What Mubadala's success says about 21st-century investing

As we welcome 2025, the worldwide economic outlook is the brightest it has been for several years. The Organisation for Economic Co-operation and Development is predicting global gross domestic product growth of 3.3 per cent this year, up from 3.2 per cent in 2024. The OECD also expects inflation to ease further with unemployment remaining low by historical standards. Into this promising picture steps this week’s news that not only did sovereign wealth funds invest more than $136 billion last year – a 7.1 per cent increase from 2023 – Abu Dhabi’s Mubadala Investment Company was the world’s largest sovereign wealth fund investor in 2024. The sums presented by industry specialist Global SWF in its annual report are certainly eye-catching but a deeper look at Mubadala’s performance and strategic choices tells us much about 21st-century investing and even offers clues as to how the world of the near future is taking shape. Last month, Khaldoon Al Mubarak, Mubadala’s chief executive and managing director, told the Milken Institute’s Middle East and Africa Summit in Abu Dhabi that the capital’s strategic investment arm is “zooming in” on key sectors such as artificial intelligence, technology, financial services, life sciences and health care. The company has also been a central figure in developing renewable energy – for example, Mubadala Capital’s energy company Acelen said in 2023 that it would invest $2.5 billion in the next 10 years to produce renewable diesel and sustainable aviation kerosene in Brazil. In fact, renewable energy is a prime example of how investment funds such as Mubadala can shape the future. According to TheCityUK, a British financial industry advocacy group, sovereign wealth funds are “significant drivers of the transition to renewable energy and broader sustainability”, adding that in 2023, sovereign investment vehicles’ $21.6 billion investments in green assets such as electric vehicles and renewable battery storage were more than double that invested in assets such as fossil fuels or mining. For Mubadala to have made diverse investments totalling $29.9 billion last year is a significant milestone, but it is also an important reflection of the UAE’s overall strategy for a sustainable future amid an energy transition. Global SWF’s report ranked Mubadala alongside four Gulf peers – Abu Dhabi Investment Authority and ADQ, as well as Saudi Arabia’s Public Investment Fund and the Qatar Investment Authority. To have five GCC sovereign wealth funds in a list of the top 10 global dealmakers shows the strategic direction many of the Gulf countries are taking to diversify their economies. As noted earlier, this year’s economic outlook is optimistic even despite the challenges posed by several unresolved international conflicts. But it was not always this way; during the economic doldrums of the Covid-19 pandemic, Mubadala continued to make significant investments – in 2020, it invested more than $11 billion, an almost 50 per cent increase from 2019. These bold choices, based on strategic insights, are clearly paying off. The results of this approach, as seen in this week’s news, should offer some lessons for investors about resilience and long-term strategic thinking. Essentially, successful sovereign investing is about making the right choices for future prosperity – an approach that the UAE has been taking for decades.