Alpha Dhabi has doubled its shareholding and capital commitment in its private credit joint venture with the emirate’s sovereign fund Mubadala Investment Company as it looks to broaden its portfolio of investments.
Under the revised partnership agreement, the investment holding conglomerate has boosted its capital commitment in Micad Credit JV to $1 billion, it said in a statement to Abu Dhabi Securities Exchange, where its shares are traded.
The company has also raised its shareholding from 20 per cent to 40 per cent in Micad, which manages about $1.7 billion in assets across 45 portfolio companies.
The parties have also agreed to expand the investment horizon of Micad, which is managed by alternative asset manager Mubadala Capital.
The expended scope includes “additional private credit strategies available through Mubadala Capital's long-standing relationships”, alongside its existing US and European direct lending activities, Alpha Dhabi said on Monday.
“This expanded partnership with Mubadala Capital reflects our conviction in private credit as a strategic pillar of Alpha Dhabi's investment portfolio,” said Hamad Al Ameri, managing director and group chief executive of Alpha Dhabi. “Doubling our commitment and broadening our mandate is a deliberate step – one that positions us to access a wider universe of high-quality global opportunities.”
Demand for private credit – which refers to lending to companies by institutions other than banks – has grown exponentially since the 2008-09 financial crisis. Unlike most bank loans, private credit providers tailored deals to meet the requirements and needs of borrowers to fit the size, type or timing of transactions.
The alternative source of funding has grown even popular among corporate borrowers in the past few years and Morgan Stanley expects it could become a $5 trillion market by 2029.
Private credit, however, has come under scrutiny in the past few quarters, after a few high-profile bankruptcies in the US, which raised questions about the quality of underwriting in the industry. Opinion remains divided on whether private lending is adding new layers of complexity to the financial system and the broader economy.
Since its inception in 2023, however, Micad has been focused on identifying and investing in “compelling credit opportunities in sectors and geographies that offer attractive risk-adjusted returns”, Alpha Dhabi said.
“As our credit business continues to grow, we remain focused on expanding access to differentiated private credit opportunities through our investment capabilities and long-term global relationships in the sector,” said Omar Eraiqat, president and chief investment officer for credit and solutions at Mubadala Capital.
