Mubadala Development, the Abu Dhabi Government's strategic investment arm, will sell stock in local companies it owns over the coming years to breathe new life into local markets and help its subsidiaries expand. Listing on the Abu Dhabi Securities Exchange (ADX) would be "a very natural evolution of what we want to do", Waleed al Muhairi, Mubadala's chief operating officer, told The National yesterday. "Once a given business is stable and mature, then absolutely."
Any listings, he said, were likely to be between five and eight years away for Mubadala's stable of mostly young companies. He would not specify what industries or individual businesses were ripe for a listing, and he said Mubadala would likely retain "some level of equity" in any company that offered shares to the public. Listing "is a great tool for monetisation, and it's a great tool to deepen and broaden the public markets you see here", he said. "Those are both important objectives for us."
Ali Khan, a director at Arqaam Capital in Dubai, said investors would welcome a greater chance to participate in the country's economic development and diversification plans. Stock exchanges in the UAE, which include the ADX and the Dubai Financial Market, have been plagued in recent months by price declines and low trading volumes. "At this stage, it's all about helping to facilitate a broader market, and I think it would be welcome," Mr Khan said. "Anything that would help the market move away from its heavy weighting in real estate and banks would be a good thing, and not just because of the challenges of today. It's never a bad time to look at broadening the market."
Mubadala owns regional businesses in sectors ranging from property to energy, including Abu Dhabi Aircraft Technologies, half of Emirates Aluminium and all of Yahsat, a satellite venture. It also has holdings in a variety of international industrial and finance giants, including nearly 20 per cent of Advanced Micro Devices (AMD), a US microchip maker; 22.4 per cent of Spyker Cars, the high-end car manufacturer; and 7.5 per cent of The Carlyle Group, a global private equity company.
Mubadala also owns 5 per cent of Ferarri, the car maker, and 0.7 per cent of General Electric, the US conglomerate with which it has a US$8 billion (Dh29.38bn) commercial finance joint venture. Those investments fit Mubadala's aim to foster the growth of industry in Abu Dhabi in line with the Government's plans to diversify economic activity away from petrochemicals revenues, Mr al Muhairi said. About 60 per cent of Abu Dhabi's GDP is attributable to petrochemicals income. The emirate sits on one of the world's largest reserves of crude oil.
Eventually taking holdings public and listing them on the ADX, Mr al Muhairi said, was something Mubadala would do regardless of the trends in trading volumes and stock prices, given its commitment to developing the local economy. "I think we already know that the folks at the ADX are spending a lot of time thinking about how they can deepen and broaden the local market," he said. "So we stand in support of that. The easiest way to deepen and broaden the market, regulatory change aside, is to encourage more listings there, and that will hopefully encourage more volumes and that type of thing. We would do it irrespective almost, because we see it as a way to develop the ADX."
Mubadala recently reported profits of Dh8.6bn for last year thanks to steady gains at its oil and gas companies - including Dolphin Energy and Pearl Energy, an oil and gas exploration and production company in South East Asia - and a large gain on its holding in AMD. The profits reversed its loss of Dh19.8bn in 2008. As its assets grow, Mr al Muhairi said, Mubadala was quickly developing from the small but ambitious company it started as in 2002 into an established institution with a rich set of investments.
"As you move into the next horizon where you are a little bit more institutionalised, the interactions change," he said. "The interactions change, the institutionalisation element that you overlay on top of it changes. But just as important, you always want to make sure you don't lose that part of you that made you special." The past year has not been without its challenges for Mubadala. A wide-ranging review of Masdar, a clean-energy business that Mubadala fully owns, started last year. Masdar, which is developing the carbon-neutral Masdar City near the Abu Dhabi International Airport, has already seen major changes in plans due to uncertainty about property projects there.
"We all know what's been going on in real estate," Mr al Muhairi said. "Real estate has been slow. It is not unreasonable to expect a review is going on. In fact, don't you think that's prudent? That's what anybody would do. And so, obviously, we are undergoing that right now, and we are supportive of that review process and will make whatever changes we need to in order to ensure both the economic viability and in order to meet our mandate."
He said Mubadala stood steadfastly behind Masdar, which he called "an important vehicle for us in an important sector for Abu Dhabi". The biggest challenge ahead, he said, was attracting the right people to run Mubadala and its subsidiaries. Mubadala's staff numbers grew to 622 at the end of last year, a rise of 36 per cent from the year before, according to the annual report the company released on Sunday.
"Mubadala is an agglomeration of its assets, but it's the people who drive the value creation process within those assets, and so making sure we have the right people is the be-all and end-all," Mr al Muhairi said. "That's everything, as far as I'm concerned." @Email:afitch@thenational.ae
