Abu Dhabi fund seeks credit rating

Abu Dhabi fund seeks credit rating

By Andrew England in Abu Dhabi

Published: May 4 2008 22:01 | Last updated: May 4 2008 22:01

Mubadala, one of Abu Dhabi’s most visible state investment vehicles, is in the process of gaining a credit rating – virtually unknown among sovereign investment groups – as it seeks to reduce the cost of financing and pave the way for new deals while enhancing the company’s transparency.

Waleed al-Mokarrab al Muhairi, chief operating officer at Mubadala, which has stakes in Ferrari and Carlyle Group, as well as a burgeoning portfolio of investments in sectors ranging from energy to real estate to telecommunications, told the Financial Times the company was eight weeks into the ratings process and was working with more than one ratings agency.

Mr Muhairi also signalled an eagerness to broaden the company’s investment focus, buying debt from troubled institutions and putting money into Asia.

Mubadala would be the first state-owned investment entity in the Middle East to receive a rating. The move requires disclosure and would help improve Mubadala’s transparency when state investment arms in the region are under increasing scrutiny.

Mr Muhairi said: “Generally speaking, if you have a rating, the cost of debt usually goes down, if the rating goes in the direction you want

“It’s about the discipline, it’s about decreasing the cost of funds and certainly it’s about the transparency, they are all equally important.”

The company is also looking at better ways to relay information about its activities, which is likely to include the publication of some form of financial reports. Currently, Mubadala does not disclose even the size of the fund – estimates of which range from $10bn upwards.

Abu Dhabi officials say Mubadala should not be bracketed as a sovereign wealth fund, but Mr Muhairi said that the recent debate surrounding SWFs’ activities had “made us more cautious”.

“But really in a positive way to understand the different regulatory processes you have to go through in the different markets.

“What we do, we first have a lot of conversations about it, so we really understand the issues and try and understand what the boundaries of the issues are.”

The company was set up in 2002 to utilise Abu Dhabi’s oil wealth to support the growth of new businesses in the emirate.