Gulf private equity and sovereign funds are increasingly turning global. In a significant deal, General Electric has struck an $8 billion commercial finance joint venture with Mubadala Development Co., a sovereign wealth fund of Abu Dhabi, one of the states in United Arab Emirates. The new venture will target Middle East and African markets. Each company will commit $4 billion in equity to the venture.
Besides, Mudabala would also buy into GE. Mudabala said it would become “top ten institutional investors” of GE. It would buy shares of GE from the open market, “as conditions allow.” Mubadala didn’t disclose what stake it would pick up in GE and when it would start investing.
The tie-up envisages investment in commercial financial-services business in the Middle East and worldwide, besides investing in sectors like clean energy, aviation, and corporate learning. GE and Mubadala have also decided to establish a clean-energy-technology center in MasdarCity, Abu Dhabi.
GE, on the other hand, had put its consumer finance company in India GE Money on sale. This was later called off since the company could not find buyers at the right price.
The latest JV follows Mubadala’s previous two deals - it paid $1.35 billion for a 7.5 per cent stake in private-equity firm Carlyle Group, and it bought a roughly 8 per cent stake in Advanced Micro Devices Inc., paying some $622 million.
Besides Mudabala, there are other SWFs in UAE such as The Abu Dhabi Investment Authority.