Dubai: An $8 billion (Dh29.4 billion) commercial finance joint venture between General Electric Co. (GE) and Abu Dhabi’s government-owned development fund Mubadala is preparing to get a credit rating and sell bonds for the first time next year as the business transitions to a self-funded model and eyes expansion across the Middle East and Africa.

Mubadala GE Capital, as the venture is called, is a cornerstone of Abu Dhabi’s drive to develop its local financial sector and give training to citizens looking at careers in the field. It is also a crucial part of a broader effort to wean the emirate’s economy off oil by partnering with leading global companies to spur private sector activity.

The coming bond issue and geographic expansion represent the next major stage in Mubadala GE Capital’s evolution since it began operations almost four years ago. GE and Mubadala each allocated $4 billion of equity to the company when it launched.

“We’ll build the infrastructure, the team, the experts, and at the same time launch the process to get a rating,” chief executive Ron Herman said in an interview on Sunday. “We hope to get that rating next year, and we anticipate in the second half of the year to access the bond market.”

The company plans to issue more than $1 billion worth of bonds annually, he added, helping support commercial financing assets that have grown to more than $5 billion globally. The bonds are to be both local and international, he said, and will mix with bank loans and other forms of financing to provide diversity.

Bank loans

Mubadala GE Capital has already raised about $700 million this year through a pair of bank loans, and is currently negotiating a third that Herman expects to bring in a similar amount.

Fida’a Haddad, who works with Herman as the managing director of leverage and structured finance, said the company’s independent fund-raising efforts and decreasing reliance on its shareholders were a goalpost for the company at the five-year mark. “We’re investing in the business to get it ready to be self-funded to support both shareholders,” he said.

Like GE Capital, Mubadala GE Capital lends money to companies but does not take deposits. It participates in deals arranged by GE Capital, but also provides financing for local companies in the UAE. It has done about 300 deals in total since it started operations, Herman said, over 65 of which have been local.

The joint venture distinguishes itself from other lenders in part by selling complex financing structures that local banks don’t typically offer, but also by helping customers improve their businesses’ efficiency and grow their operations, Herman said. Within the UAE, the focus has been on equipment lease finance and working with private equity firms on financing transactions and companies.

“We want the companies we provide capital to to have a long-term relationship with us so that we don’t give them a loan and in two years, they repay it and say goodbye,” Herman said. “We want them to take our capital and continue to get capital from us as they grow.”

While the UAE would remain the number one focus, geographical growth was on the cards as the company increasingly finances itself.

“Over time, we’ll look at other countries outside the UAE in our local region, which is the Middle East, Turkey and Africa,” Herman said. “We’re focused on some of the large economies such as Saudi Arabia and Turkey. It’s something we have our sights on in the future.”