Mubadala Capital expands private equity arm with London team

Aug 17, 2021 | News, UKPEC

The Abu Dhabi firm recently closed on $1.63bn for its third private equity fund, while it also plans to expand in New York

Mubadala Capital, the investment arm of Abu Dhabi-based sovereign wealth manager Mubadala Investment, is preparing to add private equity professionals to its London office next month on the heels of closing its third fund for the strategy.

Antoun Ghanem, a director in the private-equity group who leads Mubadala Capital’s European investment practice, will move to London from Abu Dhabi, according to Adib Mattar, head of private equity.

The multi-strategy firm also has one private-equity professional in New York. Mubadala Capital’s private equity investments largely focus on North America, and Europe, according to Kevin Kokko, leader of the firm’s New York office, and its co-head of private equity, and head of business development.

“These help us get closer to the markets we invest in, and to our investor base,” Kokko said. The firm opened its New York office in 2019.

Kokko said Mubadala Capital’s private-equity investment professionals in New York and London will number three or four across both offices through transfers from Abu Dhabi and from local hiring. Mubadala Capital has 20 private-equity professionals in its Abu Dhabi headquarters, Kokko said.

Mubadala Investment, which has more than $240bn in assets, established its private-equity strategy in 2008 and set up Mubadala Capital in 2011 to run private-market investments for the sovereign wealth manager. Its strategies also include venture investing, public equities and a fund focused on Brazil.

In 2017, the firm began accepting capital from outside investors for its private-equity funds, according to Mattar. The firm now has about $9 billion in third-party capital under management, he added.

The firm recently wrapped up its third fund, MIC Capital Partners III, with about $1.63bn in capital, including $500m from its parent and a “significant commitment” from BlackRock’s secondaries and liquidity solutions group, as well as other investors, Kokko said.

“There is real value in being owned by a sovereign-wealth fund,” Kokko said. “It gives us access to unique sourcing opportunities, resources and networks for due diligence, which lead to better investment decisions and then helping companies once we become owners of those assets.”

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For instance, Mubadala Capital’s 2019 investment in the Yankees Entertainment and Sports Network, or the YES regional sports network, from its latest fund was sourced on a proprietary basis through direct relationships, Kokko said.

Khaldoon Khalifa al Mubarak, Mubadala Investment’s group chief executive, is also chairman of the UK Premier League’s Manchester City Football Club. Man City acquired the New York City franchise of Major League Soccer in 2013 in partnership with Major League Baseball’s New York Yankees.

So when the Yankees decided to form a group to reacquire the portion of the YES network it didn’t already own, it approached Mubadala to evaluate the transaction, Kokko said. Mubadala Capital wound up participating in the deal.

“It fit our thesis of investing in sports and media, and was a really good price with a conservative leverage profile,” Kokko said. “Not all the deals in our funds are going to come that way, but it speaks to our unique sourcing channel.”

Mubadala’s latest fund has already made eight other investments, and depending on the size of the transactions, there is room for another one or two acquisitions, according to  Kokko. He declined to comment on when Mubadala might hit the fundraising circuit to raise its next pool.

But, he added, the firm isn’t compelled to start collecting capital for a new fund once more than 70% of its current vehicle has been committed — often the point at which independent private-equity firms begin raising new funds.

“We have the ability to do the next two or three deals on our balance sheet and then drop those into fund four as seed assets,” Kokko said. Investors in Mubadala’s next fund could then do their due diligence on the seed holdings, making it “more attractive than a 100% blind pool,” he added.

The capacity to invest from the firm’s balance sheet “takes the pressure off the investment team and allows us to build a business and grow the pool of assets at a pace that fits with the market opportunity”, Kokko said.

Source: Today UK News

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