Fitch affirms Mamoura credit ratings on strong Abu Dhabi government support

Fully-owned subsidiary of Mubadala Investment Company has a 'stable' outlook, rating agency says

The Abu Dhabi skyline from Al Bateen marina. Fitch says Mamoura is helping to diversify the country's oil-based economy. Alamy

Fitch Ratings has affirmed credit ratings of Mamoura Diversified Global Holding (MDGH), a wholly-owned subsidiary of Mubadala Investment Company, based on its strong affiliation with the Abu Dhabi government.

The rating agency also said that Mamoura's outlook on all ratings remains stable.

Mamoura's long-term local and foreign-currency ratings were affirmed at 'AA' — the second-highest investment grade rating by Fitch — on a par with the Abu Dhabi’s sovereign rating.

The stable outlook of the company reflects Fitch’s views of Mamoura being a government-related entity and a sovereign wealth fund of Abu Dhabi, which is “mandated to diversify the country's oil revenue-based national economy”, the rating agency said.

“As a key economic agent of the Abu Dhabi government, Fitch does not expect changes to MDGH's status, ownership and control over the medium term.”

Set up in 2002, MDGH is a strategic investment, development and asset management vehicle of the Abu Dhabi government.

After the transfer of a significant portion of International Petroleum Investment Company’s assets in 2018, MDGH's portfolio currently spans five continents, with interests in aerospace, information and communications technology, semiconductors, metals and mining, renewable energy, oil and gas, petrochemicals, utilities, health care and others.

At the end of 2021, Mamoura’s operating profit increased to Dh34.9 billion, a significant rise from Dh9.7 billion recorded at the end of 2020. Oil-related income accounted for about 45 per cent of MDGH's Dh55 billion revenue last year.

“MDGH maintains sound financials with low indebtedness and robust liquidity,” Fitch said.

“Fitch expects strong capitalisation with debt at around 0.5 times equity over the medium term.”

The government of Abu Dhabi-contributed equity to MDGH amounted to more than Dh296 billion, or about 60 per cent of its total assets, at the end of last year.

“Since 2014, MDGH has not paid any dividends to its shareholder and retained all earnings for reinvestment.”

As a key economic agent of the Abu Dhabi government, Fitch does not expect changes to MDGH's status, ownership and control over the medium term

Fitch Ratings

MDGH, with other holdings under Mubadala, had assets of $285 billion under management at the end of 2021. It has a global footprint, with 75 per cent of its assets allocated outside the UAE with the majority in North America followed by Europe and the Asia Pacific region, Fitch said.

Investments by private and public listed companies accounted for about 65 per cent of MDGH invested assets, alternatives investments made up 24 per cent, real estate and infrastructure 8 per cent, while credit investment accounted for 3 per cent, the rating agency added.

A proxy funding vehicle of the Abu Dhabi government, MDGH's total debt was stable at Dh126.8 billion at the end of 2021.

“About 63 per cent of its outstanding liabilities are at fixed rates and the remainder at floating rates and hedged,” Fitch said.

Nearly 50 per cent of the company’s debt matures after five years, and refinancing risk is mitigated by improved year-end cash reserves, undrawn committed bank lines of $2.5 billion as at end-2021 and MGDH's strong access to financial markets.

The company’s “foreign-currency denominated debt is hedged, mitigating foreign-exchange risk”, Fitch said.