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Mubadala-backed UAE firm sets up $13.8 billion fund for tech deals

DUBAI (BLOOMBERG) – Abu Dhabi-based artificial intelligence (AI) firm G42, which counts Mubadala Investment and Silver Lake as its backers, is setting up a US$10 billion (S$13.8 billion) fund with a focus on technology investments in emerging markets.

The entity will be formed in partnership with the Abu Dhabi Growth Fund, which was set up by state-controlled ADQ last year. Both G42 and ADQ are part of a business empire overseen by United Arab Emirates national security adviser Sheikh Tahnoun Bin Zayed.

The new fund will be managed by a unit of G42 and target late-stage growth companies with disruptive technologies. It will operate as a private equity investor, with a significant share of funds earmarked for high-growth regions in sectors ranging from communications and intelligent mobility to renewables and healthcare.

The move comes as Abu Dhabi – a city that is among the few globally to manage more than US$1 trillion in sovereign wealth capital – ratchets up efforts to plough oil revenue into the technology sector and diversify its economy.

Sheikh Tahnoun, a brother of the UAE’s president, has been at the forefront of many of these investments. His interests range from Royal Group to wealth fund ADQ, and both entities recently committed money to a new fund set up by SoftBank Group’s Mr Rajeev Misra.

Abu Dhabi Growth Fund, a partner in the latest venture, invests primarily in private equity and venture capital. Led by Mr Khalifa Al Suwaidi – who was chief investment officer at ADQ – the fund has a “unique risk profile that complements the existing Abu Dhabi sovereign wealth funds”, according to its website.

AI to healthcare

G42, an AI and cloud computing company, has operations spanning from energy to healthcare and autonomous vehicles. Last year, the firm formed a joint venture with Beijing-based Sinopharm, marking the first overseas manufacturing of the Chinese vaccine.

It also became the first Emirati firm to open an Israel office after the nations normalised ties in the so-called Abraham Accords and rolled out the Middle East’s earliest driverless car trials. Over the past year, G42 has been building up its investment team with key hires from Abu Dhabi’s sovereign wealth funds.

“With the G42 Expansion Fund, we aim to accelerate our global impact not only through the deployment of capital, but also by providing unique access to our networks, management, and operational assets to our portfolio companies,” G42 chief executive officer Peng Xiao said in a statement. He will be chairman of the new fund’s investment committee, which will also include Mr Khalifa Al Suwaidi.

Mubadala owns a minority stake in G42. The US$280 billion fund has itself stepped in to invest in technology-focused businesses just as other investors turned away from what they see as risky and potentially overpriced assets.

United States private equity firm Silver Lake also invested in G42 last year and its co-CEO Egon Durban sits on the Abu Dhabi firm’s board.