RIYADH (BLOOMBERG) - Abu Dhabi's Mubadala Investment plans to invest as much as US$15 billion (S$21.04 billion) in SoftBank Group's Vision Fund and start two new venture capital funds to build its technology holdings.
The SoftBank fund will be "wrapped up" in two to three weeks with about US$95 billion of commitments, according to Ibrahim Ajami, head of venture capital at Mubadala Capital, the sovereign wealth fund's investment arm. Mubadala plans to make its investment over the next five years, he said.
"This is a significant opportunity for good financial returns," Mr Ajami said in an interview in Abu Dhabi on Sunday. "Our priority is financial return, if you look at his track record over the past 30 years, what he's been able to achieve in technology, no other investor has," Mr Ajami said, referring to SoftBank chief executive officer Masayoshi Son.
Sovereign wealth funds in Gulf Arab states are looking at opportunities in new areas, such as technology, to lessen their reliance on volatile oil markets. Saudi Arabia's Public Investment Fund is said to be committing as much as US$45 billion to partner with SoftBank to set up its fund after funneling about US$50 billion of the kingdom's reserves into investments abroad - almost all in technology - over the past year.
SoftBank plans to contribute at least US$25 billion of its own capital to the fund in the next five years. The Japanese company announced plans for the Vision Fund last year, aiming to create a vehicle that would become one of the biggest technology investors over the next decade.
"Technology impacts everything, it has become foundational to every sector around the world," Mr Ajami said. "The amount of change that's happening really provide an opportunity to generate some good return- with the right investment, the right approach and the right thesis."
Mubadala already fully owns Globalfoundries, the California-based maker of semiconductors and holds a stake in Advanced Micro Devices Inc. In the United Arab Emirates, it has a holding in telecommunication services provider Emirates Integrated Telecommunications known as du, and owns satellite operator Al Yah Satellite Communications.
Mubadala plans to start two technology venture capital funds next month to invest in companies with an annual revenue of between US$1 million and US$10 million, Mr Ajami said. Mubadala will manage one of the funds itself, while the other will be managed externally.
"We're looking for early stage companies, not necessarily at the beginning, but companies that are at the early growth phase," he said. "We can come in and provide, as an investor, the financial resources and the support to help them grow."
Mubadala completed its merger with Abu Dhabi's International Petroleum Investment Co. earlier this year and is now the world's fourteenth largest fund with US$125 billion of assets, according to the Sovereign Wealth Fund Institute.
