Mubadala in the vanguard of nation’s quest for economic diversification

▶ Abu Dhabi investment company says strong operational performance and gains on financial investment

Mubadala Investment Company has begun to put significant money into some of the world’s fastest-growing businesses of the future to support Abu Dhabi’s economic diversification efforts, its chief executive said yesterday.

The company was formed after Mubadala Development merged with Ipic in May.

In an exclusive interview with The National, Khaldoon Al Mubarak said that the Abu Dhabi-owned investment company was already moving on its US$15 billion commitment to the Vision technology fund led by Japan’s SoftBank.

“We have been active since the past six weeks over this partnership,” Mr Al Mubarak said.

“We have deployed significant capital already into very different companies around the world, from China to the US to Europe.

“That gives us insights into very attractive deal flow in a sector that is important for us as we look to the future diversification of Abu Dhabi.”

The fund, expected to ultimately raise $100bn, backed business messaging app Slack and US online sports merchandise retailer Fanatics this month, and Indian e-commerce company Flipkart and AI chip developer Nvidia in August.

Mubadala Investment is focused on supporting its shareholder’s diversification strategy and “healthy returns” on investments, Mr Al Mubarak said.

“Our first year in operation as Mubadala Investment Company is going to be a milestone year for us and set the tone for the future,” he said.

It also reported first-half results yesterday, swinging to a profit on the back of strong operating income, gains from financial investments and favourable currency movements.

Mubadala is also exploring opportunities in Saudi Arabia, which is also a partner in the SoftBank Vision Fund, as the kingdom opens up the biggest Arab economy to foreign investors, Mr Al Mubarak said.

Mubadala Investment Company, Abu Dhabi’s strategic investment company with Dh465.5 billion in assets, swung to a profit in the first half of this year on the back of strong operating income, gains from financial investments and favourable currency movements.

The company, which reported its first independent interim results after merging with International Petroleum Investment Company (Ipic), said first-half profit stood at Dh4.2bn compared with a loss of Dh4.7bn a year earlier, according to a statement yesterday.

First-half 2017 revenues climbed 14.4 per cent to Dh83.4bn from Dh72.9bn recorded for the same period in 2016, primarily driven by the company’s investment platforms including the upstream and integrated oil and gas, semiconductors, and aerospace sectors. Total assets reached Dh465.5bn as of June 30, 2017, rising 3.5 per cent from Dh449.7bn at the end of last year, helped by dividends from financial investments.

“The results from the first half of 2017 reflect the strength and scale of Mubadala Investment Company’s diversified global portfolio and robust balance sheet,” said Khaldoon Al Mubarak, the group chief executive and managing director. “We will continue to integrate, optimise and grow the company’s assets under our global business platforms, to create and realise maximum financial and strategic returns to support diversification of the economy of Abu Dhabi and the country.”

Mubadala Investment’s portfolio of investments spans 13 sectors across more than 30 countries, invests primarily in sectors such as petrochemicals, petroleum, aerospace, ICT, semiconductors, metals and mining, renewable energy, healthcare and utilities.

It manages financial holdings and owns stakes in the local, regional and global firms including Austria’s Borealis and OMV, Bahrain-based Investcorp Bank, the UAE’s Emirates Global Aluminium, telecom Operator du, renewable energy firm Masdar and the country’s biggest-listed contracting firm Arabtec Holding.

Mubadala Investment was formed through the merger of Mubadala Development Company and Ipic in the first half of this year to improve efficiencies and broaden its investment portfolio.

“In the first half of 2017, we worked to integrate the two portfolios under the Mubadala Investment Company,” the company’s chief financial officer Carlos Obeid said. “We managed our costs prudently, while monetising mature assets and growing our profit as we reduced our overall leverage.”

The company in June sold a 40 per cent stake in Tabreed to France’s Engie for Dh2.9bn, but it still remains the largest shareholder in the UAE utility firm with a 42 per cent stake.