Mubadala Backed UAE Firm Sets Up USD10 Billion Fund for Tech Deals
(-Written by Mumtaz Afrin): - A $10 billion fund with a focus on technology investments in emerging economies is being established by the artificial intelligence company G42, which has its headquarters in Abu Dhabi and is backed by Mubadala Investment Co. and Silver Lake. The organisation will be established in collaboration with the Abu Dhabi Growth Fund, which was established by the government-run ADQ last year. The national security adviser for the United Arab Emirates, Sheikh Tahnoon Bin Zayed, is in charge of a commercial empire that includes both G42 and ADQ.
A division of G42 will manage the new fund, which will focus on late-stage growth businesses with disruptive technologies. It will function as a private equity investor, with a sizeable portion of money designated for high-growth areas, in industries such as healthcare, intelligent mobility, and renewable energy.
Two of the sovereign wealth funds of the Emirate, Mubadala and ADQ, have been working together more closely since the passing of Sheikh Khalifa, the leader of Abu Dhabi and the UAE, in May. This week, the Mubadala-backed artificial intelligence company G42 partnered with ADQ's venture capital arm, the Abu Dhabi Growth Fund, to create a US$10 billion fund with a focus on tech investments in emerging markets.
The G42 Expansion Fund will focus on providing private equity to disruptive late-stage firms in high-growth industries. G42, based in Abu Dhabi, has hired from the teams of regional sovereign wealth institutions, in which Mubadala has a significant minority share and is also supported by US private equity firm Silver Lake. Mubadala also has a significant minority stake in G42.
"With the G42 Expansion Fund," said Peng Xiao, CEO of G42, "we intend to accelerate our worldwide effect not just through the deployment of funds, but also by offering our portfolio firms special access to our networks, management, and operational assets."
Rajeev Misra, a SoftBank executive, received support last month from Mubadala, ADQ, and the Royal Group conglomerate for his new US$6 billion multi-asset investment vehicle. Sheikh Tahnoon bin Zayed al Nahyan, the UAE’s national security adviser, heads ADQ and the Royal Group, while Mubadala is chaired by his brother, Sheikh Mohamed bin Zayed Al Nahyan (colloquially known as MBZ), who was appointed as Sheikh Khalifa's successor. They are a part of the infamous "Bani Fatima six" about their mother. Khalifa Al Suwaidi, a former CIO at ADQ, is the head of the Abu Dhabi Growth Fund.
The deals involving G42 and Misra highlight the changing dynamic inside Abu Dhabi and the larger federation of emirates with Sheikh Tahnoon being considered MBZ’s number one among his inner circle. Due to their close relationship, Mubadala and ADQ, which have portfolios of $284 billion and 108 billion dollars respectively, could continue to work together while also losing some of their strategic differentiation.
Private equity and venture capital are gradually replacing ADQ's previous role as a holding firm predominated by domestic infrastructure assets. According to the Global SWF database, ADQ's Abu Dhabi Growth Fund has made private equity investments totalling more than US$1.4 billion, of which about US$430 million has been made so far this year. The VC fund has allocated roughly 40% of this sum to businesses in the US, 25% to startups in India, 20% to startups in Turkey, and the remaining amounts to startups in the UK, Germany, and Israel. Although it has made investments in finance, EDtech, and tech, it has placed a lot of focus on supporting e-commerce.
Meanwhile, Mubadala has directly invested an estimated US$725 million in venture capital, via Mubadala Ventures, year-to-date. Both funds are investing in private equity at roughly the same rate when their relative sizes are taken into consideration. If anything, partnering with the more established Mubadala in private equity techniques would help ADQ's investment acumen soar. Mubadala itself is the result of the amalgamation of three smaller, unique sovereign wealth funds.
AI To Healthcare
G42 is a cloud computing and artificial intelligence company with operations in the energy, healthcare, and autonomous vehicle industries. The business established a joint venture with Beijing-based Sinopharm last year, initiating the first exportation of the Chinese vaccine.
Following the so-called Abraham Accords, which restored relations between the two countries, it opened the first office of an Emirati company in Israel and launched the region's first autonomous car experiments. G42 has been expanding its investment team over the past year with major recruits from Abu Dhabi's sovereign wealth institutions.
With the G42 Expansion Fund, G42 CEO Peng Xiao said in a statement, "We seek to accelerate our worldwide influence not only through the deployment of funds, but also by offering unique access to our networks, management, and operational assets to our portfolio firms." He will preside over the committee overseeing investments for the new fund, which will also include Al Suwaidi.
In G42, Mubadala holds a small minority stake. While other investors walked away from what they perceived as riskier and maybe overvalued assets, the US$280 billion funds themselves stepped in to invest in technology-focused enterprises.
The US private equity firm Silver Lake invested in G42 last year, and Egon Durban, co-CEO of Silver Lake, is a board member of the Abu Dhabi company.