Unlike most of Abu Dhabi’s sovereign investors, which manage more than $1.5 trillion of assets, Abu Dhabi Catalyst Partners is aiming to generate much more than profit for its owners.
A key part of the mandate for ADCP “- a joint venture between the $276 billion Mubadala Investment Co. and Alpha Wave Global “- is to encourage firms to set up in Abu Dhabi Global Market, the emirate’s main business zone, in return for investment.
“The idea is how do you invest in businesses and managers and then also support the ADGM ecosystem by having them set up a real presence in Abu Dhabi,” Fatima Al Noaimi, co-head of Mubadala Capital Solutions, which includes ADCP, said in an interview. Such a commitment means that companies backed by ADCP need to “build a meaningful investment or operational presence” in the financial center, she said.
ADCP has invested in 29 companies since it was set up in 2019, and is helping to create about 400 new jobs in ADGM. Out of the $1.7 billion in capital it has received from its shareholders, it has spent around $1.3 billion, Al Noaimi said. This year, ADCP is aiming to complete four to eight new transactions and is in talks with several “big international names,” she said, declining to reveal any names.
ADCP said on Thursday it made a strategic investment in French private equity firm Ardian’s secondaries fund. As part of the deal, Ardian, which already has a presence in ADGM, has committed to expand within the hub. In recent years, the two parties have been investing in each other’s funds and Ardian was an anchor investor in Mubadala Capital.
Sovereign wealth
Abu Dhabi is a city with the world’s largest concentration of sovereign wealth, including investors such as ADQ and Abu Dhabi Investment Authority. ADGM has wooed a cadre of big hedge funds, venture capital firms and crypto companies this past year, and recently attracted commitments from firms that manage about $450 billion of assets. Ray Dalio has set up a branch of his family office in the UAE capital, while Brevan Howard Asset Management, one of the world’s biggest hedge funds, also opened an outpost in ADGM.
The deep-pocketed Gulf region has long been viewed as an easy source for capital, even more so in recent years as liquidity dried up elsewhere. That has put the region firmly on the map for firms seeking to raise fresh funds. But now, Abu Dhabi, and ADCP in particular, are demanding more than just potential returns on their investment.
“Some of the fund managers who used to come here with a suitcase four times a year to raise capital have realized that if you don’t have an office here, you’re starting to be at a disadvantage,” said Maxime Franzetti, also a co-head at MCS. “What we don’t want is a large asset manager to come here, they put two sales guys so they can do fundraising, and then that’s it.”
In a sign of how the Gulf region is playing an increasingly prominent role on the global investment stage, Franzetti said they now don’t need to source opportunities themselves.
“If you want to be close to the Mubadala’s of this world and the ADQs of this world, you have to be in Abu Dhabi,” he said. “We just have so much inbound that it’s actually shuffling through what comes in and choose the best partnerships.”
Post-Oil Era
There is “definitely a trend of sovereign wealth funds setting up inward looking subsidiaries to attract foreign capital into the Gulf, as a way to ensure long term resilience and sustainability in a post-oil era,” according to Diego Lopez, head of Global SWF, a data and research consultancy.
ADCP typically writes cheques between $25 million and $100 million per transaction. One of its first investments was in Carlyle Group Inc., whose ties with Abu Dhabi go back more than a decade when Mubadala invested in the private equity giant. It also invested in messaging app Telegram and last year set up a partnership with infrastructure fund manager, A.P. Moller Capital.
“This is one of the very few plays in the world where there’s an abundance of capital and if you haven’t been raising capital here, you do now,” Franzetti said. “It’s going to continue growing from here as we have this very strong tailwind that ADCP can capitalize on.”
