It’s no secret that sponsors such as sovereign wealth managers and pension funds have increasingly sought to deploy capital on their own in recent years, instead of paying fees for d others invest on their behalf.
Mubadala, a wealth fund from the United Arab Emirates, is an example of a sponsor flexing its muscles to turn into a great generalist.
The Abu Dhabi state fund, which is an anchor investor in SoftBank’s first Vision Fund, has worked for years to lay the groundwork for more direct investing. Now that this capability is maturing, the company is increasing the speed and scope of its direct investments.
Mubadala participated in 157 direct investments in 2021, compared to just 45 the previous year, spanning buyouts, growth capital investments, seed investments and early and late-stage VCs, according to data from PitchBook.
This year, even as uncertainty rocks the markets, Mubadala is not giving up. The company has participated in 151 deals to buy direct stakes in companies so far this year, including tech startups and infrastructure companies, according to PitchBook data.
As the sovereign wealth fund matures and gains experience through its relationships with external managers, including SoftBank, its transition to a more active investment role and growing involvement in direct investments makes sense, Daniel Brett said. , Head of Research and Data at Global SWF.
Acting as a GP allows the sovereign investor to achieve better returns instead of having their profits eroded by management fees and carry costs, and it also helps to build Abu Dhabi‘s soft power and strengthen the country’s trade ties with other countries, Brett said.
“These moves are due to his own desire to become a more mature, proactive and diversified investor,” he said.
According to Alaa Halawa, Executive Director and Head of American Business for Mubadala Capital, which was launched in 2011.
“The majority of our business that we build in the field is thesis-based, original, and our own creation of deals. We run deals. We syndicate deals. We sit on boards of directors,” he said. -he declares.
Mubadala has previously made direct investments in companies or co-invested alongside other fund managers. He has backed companies including Hollywood talent agency and media company Endeavor and Alphabet’s self-driving car unit Waymo, as well as Jio Platforms, an internet service provider in India.
However, the pace at which the company acquires direct stakes in companies has increased in pace and scale over the past two years, according to data from PitchBook. The increase in activity follows a series of measures taken to achieve the sovereign investor’s ambition of doubling the size of its assets to half a trillion dollars by 2030. Starting in early 2021, Mubadala organized its business to focus on four areas: direct investments, UAE investments, disruptive investments, and real estate and infrastructure investments, Bloomberg reported.
Mubadala has taken steps to strengthen its investment capabilities, including recruiting talent to staff its in-house investment team in the US and Europe. This year, he made several new hires with different expertise, poaching from Summit Partners, HIG Capital and Viking Global Investors, according to reports on LinkedIn.
Last year, Mubadala Capital announced plans to add more professionals to its London and New York offices in a bid to bolster its private equity strategy. The moves came as Mubadala Capital closed its third private equity fund, MIC Capital Partners III, at around $1.63 billion, including commitments from BlackRock and other institutional investors.
It is also trying to partner with other sovereign wealth funds in the emirate for new ventures. This year, Mubadala-backed artificial intelligence and cloud computing firm G42 launched a $10 billion fund, in partnership with Abu Dhabi Growth Fund, to invest in early-stage technology companies in the markets. emerging.
The investor favors buyout deals, which make up the largest portion of all his private equity and venture capital deal types tracked by PitchBook. He has co-invested with private equity giants in a number of notable deals, including EQT’s acquisition of Swedish medical freight provider Envirotainer and Warbug Pincus’ deal to buy Informa’s Pharma Intelligence.
Mubadala has also been active in venture capital, taking stakes in companies such as Turkish grocery delivery startup Getir and Swedish buy now, pay later Klarna. In another example, the firm led an investment in digital insurer Wefox, joined by a mixed group of venture capitalists and fund managers.
Its San Francisco-based venture capital team is marketing a second core fund and a Europe-focused vehicle, according to Halawa. He declined to disclose the target size of the two new funds, but said the company had made more than 40 investments from those funds.
Mubadala managed 1,045 billion UAE dirhams (about $284.5 billion) in assets at the end of 2021. Its investment arm Mubadala Capital has $13.7 billion in assets under management, including third-party capital, according to a document that reports the manager’s 2021 financial results. a promotional video on the company’s official YouTube account released in May.
Marina Temkin contributed to this report.
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