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February 2024
AAM Magazine
February 2024
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Analysis: New Abu Dhabi fund may have less baggage than regional peers

Abu Dhabi’s state investor, the Mubadala Investment Company, has announced a new US$1 billion fund, the Abu Dhabi Catalyst Partners, to explore opportunities within the United Arab Emirates and abroad. For some, that might be cause for concern. After all, much of the coverage of Uber’s planned initial public offering in the US has cited the outsize influence that Middle Eastern – specifically Saudi Arabian – money has had in the ride hailing company’s rise, and more broadly in Silicon Valley recently.

Saudi Arabia’s Public Investment Fund owns 5.2% of Uber. The SoftBank Vision Fund, roughly 50% invested by the same backer, owns a further 16.3% stake in Uber. The Softbank Vision Fund, and through it, Saudi Arabia, is now one of the biggest investors in Silicon Valley venture-backed companies. This is the private money of a regime that is busy beheading its citizens and murdering its journalists, while executing a brutal war in Yemen and leading a more insidious cold war against Abu Dhabi’s neighbour Qatar.

With China already attracting attention for the strategic strings attached to its investments through vehicles such as its Belt and Road Initiative, governments and commentators everywhere are examining the overtures of state-backed investment groups more and more carefully.

But the signs are that Abu Dhabi Catalyst Partners is likely to be a lot more innocuous, as well as modest, in its agenda. The fund will reportedly look for investees that can beneficially establish a presence at the Abu Dhabi Global Market, an international financial centre which opened in 2015, and help build the local ecosystem. It is expected to target opportunities across asset management, specialty finance and financial infrastructure.

The broad push is to help boost Abu Dhabi as a global financial centre. While the fund will seek to realise commercial returns, it also obviously has at least as much of a strategic focus. Still, Abu Dhabi’s strategic objectives seem more modest and pragmatic than Saudi Arabia’s, just as its policies are less controversial.

Furthermore, the Abu Dhabi Investment Authority still outbulks the Public Investment Fund, with estimated assets under management of just over $696.6 billion versus around $230 billion for the latter, while the Mubadala Investment Company isn’t far behind, with assets of just over $227 billion. So if money talks, in certain contexts Abu Dhabi is obviously in a position to talk louder than Saudi Arabia.

Still, it may be a little too early to relax. In February it was reported that SoftBank Group provided almost half of the $400 million capital for Mubadala’s Europe-focused technology fund, and Mubadala reportedly has committed to invest $15 billion in SoftBank’s Vision Fund.