‘We are looking closely at Saudi Arabia and are very excited about the investment possibilities’
Mubadala Investment Company is exploring opportunities to invest in Saudi Arabia as the kingdom opens up the biggest Arab economy to foreign investors, its group chief executive said yesterday.
“Absolutely. We are looking very closely at Saudi Arabia,” Khaldoon Al Mubarak said. “Saudi is obviously a market [for us]. We can see what’s happening in Saudi and we are following it very closely and we are very excited about the possibilities.”
Mubadala Investment is already a co-investor with the Public Investment Fund (PIF), Saudi Arabia’s sovereign wealth fund, in SoftBank Group’s US$100 billion Vision Fund.
The Abu Dhabi company has plans to invest $15bn in the investment vehicle, while PIF is expected to contribute as much as $45bn to the Japanese-led tech fund.
Acquisitions made by Vision Fund since Mubadala Investment’s participation was announced include leading a $114 million round of funding in July for US-based artificial intelligence company Brain Corp. In the same month, Vision Fund led a $200m funding round for Plenty, an indoor farming company.
The kingdom, the world’s top oil exporter, is heading in the right direction and its economy presents investment avenues which could be a good fit for Mubadala Investment’s strategy, Mr Al Mubarak said.
“[There’s] nothing that I can comment on right now but I can tell you for sure, we are looking, and we are working hard to be investing in Saudi Arabia,” he said when asked if a deal is already on the table.
“We think the economic story has a lot of opportunities, particularly in the areas where Mubadala is very interested.”
Saudi Arabia, Opec’s biggest oil producer, still relies heavily on the sale of hydrocarbons for revenues. It is trying to wean its economy off oil after crude prices slumped from a mid-2014 peak of $115 per barrel to lows of below $30 per barrel in 2016.
Prices are now relatively stable at around the $58 per barrel mark. But the kingdom’s finances remain under pressure.
The privatisation of government-controlled assets and increased foreign direct investments (FDI), along with an increased private sector contribution to the country’s economy, are at the heart of economic overhaul plans.
Saudi Arabia seeks to increase FDI as a percentage of GDP, to 5.7 per cent by 2030 from 3.8 per cent, according to the Vision 2030 documents. The target for the private sector’s contribution to the economy is set at 65 per cent from about the base level of 40 per cent in the same period.
Saudi Aramco, the world’s biggest oil producer, is among the assets marked for privatisation through plans to sell less than a 5 per cent stake to the public next year in an estimated $100 billion IPO, which could possibly be the biggest-ever global share sale transaction.
“Honestly, across the board,” Mr Al Mubarak said when asked if Mubadala Investment will be interested in acquiring stakes in downstream assets in the kingdom.
“Every sector that we have [invested in], I think we will have opportunities in Saudi. We will be looking at Saudi and I think you will see us there for sure.”
Mubadala Investment’s recent forays include a Dh7.7bn investment in April of a Canada-based subsidiary in an olefins plant in Louisiana, the largest refining and petrochemical production hub in North America.
The conglomerate also announced a partnership with European fund manager Ardian, resulting in Mubadala Investment managing external capital for the first time.
“[This] is not something that any other sovereign funds have done which is actually seeking or receiving third party capital to invest [and] more importantly deploy capital for our fund to manage in terms of investments,” said Mr Al Mubarak.
There’s nothing that I can comment on right now but I can tell you for sure, we are looking, and we are working hard KHALDOON AL MUBARAK Mubadala Investment Company CEO