Mubadala Investment Company, Abu Dhabi’s sovereign investment arm, has formed a strategic partnership with New York-based alternative asset manager Blue Owl Capital as it seeks to co-invest in private credit opportunities amid a tightening monetary environment around the world.
The partnership was established with a $1 billion commitment to Blue Owl’s credit platform and will initially focus on its technology lending strategy, which provides financing solutions for several technology and software companies, Mubadala said in a statement on Monday.
“We are very pleased to partner with Blue Owl as we expand our credit investment strategy into technology lending,” said Fabrizio Bocciardi, head of credit investments at Mubadala.
“Private credit has become an integral part of the financing solutions available to support corporate growth and there is an increasing demand for debt capital from well-established and high-growth software and technology businesses, which typically have leading market positions, resilient customer base and strong financial fundamentals.”
Mubadala, which is at the heart of Abu Dhabi’s efforts to diversify its economy, manages more than $284 billion in assets globally.
In recent years, it has stepped up its investment in health care, infrastructure, technology, mobility, clean energy and life sciences, and has teamed up with private equity companies, pension funds and other investors as it expands its portfolio of assets.
In January, Mubadala signed a joint venture with Alpha Dhabi Holding, a unit of Abu Dhabi's International Holding Company, to co-invest in private credit opportunities.
As part of that partnership, the two companies will collectively invest up to Dh9 billion ($2.5 billion) over the next five years, leveraging Mubadala’s long-term and strategic partnership with Apollo Global Management.
Mubadala will hold 80 per cent ownership of the Abu Dhabi Global Market-based joint venture entity, with the remaining 20 per cent held by Alpha Dhabi.
The private credit industry, or non-bank lending, is estimated to be worth about $1.3 trillion.
Private credit accounted for about 17 per cent of total credit last year and has increased by 14 per cent each year since 2000, about twice the rate of public credit, according to Bank of America Merrill Lynch.
In October, Mubadala and private equity firm KKR forged an alliance in which both companies will co-invest across performing private credit opportunities in the Asia-Pacific region to address a shortage of capital.
Since 2009, Mubadala’s credit investments unit has been investing in private debt opportunities, with a focus on direct lending to middle market and large cap companies across a variety of industries and asset classes, according to the statement.
Geographically, the unit’s focus has primarily been on North America and Europe, but has recently been strengthening its exposure in the rapidly growing Asia Pacific credit market, the statement said.
“This mandate reflects the depth of our direct lending capabilities within the technology sector and our ability to deliver differentiated solutions that enable our clients to meet their investment objectives,” said Doug Ostrover, co-chief executive of Blue Owl.
With $150 billion in assets under management, Blue Owl provides businesses with private capital solutions and offers institutional and individual investors differentiated alternative investment opportunities.