STRONGER TOGETHER

Abu Dhabi 2017 | ECONOMY | VIP INTERVIEW

TBY talks to Khaldoon Khalifa Al Mubarak, Group CEO & Managing Director of Mubadala Investment Company, on how the merging of two key investment entities will drive Abu Dhabi's diversification strategy.

The newly formed Mubadala Investment Company, which was formally established on May 1, 2017, brings together an asset portfolio worth USD125 billion. What was the rationale behind this merger?

The rationale for merging two of the Emirate's key government-owned investment entities, International Petroleum Investment Company (IPIC) and Mubadala Development Company, was to create enhanced economic value for the government of Abu Dhabi. As a combined entity, Mubadala Investment Company will realize synergies and growth in multiple sectors, including energy, utilities, technology, aerospace, industry, healthcare, real estate, and financial investments. Mubadala Investment Company has a stronger, more dynamic balance sheet and world-class expertise in a pool of industries vital to Abu Dhabi's growth. As a result, it can contribute more significantly to the diversification of the economy, in line with the Abu Dhabi Plan and the country's long-term vision.

What do the two organizations bring to Mubadala Investment Company in terms of heritage and legacy?

IPIC and Mubadala Development Company have played leading roles in Abu Dhabi's economic growth and diversification. IPIC was established in 1984 by the late Sheikh Zayed bin Sultan Al Nahyan, with the aim of directing Abu Dhabi's energy expertise and petroleum heritage toward the creation of a modern, diversified economy. IPIC's first major acquisition was Cepsa and, since then, it has become a global powerhouse in the hydrocarbon value chain with investments in 18 leading companies worldwide. Mubadala Development Company was established in 2002 to advance the Emirate's economic diversification. The company's first project was Dolphin Energy, a groundbreaking joint venture with Occidental Petroleum and Total that directly connects gas from Qatar's North Field with customers in the UAE and Oman, and today meets approximately 30% of the UAE's energy requirements. By 2017, Mubadala Development Company had become an active investor across multiple sectors in more than 20 countries. As a combined force, the two companies form an investment powerhouse that includes partnerships and subsidiaries in more than 30 countries and has a group-wide employee base of more than 68,000 people.

Given the significant scale of the new company, how has the business been structured?

Committees made up of representatives from both Mubadala Development Company and IPIC worked together over a six-month period to develop a structure that would best serve the mandate given to us by the government of Abu Dhabi. The business has been organized across four investment platforms of significant scale: petroleum and petrochemicals; technology, manufacturing, and mining; aerospace, renewables, and information and communications technology; and alternative investments and infrastructure. These platforms will help accelerate the diversification of the Abu Dhabi economy through strategic investments across critical sectors within the UAE and abroad.

Just under one-third of the new Mubadala Investment Company's portfolio is comprised of businesses in the petroleum and petrochemicals sectors. What will your strategic focus be in this area and how does this contribute to Abu Dhabi's diversification ambition?

Mubadala Investment Company's petroleum and petrochemicals platform makes up 31.1% of the asset portfolio and includes significant investments in companies such as Cepsa, Nova Chemicals, Borealis, and Mubadala Petroleum. While the development of non-oil sectors such as aerospace, renewables, and metals were key pillars of Mubadala Development Company's strategic focus, oil and gas have always been a key component of its portfolio. Today, Mubadala Petroleum pursues oil and gas exploration and production in eight countries across the eastern hemisphere, building on the UAE's hydrocarbon expertise. What is exciting about the merger with IPIC is that we now have 18 leading companies that operate across the hydrocarbon value chain. So, in addition to increased exploration and production activity, Mubadala Investment Company also now has significant midstream and downstream capability in areas such as shipping and pipelines, retail and marketing, petrochemicals, and power and utilities. We see significant opportunities to build on the Emirate's legacy of hydrocarbons expertise, particularly in the petrochemicals sector, and look forward to developing as one united business.

Industrialization is a central component of Abu Dhabi's economic development. How will Mubadala Investment Company continue to create a sustainable manufacturing industry in the Emirate and the wider UAE?

It will continue its efforts to support the transformation of Abu Dhabi's economy through the growth of industrial champions in sectors that capitalize on Abu Dhabi's natural advantages. These anchor investments in the UAE are key to growing non-oil GDP and creating new jobs in diverse fields. Abu Dhabi is leading the way in a number of manufacturing industries, exporting high-quality products to top-tier companies around the world and providing high-skilled jobs to local talent. Mubadala Investment Company has created tens of thousands of jobs in the UAE since the inception of its parent companies, as well as many more in other markets. For example, Emirates Global Aluminium is today one of the world's five-largest primary aluminium producers, manufacturing high-performance aluminium for use in a range of applications. It has a formidable track record of innovation, performance, and profitability, with more than 300 global customers in more than 60 countries. In aerospace, Strata is producing high-quality component aircraft products for original equipment manufacturers and has partnerships with leading aircraft manufacturers Airbus and Boeing. It is both an innovator and key employer of Emirati talent. 2016 saw Strata's percentage of Emirati technicians cross the 50% mark, in part driven by a highly successful technician-training program in collaboration with the UAE University, which graduated another 105 UAE nationals last year. Through these global champions and other critical UAE investments, Mubadala Investment Company will continue to support the growth of a strong, diversified national manufacturing industry.

What will be the investment strategy for Mubadala Investment Company outside of Abu Dhabi and how is the company allocating a more varied range of sectors within its portfolio?

Mubadala Development Company and IPIC were both highly active globally, and as a combined entity with partnerships and subsidiaries in more than 30 countries, this will continue. Our focus remains helping to fulfill Abu Dhabi's long-term vision for a globally integrated and diverse economy, and operating as a trusted global business that partners with the world's best companies and institutions. Our semiconductor business GLOBALFOUNDRIES' international presence embodies our approach to investing in globally integrated sectors. Through nine fabrication facilities spanning three continents, GLOBALFOUNDRIES has established Abu Dhabi's footprint in the advanced technology sector—a core pillar of the Emirate's diversification strategy. IPIC has brought the new company a significant international portfolio of assets, including stakes in Cepsa and Borealis, one of the largest polyolefin producers in the world. In addition to these established assets, we are also continuing to explore new markets through capital investments and a range of Sovereign Investment Partnerships. For example, we have established relationships with sovereign-backed entities in Russia, China, and France that are creating significant opportunities in a variety of sectors with like-minded partners. In addition, our dedicated financial arm, Mubadala Capital, began in 2017 to manage third-party capital for the first time, following a transaction with Ardian, the independent private investment company.

 

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