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Over the past few months, Mubadala Investment Company has defied all common investment wisdom. This United Arab Emirates (UAE) government investment fund started buying shares of companies around the world. This has increased their portfolio significantly. In addition, it has helped technology companies become a dam against the tide.
Currently, the list of companies that Mubadala has fully acquired or participated in includes:
- Envirotainer AB – 2.8 billion dollars
- Fortress Investment Group – 1 billion dollars
- SpotOn – 100 million dollars
- June – 100 million dollars
- Gethir – 768 million dollars
- Vision Fund – 100 million dollars
- Klarna Bank AB – 800 million dollars
- Wefox – 400 million dollars
The Emirates sovereign wealth fund currently stands at $284 billion. This means that these nearly $10 billion in purchases will not be missing. However, all the companies on the list have reduced their prices significantly. So we may ask whether these investments pay off.
Mubadala is supported by Abu Dhabi oil sales. The war in Ukraine has recently increased these sales levels. Economically, the UAE has remained neutral in this war despite its anti-war message.
Now, the fund is trying to find ways to capitalize on its new interests, particularly in the technology market. In fact, the same factors driving up oil prices have undervalued many technology companies.
The UAE is on the way to becoming an investor.
Many industry optimists saw a significant decline. Even blockchain products have seen signs of an investor exodus. However, the tech startup industry is still fueled by venture capital.
But when it comes to institutional investors, Mubadala is going against the grain. It is investing heavily in the tech industry. This week the fund raised money for Klarna Bank AB, a Swedish fintech company. Additionally, it has backed Wefox, a German online insurance provider.
The investment nature of the Abu Dhabi Fund is attracting many tech industry players to become investors. As an institutional investor, Mubadala is focusing on long-term profits and growth. He is looking to further diversify his portfolio.
As such, companies feel less pressure to show quick results. They can also develop their products properly and grow from a solid foundation. This is what institutional investors, including the US and Europe, are waiting for. In return, you can get on board later.
Focus on tech, food and healthcare
Judging by the companies that have joined the portfolio, Mubadala’s main goal is technology. In particular, the focus is on financial technology (FinTech). Still, one of the biggest individual investments on the list is Grettir, a Turkish on-demand delivery service app similar to Uber Eats.
In the year Launched in 2015, this Turkish startup received $768 million in funding alone, ultimately valuing the company at $11.8 billion. Unlike many tech companies, Gretir has not experienced a downturn in recent months. This is possible because Turkey is also neutral in the Ukraine conflict.
The fund is investing heavily in the healthcare sector and allied industries. For example, Mubadala agreed to buy Sweden’s Envirotainer AB, which focuses on medical cargo, for $2.8 billion.
Additionally, the company joined another investment fund, New York-based Warburg Pincus, to buy its pharma analytics division. Together with the former British Pharma Pvt. They bid more than $2 billion in February to acquire the unit they owned.
Mubadala is expanding its portfolio
In the year In 2017, Mubadala Development Company and International Petroleum Investment Company (IPIC) merged. Both are owned by the government of the Emirate of Abu Dhabi in the United Arab Emirates. Since then, Mubadala Investment Company has grown its portfolio significantly.
Under the banner, Mubadala owns companies such as Ferrari and Austria’s OMV. It also includes companies that focus on companies such as Waymo, owned by Alphabet (Google).
The largest contributor to the fund’s income and operating income is IPIC. It directly owns and sells the oil produced in the country. However, most other investments have benefited the portfolio. They have also established Mubadala as a globally savvy institutional investor.
Focused on long-term investments
Many companies, especially those focused on consumer products and retail, have seen huge gains from boutique investors. However, this attraction has caused great uncertainty in those markets.
That is, small investors proved to be more patient and more vulnerable. If a company is not growing as fast as they want, they are willing to sell their shares. Any issue will greatly influence the decisions of these investors. And that’s what happened with the current lack of technology.
Companies funded in this way are finding it difficult to meet those benchmarks. They feel the need to speed up the process. But often, this only leads to unfinished products and strategies.
Institutional investors like hedge funds and sovereign wealth funds are the opposite in that way. They prefer long-term investments that pay dividends rather than capital gains. For too long, this position has kept institutional investors away from the technology. And this has hurt the industry quite a bit.
But Mubadala is setting a good example of long-term stable investments in tech companies and startups. As a result, other major players may also come. This will prevent future decline in the industry. At least, the upcoming slumps will not be so intense.
What will Mubadala’s billions mean for the tech industry?
Despite its best efforts, Mubadala’s investments in technology investments are unlikely to change course. Currently, the NASDAQ is down about a third from its peak last November. The projected losses cost the industry about $1.5 trillion.
However, investments from Mubadala can be a good example and a driving force behind other investment funds. In fact, individual investors may be encouraged to put their money and trust in the tech industry.
This perspective can turn the tide. In fact, it can encourage the creation of new solutions. Overall, this will push the industry forward. Because of these opportunities, the CEOs of the technology industry have expressed their confidence in the returning market. It remains to be seen how quickly such a transition will occur.
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