Mubadala intends to diversify its asset base as it continues to increase its investment in technology and health care. Photo: Mubadala
Mubadala intends to diversify its asset base as it continues to increase its investment in technology and health care. Photo: Mubadala
Mubadala intends to diversify its asset base as it continues to increase its investment in technology and health care. Photo: Mubadala
Mubadala intends to diversify its asset base as it continues to increase its investment in technology and health care. Photo: Mubadala

Business

Mubadala invests in US enterprise software company Medallia

The Abu Dhabi fund made the investment alongside private equity firm Thoma Bravo

Shweta Jain
Shweta Jain

December 08, 2021

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Mubadala Investment Company, Abu Dhabi’s strategic investment arm, has invested in US-based enterprise software company Medallia as part of its efforts to pivot towards the industries of the future.

The minority investment in the customer experience management specialist took place in collaboration with Thoma Bravo, which recently took Medallia private, Mubadala said on Wednesday. It did not disclose the value of investment.

Thoma Bravo took San Francisco-based Medallia private in October in an all-cash transaction valued at $6.4 billion.

Medallia captures experience data from customers and employees across several channels. The data is then analysed using the company’s proprietary artificial intelligence and machine learning technology to come up with predictive insights to drive business actions and outcomes.

Mubadala intends to diversify its asset base as it continues to increase its investment in technology and health care.

In 2020 alone, at the height of the Covid-19 pandemic, the Abu Dhabi company invested $29.4bn, including in technology and life sciences, sectors vital to the future of the UAE and Mubadala.

It invested $250 million in US biosimulation software company Certara in July as part of its international healthcare and investment portfolio.

In March, the fund agreed to plough £800m into Britain's life sciences industry over the next five years as part of a £1bn deal between the UK and the UAE.

Mubadala is at the heart of the government’s plans to diversify Abu Dhabi's revenue base and generate income from sources other than oil.

The sovereign fund’s $243.4bn investment portfolio spans five continents. It has interests in aerospace, information and communications technology, semiconductors, metals and mining, renewable energy, oil and gas, and petrochemicals.

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Group B: Paris Saint-Germain, Atletico Madrid, Botafogo, Seattle.

Group C: Bayern Munich, Auckland City, Boca Juniors, Benfica.

Group D: Flamengo, ES Tunis, Chelsea, (Leon banned).

Group E: River Plate, Urawa, Monterrey, Inter Milan.

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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Updated: December 08, 2021, 1:26 PM
MubadalaAbu Dhabi