Abu Dhabi creates $125 bln fund by merging Mubadala, IPIC

Abu Dhabi’s government merged two of its top investment funds on Saturday to strengthen their financial clout in an era of low oil prices, creating a company with assets totaling about $125 billion.

The new fund, Mubadala Investment Co, was formed by merging Mubadala Development Co and International Petroleum Investment Co, which own corporate stakes in the energy industry and other sectors across the world.

The new firm’s assets will total about $125 billion, based on valuations at the end of 2015, make it the world’s 14th largest sovereign fund, according to data from the Sovereign Wealth Fund Institute, which tracks the industry.

Mubadala Investment will be run by Chief Executive Khaldoon Al Mubarak, UAE state news agency WAM reported, adding that a board had been appointed. Mubarak, a prominent executive who sits on several companies’ boards, was chief executive of Mubadala Development.

Board members 

Besides, Al Mubarak, who will be the Managing Director, members of the board include Mohammed Ahmed Al Bowardi, Suhail Mohammed Al Mazrouei, Hamad Al Hurr Al Suwaidi, Abdul Hamid Mohammed Saeed and Mahmood Ebraheem Al Mahmood.

The new firm’s large size should improve its ability to raise money from international markets, a source close to the merger told Reuters when the plan was originally announced last June.

As part of its drive to strengthen strategic financial firms, Abu Dhabi is in the process of merging its two biggest banks, National Bank of Abu Dhabi and First Gulf Bank. Bankers in the emirate say more mergers are likely. 

Global partnerships 

Mubadala Investment will have a total of 68,000 employees globally with partnerships and businesses in 30-plus countries, it said in a statement.

Its assets include stakes in General Electric and private equity firm Carlyle, Spanish energy firm Cepsa and Austrian energy firm OMV, and Unicredit, Virgin Galactic and UAE construction firm Arabtec.

IPIC is locked in a dispute with Malaysian state fund 1MDB, after the Malaysian fund defaulted on interest payments for bonds which IPIC had guaranteed; IPIC is claiming about $6.5 billion.