Dubai: A unit of Abu Dhabi’s Mubadala Investment Co. acquired one of the largest Taco Bell franchisees in the US, underscoring the $243 billion sovereign wealth fund’s growing appetite for private equity deals. Mubadala Capital, the fund’s asset management arm, bought K-Mac Holdings from Lee Equity Partners Opportunities Fund. K-Mac operates some 300 fast-food Taco Bell outlets that are primarily located in the country’s Midwest and South.
The deal reflects Mubadala Capital’s foray into the food and beverage sector, where it invested about $1.8 billion in the past seven years alone. It also underlines the buyout division’s US focus, a destination for about 80 per cent of its capital, said Adib Martin Mattar, who heads private equity at Mubadala Capital.
“It’s still the world’s biggest market when it comes to doing private equity deals and finding investments,” Mattar said.
In a rare move for a wealth fund, Mubadala Capital became the first such institution to manage third-party money. It’s now establishing its presence outside Abu Dhabi, in London and New York, where it sees most future opportunities, according to Mattar.
Mubadala Capital now has $9 billion in assets under management and besides private equity also manages two early-stage venture funds, a public equities fund and another in Brazil focused on special situations. Other sovereign investors are also increasingly active in the private equity sector. The UAE capital’s largest wealth fund, the Abu Dhabi Investment Authority, recently said it raised its target allocation range for private equity. Its buyout division completed a record 24 investments last year.
“That’s part of our business, to continuously raise capital and find good deals for investors,” Mattar said. Most of Mubadala Capital’s investments are “purely done on a financial returns-only basis,” he said.
Exceptions include Witherslack, a UK provider of special needs education schools and children’s care homes. Mubadala Capital took a majority stake in the business this year and plans to open facilities across the Middle East.
Another example is REEF Technology, a SoftBank Group Corp.-backed startup that manages hubs in parking lots used for food delivery and other services such as COVID-19 tests. “We’re expanding REEF in the Middle East as we speak,” Mattar said.