Britain’s life sciences and renewables sectors have received the backing of Abu Dhabi sovereign wealth fund Mubadala, which is looking to invest up to GBP5 billion in direct investments in private markets through to 2026, according to the FT.
The UK will join China, France, Russia, Greece and Kazakhstan in the list of long-term UAE bilateral partners. Four sectors have been selected as offering long-term value creation: health, technology, clean energy and infrastructure.
Mubadala uses Sovereign Investment Partnerships (SIPs) as its preferred framework to drive co-investment programs. SIPs enable it to gain intelligence on market opportunities and co-invest with the local fund or government, thereby lowering costs.
Mubadala is allocating GBP800 million (US$1.1 billion) into life sciences alongside Britain’s GBP200 million (US$280 million) "Life Sciences Programme", a public-private fund launched last year to boost venture capital investment in the sector.
The UK's pharmaceutical industry is one of the country's major engines of research and innovation. Despite fears of a post-Brexit negative outlook, UK biotech companies raised a record GBP2.8 billion in equity finance in 2020, according to the UK BioIndustry Association (BIA). Venture capital financing secured GBP1.39 billion, with five companies each raising over £50m in the year.
The UK is the third biggest global life sciences cluster, rivalling San Francisco and Boston, Massachusetts, and is home to 6,300 life science companies, 80% of which are SMEs. Access to the EU’s Horizon 2020 program has ensured Brexit has not broken the UK’s link to the continent’s pool of scientific talent and knowledge.
Mubadala has already made some tentative first steps into the UK’s life science sector. In November, it took a stake in Envision Pharma Group, which enables pharma and medical device companies to commercialize products through medical strategy and communications. The Covid-19 pandemic has boosted its interest in expanding its global healthcare portfolio, with a focus on early-stage innovators.
While the Abu Dhabi fund is renowned for its chunky investments, Global SWF notes its growing interest in earlier stage venture capital, particularly in the tech sector. Mubadala Capital’s Ventures team focuses on Series B+ (early growth) investments in European-based technology companies. So far this year, Mubadala’s average investment in the TMT sector is US$60 million, compared to an average of US$189 million last year and US$280 million in 2019 – largely due to increased interest in early stage funding rounds.
Mubadala’s strategy also aligns neatly with the British government’s Future Fund: Breakthrough program, which is set to launch in Q221 with a target of £375 million. The new fund comes after the initial £250 million Future Fund closed for applications in February. The Breakthrough fund focuses on co-investments in high-growth, innovative R&D intensive companies. With a minimum investment round size of GBP20 million, applications are expected to be led by established VC investors. The UAE-UK SIP could potentially develop the fund as a platform for tech venture capital.
In terms of renewables, Mubadala already has a long-standing interest in Britain’s renewables sector. Its biggest single investment to date is in the London Array, a 1,000MW wind farm in which it acquired a 20% stake via its green energy subsidiary Masdar in 2008. The investment was valued at around US$650 million – around half the total the SWF has invested in the UK to date. Masdar also has a 25% stake in the GBP210 million Hywind Scotland, world’s first offshore floating wind farm with 30MW capacity.
The Mubadala clean energy subsidiary is likely to facilitate capital into the UK’s growing wind and solar energy sector. This year has seen the auction of seabed rights, which has attracted frenzied bidding with six proposed new offshore wind projects up for grabs.