Dubai Airshow: Mubadala Aerospace Eyes US Deals

The aerospace unit of Abu Dhabi investment fund Mubadala is targeting acquisitions in the United States to expand its manufacturing capabilities after securing billion-dollar contracts at the Dubai Airshow, it said on Wednesday.

Mubadala Aerospace won industrial orders worth over $5 billion at the air show this week to sell parts and materials to planemakers Boeing and Airbus.

The deals could provide a reciprocal boost to Gulf economies after their state-owned airlines placed blockbuster orders worth about $150 billion at the event.

Mubadala Aerospace, which already builds lightweight parts for Boeing and Airbus, plans to expand its manufacturing operations and also acquire other businesses.

“We have said before that we would put up to $500 million into building facilities and capabilities. Now, I think that number will have to go up,” said Homaid Al Shemmari, executive director of Mubadala Aerospace.

“We need to look at what is the space, manpower and other requirement.”

The Abu Dhabi-based firm’s next phase of expansion would include acquisitions of companies in aero-structures, engineering, research and development areas, preferably in the United States.

“We want to spend a good percentage of our capital outside the UAE. And I would go for the U.S. to begin with,” Shemmari said.

“I think an acquisition in the U.S. would probably be the best because the UAE currency is pegged to the dollar and that helps me reduce my risks. Also, labour relations in the U.S. are not as complicated as some other parts of the world,” he added.

The company aims to close a deal within the next three years, he said.

Mubadala Aerospace aims to be among the world’s top three manufacturers of composite and metal parts for aeroplanes by 2020.

Its parent firm, which has interests in semiconductors, oil and gas, aerospace and real estate among other industries, holds stakes in General Electric and private equity firm Carlyle.

Apart from the $5 billion contract from planemakers, Mubadala Aerospace also secured a contract from Britain’s Rolls Royce Plc to service the Trent XWB engines.

The manufacturing deals signed this week will particularly benefit the mainly female workforce of a $250 million plant in the remote oasis town of Al-Ain, which competes with Britain’s GKN and Spirit Aerosystems of the United States to make composite and metal parts.

The company will build a new plant to meet the demand, Shemmari said.

The Abu Dhabi firm will be providing parts for Boeing’s newly launched revamped 777, and already provides composites for the 787, as well as Airbus’s A350 and A380, Shemmari added.

“Our goal is to be a risk sharing partner in the next programme of Airbus or Boeing,” he said. “Within the next 5 years, we should be ready.”