Mubadala Investment Company, Abu Dhabi’s strategic investment arm, takes a "longer-term" view on investments and is ready to pivot when required, its chief executive said.
“Our investment strategy is to take a long-term view, seek sustainable returns, identify thematic sectors and pivot when needed,” Khaldoon Al Mubarak said at the Investopia Summit in Dubai on Monday.
He also confirmed that the company has decided to pause investments in Russia, which currently represent less than 1 per cent of its portfolio.
“We have been investing in Russia for more than 10 years,” he said.
“What is happening in this crisis between Russia and Ukraine is catastrophic, in terms of human life and in terms of the impact it’s having on economies all over the world. But that doesn’t change our conviction and how and where we invest.”
Mubadala acquired a 1.9 per cent stake in Russian petrochemicals company Sibur for an undisclosed amount in December last year.
Since entering the Russian market in 2010, the Abu Dhabi sovereign fund has made investments in a number of businesses to the tune of more than $3 billion.
It built a portfolio of about 50 investments across sectors, ranging from infrastructure and property to commodities, banking, logistics and technology, resulting in strong financial returns.
“We invest with conviction. For instance, we took a thematic view on semi-conductors because we knew they would be an important part of global economies and a critical component to many industries. It was a sector that was not loved then, but our investment lived through various cycles.”
Referring to the current energy situation, he attributed it to underinvestment in oil and gas development during the shift to renewable energy.
“We started investing in renewable energy in 2006, but we didn’t completely wean off from traditional sources. It is key to manage the energy transition in an optimal way, with a mix of both traditional and non-traditional sources,” Mr Al Mubarak said.
Discussing the global economy, he said Covid-19 resulted in two outcomes of globalisation. On one hand it caused supply chain disruption and a movement towards localisation, while on the other it led to collaboration in areas such as life sciences to solve a global pandemic, the executive said.
Russia’s military offensive in Ukraine has changed how the world has framed globalisation in the past 30 to 40 years, Larry Fink, chief executive of BlackRock, said at the event.
“Russia’s aggression in Ukraine made the EU realise its dependence on Russian oil and gas, wheat and corn. This is going to prompt companies and governments worldwide to re-evaluate their dependencies — something that Covid-19 had already spurred many to start doing,” he said.
"This may lead companies to onshore or nearshore more of their operations.
“Corporate margins had accelerated in the past 20 years due to efficient supply chains. However, we are now facing difficulties in supplies and deliveries that we are not accustomed to. This will change the world order and make governments think more long term,” Mr Fink said.