Abu Dhabi sovereign wealth fund Mubadala is continuing to explore avenues for liquidity and has begun preparations for an IPO in its semiconductor business GlobalFoundries.
The IPO is reportedly targeting a total enterprise value of US$20 billion and is scheduled for 2022. The offering is set to coincide with the global recovery from the pandemic, which is expected to see demand for electronic components soar as the tech sector moves up a gear.
In common with other sovereign wealth funds, Mubadala is revamping its structure and seeking to become more nimble in grasping opportunities as it sets out to achieve AUM of nearly US$500 billion by 2030. The Abu Dhabi government had already consolidated Mubadala with two of other state-owned investors operated by the emirate: the International Petroleum Investment Co. (IPIC) and the Abu Dhabi Investment Council (ADIC).
Global SWF data show that Mubadala is increasingly targeting earlier stage investment rounds with an emphasis on disruptive tech. Since the consolidation of the three funds in 2018, Mubadala has moved from acquisitions heavily oriented to chunky stakes in the energy sector (which represented nearly 80% of investment) towards venture capital in tech and retail (which together comprised 85% of capital deployed). The IPO will release more liquidity for greater exposure to areas of growing interest to Mubadala as it seeks to boost returns and reach its AUM target.
GlobalFoundries grew out of a joint venture between the Abu Dhabi government’s Advanced Technology Investment Co. (ATIC) and Sunnyvale, California–based Advanced Micro Devices (AMD). In the initial transaction, AMD contributed to GlobalFoundries’ semiconductor manufacturing facilities in Dresden, Germany, while ATIC invested US$1.4 billion. In exchange, each partner received equity securities and ATIC assumed debt securities. ATIC owned 66% of GlobalFoundries and AMD 34%. In 2011, AMD sold its stake and ATIC was consolidated under Mubadala as a wholly-owned subsidiary. Mubadala chose to invest in semiconductor manufacturing, a capital- and energy-intensive high-tech industry, because it met all the requirements for Abu Dhabi’s development plans.
GlobalFoundries has grown to become one of the world’s leading chip manufacturers and stands in a neutral position amid the US-China trade war. To date, the company has 10 fabrication plants across the world, most of which are in Singapore following the acquisition of Singapore’s Chartered Semiconductor Manufacturing in 2009.