. This will be supported by the prudent and pragmatic monetization of existing investments and recycling of capital into new investments. Mubadala also has an established and prudent dividends policy and, consistent with other economically-driven entities, during any given year we assess our balance between potential new investments and distributions.
[GSWF] In 2020, Mubadala sold almost as much as it invested. How are you pursuing monetization?
[MIC] 2020 was one of our most successful years, during which we achieved record investments, profit and growth. We deployed US$ 29.4 billion while realizing US$ 28.3 billion through monetizations and distributions. 2021 has also been one of our most active years. Our investments this year have involved global partnerships with BlackRock, Silver Lake, SoftBank, Bpifrance, and the UK government, to name just a few. Monetization activities included the partial sale of Aldar, one of the largest private share purchases in a UAE-listed company, the IPO of Yahsat, our first-ever listing on ADX; and the listing of GlobalFoundries on the NASDAQ, one of the largest IPOs of 2021.
[GSWF] Mubadala has been very active in green energy, especially via Masdar, but also in oil and gas. Why?
[MIC] As we drive to double the size of our portfolio, our relative exposure to the hydrocarbon industries is intended to reduce over time. While our strategy calls for significant and focused investment in high growth sectors with strong tailwinds such as technology, life sciences, fintech, renewable energy and traditional infrastructure, natural gas, for example, is expected to remain part of our capital deployment in the immediate future in support of the transition to cleaner energy alternatives. More broadly, Mubadala is investing in a range of energy assets and initiatives, from renewables to partnerships focused on the development and commercialization of the green hydrogen market.
[GSWF] In 2021, Mubadala restructured itself into five main business lines. What was the rationale?
[MIC] To achieve our growth plans, we reorganized our structure to create five distinct platforms that align us with our mandate as well as facilitate Abu Dhabi’s integration with the global economy.
UAE Investments: This platform consolidates all Mubadala’s domestic assets. Significant highlights include the landmark listing of Yahsat (Mubadala’s first IPO) and the partial monetization of Aldar.
Direct Investments: This platform focuses on global high growth, high profitability sectors such as life sciences, tech and financial services. It has had an active year that included the US $26 billion listing of GlobalFoundries.
Disruptive Investments: This platform includes asset management subsidiary Mubadala Capital, as well as Ventures & Growth, Credit Investments, and Country Direct Investment Programs in Russia & CIS, France, China, and the UK.
Real Estate and Infrastructure Investments: This platform focuses on physical and digital assets around the world. Investments included CityFibre and Calisen in the UK, and logistics deals in Australia, Korea, and Mexico.
Globally Diversified Investments: ADIC focuses on international direct and indirect investments across private and public markets by selecting top-quartile fund managers combined with an active asset allocation policy.
[GSWF] Can we talk about Mubadala Capital, which recently became a subsidiary of the parent company?
[MIC] Although Mubadala Capital recently commenced operations as a standalone portfolio company, it remains a wholly-owned asset, enabling it to pursue its highly focused investment strategies while leveraging Mubadala’s scale and network. Mubadala Capital’s management of third-party capital makes it unique among Mubadala’s businesses, and its success in attracting global blue-chip investors has positioned it well to maintain its growth trajectory going forward. Today, the company manages over US$ 9 billion in third-party capital on behalf of its institutional investors.
[GSWF] How are the Country Direct Investment Programs scoped and motivated?
[MIC] Our strong focus on partnership is one of our greatest strengths that makes us unique. Our country-specific partnerships are focused on strong economic fundamentals and the conviction that allows us to develop relationships and commercially driven direct investment programs in key markets including Russia & CIS, France, China, and the UK.
[GSWF] Where do you see growth going forward and what regions and industries are you bullish on?
[MIC] Even though our focus has been largely on private equity, we have a diversified portfolio that is balanced across asset classes and sectors. We’ve built a dynamic engine that allows us to capitalize on various short- and long-term trends that are fundamental to our investment thesis. We’re not exclusive to any particular sectors but we continue to focus on developed markets and are bullish on emerging economies like India and China.
[GSWF] What are your global strategy and growth aspirations?
[MIC] Mubadala now has a global network of offices, which includes London, New York, Moscow and Beijing as well as our headquarters in Abu Dhabi. As we continue to grow, we will assess the benefits of opening new offices in other markets. A local presence allows us to be closer to the markets where we invest, helps with sourcing deals, and strengthens our global partnerships – a key focus for us. We also believe that our expanding footprint offers an invaluable opportunity to identify, cultivate and develop talent - both within our organization and locally - in ways that will help our people achieve their potential and positively contribute to the Mubadala story and to the communities in which we invest.