Complex Made Simple

Abu Dhabi’s Mubadala taking tech start-ups to the finish line

Abu Dhabi State investment company Mubadala is pouring hundreds of millions into European tech start-ups with an eye to develop a thriving startup eco-system locally.

Mubadala just committed $200 million as part of a joint $400 million fund with Japanese conglomerate SoftBank, cementing relations with an international investor with whom the UAE company has invested $15bn in 2017 as part of Softbank’s Vision fund.

Tech is a component of any future business, ecology and thriving economy and Mubadala plans to be right in the middle of it.

Beckoning Europe 

 According to sources telling the Financial Times (FT), SoftBank is currently saddled with $154 billion in gross debt and the new fund “raises the prospect that Mubadala’s influence with the Vision Fund (will) only grow by allowing it to shape SoftBank’s tech investments.”

SoftBank’s once-solid relationship with Saudi which committed $45bn to its current ($97bn) fund has been shaken from when company CEO Masayoshi Son failed to officially attend Riyadh’s investment conference the Future Investment Initiative last October. A further $45 bn Saudi investment in Vision Fund II hasn’t yet materialized despite Bloomberg journalists reporting last October 3 that Saudi Arabia’s Crown Prince Mohammed bin Salman (or MBS) saying he planned to invest that sum with SoftBank.

“In the meantime, (Softbank) is barreling ahead with Mubadala, which will reportedly use its new fund to write to European startups checks of between $5 million and $30 million,” reported Tech Crunch.

This is below a typical investment size for the Vision Fund, which has injected $502m into ‘Improbable’, a UK virtual simulation start-up, and $520m into Auto1, a German online car dealer, according to FT.

One person told FT “the plan was to ultimately pass the best Mubadala-backed deals to the Vision Fund for bigger cheques — which would be likely to strengthen Mubadala’s hand in negotiations with start-ups.”

Mubadala’s European venture fund will be run out of a new office in London, expected this spring.

AUM for SoftBank and Mubadala

The Softbank Vision Fund, managed by Softbank Group, raised more than $93 billion from investors including the Abu Dhabi investor, Saudi Arabia’s Public Investment Fund, Apple Inc, Foxconn, Qualcomm, Sharp Corp and SoftBank Group Corp, according to Reuters.

Mubadala Investment manages a $225bn portfolio.

According to Zawya, Mubadala was merged with Abu Dhabi Investment Council (ADIC) in March last year.  At the beginning of 2017, the government of Abu Dhabi merged what was formerly known as Mubadala Development Co with International Petroleum Investment Co. (IPIC) to form Mubadala Investment Co as a stronger state fund.

Mubadala Investment Company allocated over 80% of its investments internationally, its chief executive. Khaldoon Al Mubarak, said at Milken Institute’s Mena Summit in Abu Dhabi.

Abu Dhabi start-up ecosystem

Mubadala will be working with international funds, inviting them to invest in Abu Dhabi to boost the startup eco-system in the capital, GulfNews reports.

 “We will be working with international funds, inviting them to Abu Dhabi, to play a role in the community here,” said Ebrahim Ajami, head of Mubadala Ventures, the venture capital arm of Mubadala Investment Company, while recently speaking to reporters in Abu Dhabi.

In the next 12 months, the company will be announcing funds from the US and Europe, but also closer to the region such as India, Pakistan, Eastern Europe and Western Europe which are expected to set up shop in Abu Dhabi and explore the region more seriously, he said.

Mubadala, which owns stakes in private equity company Carlyle Group and General Electric, is active in 13 sectors across more than 30 countries, investing in industries that include aerospace, ICT, semiconductors, metals, mining and renewable energy and utilities, and manages a diverse portfolio of financial holdings.