Business headlines around the world are abuzz with news of the Abu Dhabi Investment Authority (ADIA) and its $7.5 billion capital injection into Citigroup. Today’s Financial Times opines that such liquidity injections from cash-rich sovereign investors could prove a “template for other banks hit by the US subprime crisis.” The FT may be right, but the point is even broader – it’s not just the banks that are affected by subprime woes.
Continue reading ‘Citigroup’s Gulf Capital: ADIA & Alwaleed’
In a post two days ago on Mubadala’s investment in AMD, I noted that “Gulf investors have choices, especially towards the East.” Yesterday, another UAE-based investor announced a major stake in a high-profile global firm: Dubai International Capital (DIC) is making a “significant investment” in Sony. According to the Financial Times, DIC now seeks to deploy 30% of its capital in Asia. Significantly – and not surprisingly – DIC increasingly finds the East a welcoming destination for its capital.
On November 16, the chip maker Advanced Micro Devices (AMD) announced that Abu Dhabi’s Mubadala Development Company has acquired an 8.1% equity stake in the California-based firm. The $622 million investment provides a major cash boost for the struggling US company.
Commentators on the deal have noted that government review of the matter is possible, as some see security risks in a foreign company owning a meaningful stake in a high-tech US company. Some assert that Mubadala – despite having less than 10% of AMD and not having a seat on the board of directors – could somehow compromise our national security. What happens in the weeks ahead will be closely watched by sovereign wealth funds and other international investors with portfolios in the US.
Observers would, however, be well-served to bear in mind the following key facts:
Continue reading ‘Mubadala & AMD: “Capable Capital” Turns to Chip Maker’
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