Mubadala eyes more third-party capital

The investment arm of Abu Dhabi's second-largest SWF has teamed with SoftBank to raise $400m for venture capital.

In May last year Mubadala Investment Company made headlines when it committed $15 billion to the Vision Fund, the $100 billion brainchild of SoftBank founder Masayoshi Son.

The flow of capital hasn’t all been one way, however. On Wednesday the investment arm of Abu Dhabi’s second-largest sovereign wealth fund announced in a statement that it would partner with SoftBank to create a $400 million venture capital fund.

The fund will invest in “founder-led, high-growth” European technology companies and make commitments to other European VC funds. Mubadala will also use the fund as a platform to help European companies establish operations in Abu Dhabi.

The fund doesn’t yet have a name and the capital split has yet to be decided, according to a source familiar with the matter.

This isn’t the first time that SoftBank has invested in a Mubadala-managed fund. Last October the two announced the formation of Mubadala Ventures Fund I, a $400 million early growth VC vehicle with the goal of investing in 25 companies, as well as a $200 million VC fund of funds to invest primarily in emerging managers. But it’s another step towards Mubadala’s goal of becoming a bona fide fund manager.

That ambition is equally clear on the private equity side. In April last year Mubadala made headlines with the largest ever stapled secondaries deal in which it received a $750 million investment from secondaries giant Ardian.

Mubadala proceeded to use its own – and Ardian’s – networks to collect another $750 million from a select group of investors, Private Equity International revealed in May. The resultant $1.5 billion fund, which makes direct investments, co-investments and primary fund commitments in Europe and the US, is something of a testing ground.

“Now they have a relationship with these investors,” a source told PEI at the time. “When the portfolio performs [as well] as they expect it to and the natural time comes to raise a third-party fund, they’ll have a group who know about them and the deals they’ve done. They’ll say, ‘Let’s commit with them’.”

Mubadala has no firm plans to raise a private equity fund unaided and no sense of how much it would target, PEI understands. But it surely won’t be long until we find out.