Mubadala Investment Company, Abu Dhabi’s strategic investment arm, is keeping its options open when exiting from its investments and would not shy away from taking on private equity partners as part of the process, a senior company executive said.
“Usually when we think values [of assets] have reached our internal targets and it’s the right time, we consider an exit,” Waleed Al Muhairi, deputy group chief executive of Mubadala said on Wednesday at Bloomberg Invest conference in Abu Dhabi.
“Exits could take place in many different forms – public process as an initial public offering or [a] private sale ... there are many different ways involved in-between.”
The firm, with more than $225 billion (Dh826bn) under management, agreed this week to sell a significant minority interest in its fully owned Spanish oil and gas firm, Compania Espanola de Petroleos (Cepsa), to US-based Carlyle Group, one of the top global private equity players. Mubadala will remain the majority shareholder of Cepsa under the deal, while Carlyle Group will acquire between 30 and 40 per cent, Mubadala said on Monday. The deal puts the entire enterprise value of Cepsa at $12bn, according to Mubadala, which did not disclose the exact size of the transaction.
The Abu Dhabi firm had first considered selling a stake in Cepsa, Europe’s biggest privately-owned fully integrated energy company, through a public float last year but shelved the plans due to volatile market conditions at the time.
The 90-year-old Cepsa has worked in partnership with Abu Dhabi for many years. It was originally an investment of Ipic, which became part of Mubadala in a merger in 2017. Mubadala has built its stake in Cepsa since and bought shares held by France’s Total in 2011.
Mubadala, which invests on behalf of the Abu Dhabi government, has no “in-house view” on leaning towards private equity deals following the Cepsa transaction, Mr Al Muhairi, who also heads the investment conglomerate’s alternative investments and infrastructure business, said.
“At the end of the day, there are two things when you are exiting an asset. Obviously you want to make sure it should maximise your returns, that’s normal, number two if you are retaining a stake, like we did in case of Cespa where we still own 70 per cent of business … you need to find the best partner who can join you in that journey to create more value over time,” he said.
Last year, he said has been “a marking year” for the company in terms of international expansion. It today has offices in San Francisco, Rio De Janerio, Moscow, New York city and Hong Kong, which reflects the interest the company has for more international investments.
The company, whose assets include Emirates Global Aluminium, the green-energy firm Masdar, the property developer Aldar and a host of other companies at home, as well as stakes in GE, Austria’s OMV, petrochemical firm Borealis, among others, is looking at adding new sectors to its portfolio.
“We always have strategies and point of views about where the world is going. We do have some new small ones [sectors] that are rapidly growing [including] biotech, life sciences, agri-businesses,” he said, adding that the firm is looking for new areas of disruption for potential investments.
The struggle is on for active managers
David Einhorn closed out 2018 with his biggest annual loss ever for the 22-year-old Greenlight Capital.
The firm’s main hedge fund fell 9 per cent in December, extending this year’s decline to 34 percent, according to an investor update viewed by Bloomberg.
Greenlight posted some of the industry’s best returns in its early years, but has stumbled since losing more than 20 per cent in 2015.
Other value-investing managers have also struggled, as a decade of historically low interest rates and the rise of passive investing and quant trading pushed growth stocks past their inexpensive brethren. Three Bays Capital and SPO Partners & Co., which sought to make wagers on undervalued stocks, closed in 2018. Mr Einhorn has repeatedly expressed his frustration with the poor performance this year, while remaining steadfast in his commitment to value investing.
Greenlight, which posted gains only in May and October, underperformed both the broader market and its peers in 2018. The S&P 500 Index dropped 4.4 per cent, including dividends, while the HFRX Global Hedge Fund Index, an early indicator of industry performance, fell 7 per cent through December. 28.
At the start of the year, Greenlight managed $6.3 billion in assets, according to a regulatory filing. By May, the firm was down to $5.5bn.
What the law says
Micro-retirement is not a recognised concept or employment status under Federal Decree Law No. 33 of 2021 on the Regulation of Labour Relations (as amended) (UAE Labour Law). As such, it reflects a voluntary work-life balance practice, rather than a recognised legal employment category, according to Dilini Loku, senior associate for law firm Gateley Middle East.
“Some companies may offer formal sabbatical policies or career break programmes; however, beyond such arrangements, there is no automatic right or statutory entitlement to extended breaks,” she explains.
“Any leave taken beyond statutory entitlements, such as annual leave, is typically regarded as unpaid leave in accordance with Article 33 of the UAE Labour Law. While employees may legally take unpaid leave, such requests are subject to the employer’s discretion and require approval.”
If an employee resigns to pursue micro-retirement, the employment contract is terminated, and the employer is under no legal obligation to rehire the employee in the future unless specific contractual agreements are in place (such as return-to-work arrangements), which are generally uncommon, Ms Loku adds.
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