GE and Mubadala sign US$8bn joint venture

Robert Hamilton
For Al-Shorfa.com
2008-07-29

U.S. giant General Electric's (GE) chief executive officer, Jeffrey R. Immelt addresses a press conference in Mumbai. (Getty Images)

General Electric (GE) has announced an $8billion [USD] global partnership with Gulf-based investment group Mubadala Development Company, to pursue a broad range of initiatives including commercial finance, clean energy research and development, aviation, industry and corporate learning.

The framework agreement, signed July 22, will provide for shared capital commitments to new joint ventures and investment funds, allowing both firms to take advantage of high growth opportunities in the Middle East, North Africa, and globally.

In addition, Abu Dhabi-based investment agency Mubadala announced plans to become a long-term GE shareholder. The expectation is that Mubadala will become one of GE’s top ten institutional investors through the open market, as conditions allow.

Implementation of the framework agreement is subject to the negotiation of definitive documents and receipt of required regulatory approvals.

Over the next 12 months, the two companies will establish a jointly owned global commercial financial services business headquartered in Abu Dhabi. The two companies will each allocate $4 billion in equity for the venture over a three-year period. The venture is designed to expand GE’s opportunity pipeline globally, particularly in the Middle East and Africa, while providing Mubadala with access to best-in-class commercial finance capabilities.

“This partnership brings together two world-class organisations with complementary resources and a shared commitment to excellence,” GE Chairman of the Board and Chief Executive Officer Jeff Immelt said at the launch.

“Mubadala has deep experience, a diversified portfolio of businesses, access to regional infrastructure opportunities and an exciting vision for growth,” he added. “We are delighted to be partnering with them to capitalise on what we believe are significant opportunities in today’s global financial marketplace.”

GE and Mubadala will establish a clean energy technology centre located in Masdar City, the new carbon neutral, zero-waste city in Abu Dhabi. The centre will be an extension of GE’s global research network and will house up to 100 technologists developing new sustainable energy, water and other environmental technologies.

GE also plans to commit up to $50 million to Masdar’s second Clean-Tech Fund, focused on multi-geography investments in the clean technology sector, while Mubadala will invest up to $200 million in GE Industrial Investment Partners, a new partnership of select global investors that will focus on the healthcare, energy, and transportation industries.

GE and Mubadala have been working together for more than four years. Mubadala and GE currently jointly manage an infrastructure fund, while GE also is an anchor partner in the Masdar initiative, helping create solutions in clean energy. GE has also hosted Mubadala senior executives at its Crotonville leadership centre in New York. This in turn led to the Mubadala & GE Management Programme, launched in Abu Dhabi in 2006, a leadership programme run in Abu Dhabi and across the Arabian Gulf.

GE has been growing significantly in the Middle East, including Abu Dhabi. GE’s 2007 revenues in the region were over $5 billion, an increase of 50 percent over 2006. Abu Dhabi companies and institutions represent a large customer base for GE’s aircraft engines, healthcare and energy products and services. GE has established Abu Dhabi as an important GE service centre hub in the region, with facilities dedicated to its Energy and Sensing businesses.

Bookmarking

Please comment on this article so that we can improve the experience of viewing this website.