Mubadala set to triple asset base in five years and may launch bonds

Mubadala plans to triple its asset base from Dh54 billion to Dh162bn in five years and is likely to announce a bonds issue for the United States and British markets shortly, its chief operating officer revealed yesterday. The Abu Dhabi-based investment company is likely to consider using contributions of equity from the government, debt and revenues to boost its assets, said Waleed Al Mokarrab Al Muhairi, who is also Director-General of the Abu Dhabi Council for Economic Development. "We will see both equity contributions from the government and the optimisation of the use of debt," he told the UAE Global Investment Forum in the capital. "We will also look at the revenues generated over time. I will not reveal the breakdown among debt, equity and revenues. "What I can tell you is that over the next five years the asset base of Mubadala is likely to grow from the Dh54bn you see today to a figure three times as high." On reports that Mubadala was planning to launch a dollar-denominated two-tier benchmark bond for the international market, he said he could not comment until the issue took place. "The bonds have not been released yet, they are with the bankers. The roadshow is taking place and then you will see they will be released in the fullness of time." However, sources said the bond was likely to be launched shortly during the US business day. The bonds will be aimed at global institutional investors. Al Muhairi told the forum that Mubadala was currently focusing on the aeronautical, aluminium, iron and steel sectors to help create a heavy industry cluster and support entrepreneurs. "Let us talk about basic industries," he said. "If you look at the range of basic industries then none is more important to us than aluminium. "The aluminum sector is extremely important to Abu Dhabi. It is quite capital-intensive and energy-intensive. "Abu Dhabi is building the world's largest aluminum smelter to essentially take advantage of our comparative advantages. It will produce its first hard metal in December this year." Turning to the aeronautical industry, Al Muhairi said Mubadala's deals with EADS and Airbus would help to make Abu Dhabi a world-class aeronautical manufacturing hub. "Aerospace is very interesting at the level of the Government of Abu Dhabi. We are making two large pushes. The first is that we are now tier one suppliers to EADS and Airbus. "And we are trying to build a base for advanced material sciences. So we are trying to concentrate on engineering term in the composite space so that we can build complex infrastructure for A380, A340 and A350 and A330 aircraft." Those contracts, he added, had already been signed with Airbus. Referring to foreign direct investment, he said Abu Dhabi had a long history of linking up with the best partners who invested their capital side-by-side with the emirate in order to bring in technology and all the different elements that helped to develop an economy. "You will see an acceleration in that type of partnership as we encourage more and more foreign direct investment into our economy," he added. Mubadala Sets Terms On $1.75Bn, two-Part Bond Mubadala Development Co has set final terms on a new $1.75 billion (Dh6.42bn), dual-tranche bond, one of the lead managers said yesterday. The $1.25bn, five-year tranche will be priced at 395 basis points over Treasury's, while the $500 million, 10-year portion will be priced at 462.5 basis points over Treasury's. Price guidance on the tranches has been tightened from initial talk of around 400 basis points over Treasury's and around 470 basis points over Treasury's, respectively, provided by the banks earlier yesterday. Citigroup, Goldman Sachs Group. and Royal Bank of Scotland Group are acting as lead managers on the deal, which should be priced later in the session. Mubadala is rated Aa2 by Moody's Investors Service. Mubadala has built up its energy portfolio in recent years. The company owns 51 per cent in Dolphin Energy, which pipes natural gas from Qatar to the UAE and has joint investments with Occidental Petroleum Corp in Oman and Libya. In September, the company set up an oil and gas services firm with London-listed Petrofac to tap energy projects in the UAE. Fuelled by record oil prices, Gulf states have poured billions of dollars into expanding their oil and gas sectors in recent years to meet rising long-term energy demand and to diversify their economies by developing downstream industries such as petrochemicals. Last year, Mubadala said it would form a joint venture with General Electric Co, to help fund Middle East infrastructure projects. At the same time, it pledged to build a big stake in GE. (Agencies) Keep up with the latest business news from the region with the Emirates Business 24|7 daily newsletter. To subscribe to the newsletter, please click here .