Mubadala Development Company, the investment company wholly owned by the Government of Abu Dhabi, has purchased a five per cent stake in the car marque Ferrari from Mediobanca.

Mubadala will pay 114 million euros (Dh512 million) to purchase the five per cent stake, valuing Ferrari at a total of 2.28 billion euros (Dh10.24 billion), said a joint press statement issued yesterday.

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Luca di Montezemolo and Shaikh Hamed Bin Zayed Al Nahyan are seen after announcing that Mubadala will purchase a five per cent stake in the Italian carmaker.

Initial business areas under consideration range from the creation and development of road and racing car testing initiatives, along with professional driving schools, to the leveraging of opportunities around brand experiences and merchandising.

"This is a sound financial and strategic investment on numerous levels," said Shaikh Hamed Bin Zayed Al Nahyan, Chairman of the Abu Dhabi Department of Planning and Economy.

"It meets our own investment objectives that include the creation of blue chip commercial partnerships that will directly and indirectly benefit the Abu Dhabi economy."

The move continues Mubadala's track record of being involved with premier global companies and brands which are leaders in their fields, Shaikh Hamed added.

The agreement provides for an earn out in favour of Mediobanca in case the IPO of Ferrari is completed within the next 24 months, at a price ensuring to Mubadala an internal rate of return above 10 per cent.

"This is the first time that we, Fiat, have welcomed a non-financial institution to become a Ferrari shareholder," said Luca di Montezemolo, chairman of Ferrari and Fiat, which holds a 56 per cent stake in the Italian luxury brand.

"The strategic alliance with Mubadala, and therefore the Government of Abu Dhabi, is set to bring us compelling and dynamic new strategies, especially in the Middle East and North African markets."

Piero Ferrari, who owns 10 per cent of the company, said, "I know Abu Dhabi well. I have had the opportunity to meet government representatives, and I am therefore happy to welcome them into the Ferrari fold."

Khaldoon Khalifa Al Mubarak, chief executive of Mubadala, said, "This deal further underscores our strategy of involvement in profitable relationships with premiere global companies and brands."

"For both Mubadala and Ferrari, the primary business objective is to create long-term, commercially viable opportunities that maximise all potential aspects of the strategic alliance," he added.