GE and Mubadala sign commercial finance JV deal

JEFF IMMELT: GE's CEO is eyeing more opportunities in the Middle East. (Getty Images)

General Electric and the Abu Dhabi government-backed Mubadala Development Company confirmed on Sunday the signing of a commercial finance joint venture agreement that also involves setting-up a regional training centre for next-generation business leaders.

The companies announced a tie-up last July but few details have emerged since.

News of Sunday’s agreement came as a boost for GE's commercial finance business, which has suffered as a result of the global financial crisis.

The joint venture is targeting "opportunities around the world," particularly in areas where GE Capital already operates, such as project finance, aircraft finance and loans to medium-sized companies, said Aris Kekeijian, vice president of GE Capital's existing Middle East operations in Business Week. The joint venture is likely to start out in Saudi Arabia and the UAE, however.

"The global financial services business proposed under today's (Sunday’s) agreement combines Mubadala's regional investment expertise with GE's global origination excellence in one of the world's fastest-growing markets," GE Chairman and CEO Jeff Immelt said in a statement.

"Having grown its Middle East-based revenues more than 60 percent in the past two years, GE clearly shares Mubadala's view of high-growth opportunities in the region," Immelt noted.

Ensuring such regional growth remains sustainable and diversified, "demands developing world-class local leadership talent, which is the charter of the newly formed Abu Dhabi Leadership Development Center," Mubadala CEO and MD H.E. Khaldoon Khalifa Al Mubarak added.

GE and Mubadala are currently applying for the necessary legal and regulatory approvals needed prior to the commercial launch of the joint venture. Once approved, it will be headquartered in Abu Dhabi.

GE and Mubadala each will allocate up to $4 billion in equity for the joint venture over a three-year period.

Ron Herman, a 25-year GE veteran, will head up the venture. Herman has held numerous leadership positions in GE Capital, ranging from private equity to mergers & acquisitions. Most recently, he was CEO of GE Equity.

Meanwhile, the Abu Dhabi Leadership Development Center (Abu Dhabi LDC) is earmarked to be the premier corporate leadership and management development destination in the region, developing the skills of high-performing business executives and leaders across the Middle East, Africa and near Asia region, the companies added in a statement.

It will form part of GE's Global Learning Network and will leverage GE's ''Crotonville'' leadership curriculum, as well as developing programmes addressing specific needs of the region.

Courses will focus on executive and emerging leaders with content ranging from strategic thinking, operational excellence and innovation to manager development, financial basics, project management and business simulation. In addition, there will be customer programmes covering executive briefings, change management and integration.

GE and Mubadala's global partnership encompasses a broad range of other initiatives including clean energy research and development, an expansion of local aviation maintenance, repair and overhaul services to support the large and growing number of GE aircraft engines in service in the region, and investment by GE in Masdar's second Clean-Tech Fund.

As of March 31 Mubadala had accumulated 65.8 million shares in GE (approximately 0.62%), in line with its commitment to become a top-ten shareholder in GE as market conditions allow.

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