Mubadala keeping pace with KKR as $29bn deployed last year

Mubadala Investment Co. joined global investors like KKR & Co. in pouncing on opportunities presented by the pandemic, embarking on a record dealmaking spree while many of its peers among sovereign wealth funds hunkered down.

In a year that saw the worst oil-price crash in a generation, Mubadala delivered a record income for the Abu Dhabi government as it doubled down on a bet that sectors like technology and consumer goods will benefit the most from the economic recovery. Abu Dhabi’s second-largest wealth fund said on Thursday that new investments last year amounted to Dhs108bn ($29.4bn).

With stakes in businesses from the retail unit of India’s Reliance Industries Ltd. to US private equity firm Silver Lake and an ambition of doubling in size over the next decade, Mubadala stood out in seizing on dislocations in markets caused by the pandemic.

State funds’ overall investments dropped almost 20 per cent last year, according to New York-based adviser and data firm Global SWF.

Mubadala’s pace put it on par with KKR, which was the top spending private equity firm globally from the start of April through December last year, according to data compiled by Bloomberg. KKR invested a total of $29.5bn in public and private markets in 2020.

“We navigated our portfolio through the dramatic macro-economic decline of early 2020, and decided to accelerate the pace of our capital deployment, ending the year with record profit and growth,” said Mubadala’s managing director and group chief executive officer, Khaldoon Al Mubarak.

The annual review published on Thursday showed Mubadala’s assets under management across the group reached Dhs894bn, from Dhs853bn in 2019. It also said five-year returns on its portfolio were 9.8 per cent, dating to 2016.

The fund recently changed the way it reports its results. It eliminated categories such as annual revenue and net income, saying it would no longer release data “not relevant to a long-term investor” and would instead disclose a multi-year metric.

Technology, Health
Mubadala is plowing money into high-growth sectors such as technology and health care as the emirate looks to reduce its traditional reliance on oil and gas. Abu Dhabi, the capital of the United Arab Emirates, is home to almost 6 per cent of the world’s oil reserves.

For 2020, Mubadala said its total comprehensive income rose to Dhs72bn from Dhs53bn in 2019, citing growth in its public equities portfolio and funds in addition to the company’s assets across various sectors. It said the UAE and the US remain its largest investment destinations but that it also expanded in India, France, China and Russia.

Mubadala, which earlier this year overhauled its internal structure, also cashed out of some commitments, collecting Dhs104bn last year by monetising mature assets and distributing investments locally and abroad.

“In line with our long-term strategy, we increased our investments in sectors where we have high conviction, and with high performing fund managers,” Al Mubarak said.

Funds from Gulf states have been chasing overseas investments to reduce reliance on their oil-dependent home markets. Kuwait’s $124bn pension fund is reducing its allocation to stocks in favour of alternatives and sees “lots of opportunities” in infrastructure over the next few years, especially in the US, its director general said in November.