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Goldman Sachs, Mubadala sign $1 billion private credit Asia-Pacific partnership deal

Published 02/25/2024, 09:56 PM
Updated 02/26/2024, 01:20 AM
© Reuters.

By Hadeel Al Sayegh and Utkarsh Shetti

(Reuters) -Abu Dhabi's sovereign wealth fund Mubadala Investment Company has struck a $1 billion deal with Goldman Sachs to go after private credit deals in Asia, the companies said on Monday.

Mubadala and the U.S. bank agreed on a partnership to co-invest in private credit opportunities in the Asia Pacific region, with a particular focus on India, the companies said in a statement.

The partnership will be managed by Private Credit at Goldman Sachs Alternatives, with a dedicated on-the-ground team across multiple Asia Pacific markets, Mubadala and Goldman said.

The Abu Dhabi sovereign investor has been building up its exposure to private credit markets through partnerships, leveraging on opportunities in distressed debt amid a high interest rate environment.

Last year, Goldman Sachs announced it was opening a new office in Abu Dhabi, marking a significant milestone for the Wall Street bank since it was sidelined from any new business in the capital of the United Arab Emirates for its involvement in the 1MDB scandal.

The bank said the new office will complement the firm’s growing regional presence, allowing the firm to deepen relationships with clients and meet them where they are.

Money managers are vying for a slice of the growing private credit market that emerged after the 2008 financial crisis. Private credit funds are increasingly competing with banks, including for financing large company buyouts.

That has attracted the attention of sovereign wealth funds in the Gulf, including the $300 billion Mubadala, one of Abu Dhabi's three main sovereign wealth funds, alongside Abu Dhabi Investment Authority and ADQ.

In March last year, Mubadala forged a joint venture with Ares to invest in global credit markets opportunities, starting with an initial target of $1 billion.

In the same year, it committed another $1 billion to U.S.-based Blue Owl Capital's credit platform that will initially focus on providing financing for technology companies.

© Reuters. The logo for Goldman Sachs is seen on the trading floor at the New York Stock Exchange (NYSE) in New York City, New York, U.S., November 17, 2021. REUTERS/Andrew Kelly/FILE PHOTO

Mubadala and UAE-based conglomerate Alpha Dhabi last year announced plans to deploy up to 9 billion dirhams ($2.5 billion) over five years in credit markets, with the two companies leveraging on Mubadala's relationship with U.S. asset manager Apollo, "to access high-quality private credit investment opportunities".

Mubadala has been investing in private debt opportunities through its credit investment unit since 2009, mostly in North America and Europe, but has recently strengthened its exposure in the Asia Pacific. Late last year, Mubadala's CEO said the firm's investment focus would increasingly shift towards Asia.

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