Mubadala Capital, the asset management arm of Abu Dhabi sovereign wealth fund Mubadala, has launched a new investments solutions business backed by Apollo Global Management, adding to its suite of vehicles that manage third party capital.
Comprised of three fully integrated strategies, the Mubadala Capital Solutions platform provides a range of proprietary private market investment opportunities with bespoke investment products. The first strategy is seeded with US$2.7 billion and provides “low volatility, meaningful embedded downside protection, an attractive cash yield on day one and the potential for strong asset appreciation over time." Backed by Apollo, it will enable investors the opportunity to invest alongside Mubadala and utilizes the sovereign fund’s existing networks and access.
The unit will also run separately-managed accounts for investors with specific risk and liquidity requirements, under its second strategy. It has also established a third strategy, a “solutions platform”, under Abu Dhabi Catalyst Partners, a joint venture between Mubadala Capital and Alpha Wave with US$1.7 billion AUM. It will invest in businesses involved in the Abu Dhabi Global Market, the emirate’s financial free zone.
The involvement of Apollo in the first strategy builds on the close relationship between Mubadala and the asset manager that began in 2020 with the formation of the Apollo Strategic Origination Partners (ASOP). The platform was expanded in February 2022 to originate transactions across various asset classes with bespoke multi-billion-dollar equity and debt solutions. In January 2023, Mubadala pledged US$2 billion to an ADGM-based US$2.5 billion joint venture with Alpha Dhabi to co-invest in private credit opportunities over the next five years, in a strategic partnership with Apollo.
Apollo is no stranger to supporting the Emirate’s economic development initiatives. Its other relationships and activities in the UAE, include an agreement in February 2022 to invest US$1.4 billion in strategic capital to drive growth initiatives in Aldar Properties, in which Mubadala has a 25% stake, as well as a US$5.5 billion long-term real estate partnership with state-owned oil company ADNOC that was agreed in September 2020.
In March, Mubadala forged a joint venture with Ares to invest in global credit markets, starting with an initial target of US$1 billion. The partnership is developing customized liquidity solutions for credit secondaries, with potential for further growth. Mubadala is anchoring the investment, utilizing Ares’ experience, knowledge and origination capacity. The Abu Dhabi fund is building on a relationship with Ares that began in 2017, but it has worked with other asset managers in the private credit asset class.
The partnership is being developed to take advantage in growth in credit secondaries transactions as a result of growth in the primary private credit market. According to Dave Schwartz, who serves as Partner and Head of the Credit Secondaries strategy, there will be a “meaningful supply-demand imbalance requiring dedicated capital to meet the liquidity needs of General and Limited Partners.”
Mubadala’s other alliances in private credit include an Asia-focused partnership with KKR, founded in October 2022 to invest at lease US$1 billion, and a partnership with Barings – the Barings Mubadala Enterprise (BME) – which was founded in 2020 focusing on financing solutions for European middle-market businesses with US$3.5 billion disbursed up to Q1 2022.
Aside from the new Mubadala Capital Solutions platform, which seeks to attract third party capital, Mubadala subsidiary Abu Dhabi Investment Company (Invest AD) has this month also launched Invest AD Global Asset Manager, the first company to obtain the Investment Fund Management activity license under the new regulations of the UAE’s Securities and Commodities Authority (SCA). The new asset manager is set to launch investment products in alternative asset classes and equities, by partnering with leading global
At the same time, Mubadala Capital is in the process of taking a majority 70% stake in Fortress Investment Group by acquiring a stake from SoftBank.Fortress has nearly US$50 billion in assets under management and its inclusion in the Mubadala portfolio will make the Abu Dhabi sovereign investor one of the world’s biggest credit investors. The transaction is expected to close in the first quarter of 2024, subject to regulatory approvals.