Mubadala, GE in landmark partnership

LANDMARK PARTNERSHIP: Mubadala and General Electric have agreed to set up a $8 billion commercial finance fund. (ITP Images)

Abu Dhabi investment agency Mubadala Development Co has entered into a landmark partnership with US corporate giant General Electric (GE) that includes the establishment of an $8 billion commercial finance venture.

Mubadala also plans to become one of GE's top ten shareholders through stock purchases in the open market, the companies said in a statement on Tuesday.

The companies said they will set up the Abu Dhabi-headquartered commercial finance venture over the next 12 months, committing $4 billion in equity each over the next three years.

“This is one of the biggest transactions we’ve ever done,” Mubadala Chief Executive Khaldoon Khalifa Al Mubarak told reporters on a conference call.

The fifty-fifty joint venture will have assets in excess of $40 billion within the next 14 to 18 months, and will be based in the UAE capital due to the emirate’s strategic location and attractive tax environment, Al Mubarak said.

It will initially invest in the Middle East and Africa, but may invest elsewhere eventually, he added.

Al Mubarak said Mubadala’s investment in GE was completely separate from the partnership and that the company is currently attractively valued. He declined to comment on when the company would achieve its targeted shareholding.

The deal is based on “the long term prospects this company has", he said. Mubadala currently holds no shares in GE.

GE Chief Executive Jeff Inmelt said the company’s guidance for the year remains unchanged.

Asked about the potential reaction from Washington amid US concerns over sovereign wealth funds, Inmelt said: “We don’t view Mubadala as a sovereign wealth fund. This is a commercial company.”

Al Mubarak added: “This is not about a fund investing as a fund.”

Mubadala and GE have also agreed to work together in the areas of clean energy and water research and development (R&D), technology, aviation, oil and gas, and corporate learning.

Under the partnership, the companies will establish a clean energy technology centre in Masdar City, the new carbon neutral, zero-waste city being build in Abu Dhabi, and GE will commit up to $50 million to Masdar's clean technology fund.

Meanwhile, Mubadala will invest up to $200 million in GE Industrial Investment Partners, an initiative that provides capital to companies in healthcare, energy, and transportation.

The companies will also set up a corporate learning centre in Masdar City, which will be managed by GE. The centre, based on GE's 'Crotonville' executive education programme, is expected to launch by the first quarter of 2009.

GE and Mubadala's aviation maintenance, repair and overhaul (MRO) arm, Abu Dhabi Aircraft Technologies (ADAT), have agreed to expand their MRO capabilities to support the growing number of GE aircraft engines in service in the region.

GE will also widen the scope of its joint venture with ADAT, Gulf Turbine Services, to include field service and repair capability for the UAE oil and gas industry.

Mubadala and GE currently jointly manage an infrastructure fund called The Mubadala Infrastructure Partners that invests in major projects in the region. GE is also an anchor partner in the Masdar initiative.

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