GE hints at deal with Mubadala for new investments

When a number of global corporate leaders gathered in Davos last week for the World Economic Forum, discussing the dynamics of the downturn and the road to recovery, General Electric's top brass was hobnobbing with leaders and policymakers here in the Gulf, ensuring the world's largest diversified conglomerate retained its edge over its numerous competitors. "I get to come here at least once a year," Jeffrey Immelt, GE's Chairman and CEO, told a media gathering last weekend. "It's quite an important business for GE. Almost all of our businesses have some operation here; some opportunities here, and lots of partnerships and customers… It's a very vibrant region for us and very important," he said. The region, Immelt said, is worth more than $10 billion (Dh36.7bn) in revenues and growing for GE. "I joined GE in 1982, and in 1983, the entire size of GE was $24bn in revenues. This region today is half of what all of GE was when I joined 28 years ago. "So it just shows how the world is unfolding – we have to be willing to invest with the vision and scale that's commensurate with how big this region can actually be… It's my sense that by the time I retire – who knows – but in the next five, 10, 15 years, this region will be bigger than what GE was the day I started," Immelt said. The UAE, he said, was a very important country for GE. "I think it's progressive, has had a tremendous impact on wealth creation, is very outward looking," he said when this journalist asked him to outline his thoughts on the country. "Broadly speaking," he said, "when we come to this region, what we see is an immense desire to transfer the wealth created by oil prices into industrial diversification, job creation and economic impact. And that [desire] is being matched with programmes, actions, investments. As people in this region have taken those actions, GE is a good partner – we can provide technology and we view it with great positivity," he added, donning his salesman's hat. Nevertheless, he made his disappointment apparent at GE not managing to clock a double-digit growth rate in the region in 2009. "We're disappointed for not growing 10-15 per cent in this region. We feel like we're not keeping up," he said. However, Immelt continues to see the region holding tremendous growth opportunities. "We just see in every business – aviation, energy, oil and gas, water, healthcare… you go down the list of things that GE does – all of it has tremendous prospects in this region. And then you think about Africa – it's not without risks – but every country [in Africa] has electricity deficit, water deficit, healthcare deficit… new oil and gas finds are happening everyday offshore of western Africa. All of those hold potential. We should see excellent growth in this region," he said. The global downturn has, nonetheless, had its impact on one of the world's largest and oldest conglomerates, with GE folding up about 400 facilities in 2009 and also shedding jobs. "We moved aggressively as the downturn took place. So it did have an impact on both the structure of the company and also on employment," Immelt admitted. "I think, like most companies, it's never kind of a 'one policy fits everything' because at the same time as we restructured, we were adding new businesses and launching new businesses and new regions and things like that. We don't make projections about employment but what I would say is that when you look at things like order intake and prospects for financial services business etc, we see much brighter skies in 2010 than we saw in 2009." Immelt outlined the conglomerate's regional partnership paradigm, with the commercial finance JV with Mubadala being "probably the biggest one" in the UAE. "We've had good relationships with Mubadala for a long time. We have very common interests so we came together in a series of joint ventures a year or so ago. The commercial finance JV is probably the biggest one. [It] became operational in the fourth quarter [of 2009]. We're quite encouraged by the prospects there. We've now ramped up, we've hired people, we're originating business… so we see that growing nicely in 2010 and beyond. "We formed an education operation, a research operation, are part of Masdar City, are part of Invest Abu Dhabi… We made co-investments in energy… So we've got probably four major components of the relationship. I think there could be more in the future. Mubadala and GE are very like-minded. We share a strong relationship and we're just in the beginning stages [of the relationship]," Immelt said. He also hinted that GE could partner with Mubadala – which he said holds "a relatively small but important stake" in GE – to invest in new regions, including Africa. "When you think about GE, we're really an infrastructure and financial services business. When you think about what Mubadala really is focused on, it's infrastructure and financial services. So, aviation has been a big focus, energy is a big focus. The potential