Dubai: Alpha Dhabi holdings is entering a joint venture with Mubadala Investment Company to co-invest in credit opportunities.
Alpha Dhabi and Mubadala will collectively deploy up to Dh9 billion over the next five years. The two companies plan to leverage Mubadala's relationship with US asset manager Apollo "to access high-quality private credit investment opportunities", they said in a joint statement with Apollo. Mubadala will own 80 per cent of the venture, which will be based in Abu Dhabi Global Market, the emirate's financial freezone. The remaining 20 per cent will be held by Alpha Dhabi, the statement said.
“We have continued to assess the private credit market asset class recently with a keen interest, particularly given the current global market environment,” Hamad Salem Al Ameri, CEO and Managing Director of Alpha Dhabi. “We are proud to partner with Mubadala and Apollo – both of which are renowned in this space – to address the global market need for alternative forms of liquidity and credit.”
Allocations to the private credit asset class have continued to gain traction and increase regionally and are seen as a route to generate strong returns while providing effective downside protection. This is particularly pertinent in the context of the current operating macroenvironment with rising interest rates and inflationary pressures.
Hani Barhoush, CEO of Disruptive Investments at Mubadala, added: “By leveraging our strong existing relationship with Apollo, and combining Mubadala and Alpha Dhabi’s investment expertise and capital, we have created a powerful platform to access investment opportunities around the world while driving synergies across Abu Dhabi’s ecosystem.”
Mubadala, the $284 billion Abu Dhabi wealth fund, is anchoring the $12 billion private credit platform that Apollo started in 2020. Also, the fund and KKR & Co. last year jointly earmarked at least $1 billion for private lending in the Asia Pacific region.
Private credit involves businesses getting money directly from a fund, which often offers more contractual flexibility than getting a loan from a bank or even borrowing from a shadow lender.