UAE-China investment fund commits $1bn for potential investments

The $10bn investment vehicle equally funded by China and the UAE aims to deploy capital in approved investments

Abu Dhabi’s Mubadala Investment Company is launching a $400 million tech fund that will target investment in European technology companies. Stephen Lock

Mubadala Investment Company together with its partners in China has committed $1 billion towards about 10 opportunities as part of the $10bn joint investment plan between Abu Dhabi and Beijing in line with the emirate's plans to diversify the economy away from hydrocarbons sector.

“We have made over 10 investment decisions, jointly [with our Chinese partners] and committed close to $1bn across eight to 10 investments,” Khaled Al Shamlan, the head of sovereign investment partnerships at Mubadala Capital told the Abu Dhabi Global Market’s inaugural Belt-and-Road financial summit in Beijing.

“In our short operations of two-and-a-half years in the Chinese market, we have managed to evaluate more than 150 [opportunities for] investments …… some of them are at the closing phase.”

In December 2015, Mubadala, China Development Bank Capital, and China’s State Administration of Foreign Exchange, agreed to set up a $10bn investment fund. The standalone investment vehicle, which is being equally funded by China and the UAE, aims to deploy capital against jointly-approved investments. It is mandated to look at a range of alternative investment strategies and special investment opportunities, including greenfield projects, with targets of building a balanced portfolio, sustainable returns and principal capital protection.

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Mubadala, which has more than $200bn of assets under management, and its Chinese co-investors are investing across sectors, Mr Al Shamlan said, without saying when the capital will be deployed.

“This investments vehicle has the agility to invest across different sectors and when it comes to asset classes [it is] agnostic,” he said.

Mubadala has been proactive in snapping up new assets and forging global partnerships to propel the company’s growth and exposure to other regions. The company, which is active in 13 industries and 30 countries around the world, teamed up with Greece’s New Economy Development Fund (Taneo) in March to set up a 400 million euro platform to co-invest in the European country. Under the terms of the agreement, both parties will chip in 200m euros each to the investment vehicle.

Mubadala’s pursuit of growth has also brought it to China, which is the world’s second-biggest economy and the UAE’s top global trade partner. Over the past 20 years China's economy recorded only one year of gross domestic product expansion below 5 per cent, he noted.

Emirates Global Aluminium, a Mubadala portfolio company which is the largest industrial entity in the UAE outside oil and gas, has also recently opened its offices in Shanghai in an effort to expand its footprint and extend its customer base into the region.

Mubadala, through semiconductor manufacturer GlobalFoundries has also set up a joint venture with the government of Chongqing in China to expand its global footprint by establishing a manufacturing facility in the country. The project has made significant progress and a “big announcement will be made in the coming year,” Mr Al Shamlan said.

“As we expand as an entity and as our investment strategy evolves over time, the main goal of Mubadala remains to be a conduit of economic diversification of Abu Dhabi’s portfolio away from hydrocarbons,” he added.