Abu Dhabi’s Mubadala Investment Company anticipates strong financial results in 2021 as it pursues a strategy of investment in “sectors with tailwind” from technology to renewable energy, a senior executive said.
The fund, which is yet to reveal its 2021 results, expects this year to mark the end of the Covid-19 pandemic and may add other sectors to its portfolio that create “global champions” in future to help accelerate the UAE’s economic diversification efforts, Musabbeh Al Kaabi, its chief executive of UAE Investments, said.
He spoke by video during an Atlantic Council session titled Economic diversification priorities post-pandemic.
“We deployed significant capital in 2020 despite the fact that it was the first year of the pandemic and we achieved very strong financial results in 2020 and we believe that 2021 also will see a very strong year for Mubadala,” Mr Al Kaabi said.
“We maintain a consistent view of the future and we maintain also a strategy that is forward-looking and anchored around a few sectors that are enjoying strong tailwinds.”
Mubadala’s comprehensive income in 2020 soared 36 per cent to a record Dh72 billion ($19.6bn) from Dh53bn a year earlier, as it navigated its portfolio through one of the toughest years for the global economy in decades.
Equity and fund investments as well as growth of assets across sectors drove income. The fund’s investments in 2021 included its private equity deal with the world’s largest asset manager BlackRock and a $2bn co-investment pact and purchase of a minority stake in Silver Lake.
Mubadala invests in sectors including life sciences, renewables and advanced manufacturing, overseeing entities such as clean energy company Masdar and aerospace structures unit Strata Manufacturing.
“Hopefully, we’ll see more and more activities in these three sectors. Of course, the world is changing now and with time we may add or upgrade certain other sectors that would create global champions,” he said.
Al Kaabi said there are “very encouraging” early indications that 2022 could mark the end of the two-year global pandemic, remaining “optimistic” that the world will move forward with economic activities and a return to normality this year.
The UAE reported 2,792 new Covid-19 cases on Tuesday, taking the overall tally of infections to 811,029. Three people died after contracting the virus, raising the death toll to 2,198. Another 1,166 people recovered, taking the total to 762,379.
Globally, the number of new Covid-19 cases on Tuesday reached 332,512,878, while the death toll stood at 5,567,166, according to coronavirus tracker Worldometer.
The world’s transition away from fossil fuels towards clean energy will still require continued investments into oil to meet the growing energy demand, Mr Al Kaabi said.
“We hope that we will see more renewable energy in the system, but we need to be practical as well,” he said. “Oil and gas will remain a significant part of that energy demand globally.”
Crude demand is nearly touching pre-pandemic levels, stretching the energy system, hampered by a lack of oil investments.
“I hope to see more responsible investment in that space to ensure that we have a balanced supply and demand, this is something we need to monitor for the foreseeable future,” he said.
During the energy transition there will be “no one solution fits all”, he said.
Mubadala, which is focused on renewable energy investments, is also working on initiatives to “transform legacy assets to become more forward-looking and ESG-compliant”, Mr Al Kaabi said.
“As a responsible investor we work with these assets to update their portfolios to become more ESG-friendly, especially the oil and gas portfolio we have,” he said.
Abu Dhabi and the UAE have the right infrastructure to capitalise on opportunities in renewable energy, specifically hydrogen, the executive said.
“I think Abu Dhabi has strong ingredients to be a reliable, low-cost supplier of hydrogen globally,” he said.
Last month, Abu Dhabi National Oil Company and Taqa said they will join Mubadala to become shareholders in Masdar, in a move that will help increase the clean energy company’s renewable power capacity to more than 50 gigawatts by 2030.
Under the partnership, both Adnoc and Taqa will become shareholders in Masdar, which was previously fully owned by Mubadala. The deal will help create a “global champion in renewables and green hydrogen”, and will accelerate progress towards the UAE’s strategic goal of achieving carbon neutrality.