UAE state funds gear up for $30 bn S.Korean investment

Senior officials of the Abu Dhabi Investment Authority (ADIA) and other major sovereign funds of the United Arab Emirates (UAE) met with executives of leading South Korean companies during their visit to Seoul this week, which a Korean government official said was a pre-investment step.

Representatives of ADIA, ADQ and Mubadala Investment Co. sat down with senior officials of rechargeable battery maker LG Energy Solution Ltd., SK Bioscience Co. and fintech platform Viva Republica Inc. in central Seoul between May 15 and 16, according to sources familiar with the situation on Friday.

Other companies on their meeting list were not immediately known.

Their group visit comes after UAE President Mohammed bin Zayed AI Nahyan in January said its sovereign funds would invest $30 billion in South Korea, an agreement he said would be kept under any circumstance.

The announcement was made during the summit meeting with his South Korean counterpart Yoon Suk Yeol in Abu Dhabi.

“They are determined to invest in Korean companies. We could say they held pre-investment meetings this time,” a government official told Market Insight, the capital market news outlet of The Korea Economic Daily.

UAE’s state funds were understood that they themselves picked the Korean companies they wanted to meet.

The $30 billion investment commitment will mark the UAE’s single largest overseas investment.

It is very rare for a group of high-profile state fund officials from a certain country to visit South Korea to discuss investment.

Their visit was highly anticipated by the startup industry keen to receive funding from the UAE state funds.

Some companies, not invited to the meetings, expressed their disappointment.   

“It’s a shame to miss out on an opportunity to meet the UAE sovereign wealth fund officials,” said a Korean company official. “But we will find a way through various channels to meet with them when they come back.”

DIFFERENT APPROACHES

Investment bankers said the UAE’s sovereign funds might take different approaches when selecting investment targets. As an example, the Middle East country’s No. 1 state fund ADIA could set its eyes on big companies to meet its target yield of around 10% on average.

By comparison, Mubadala seems likely to target startups, primarily unicorns or private companies with an enterprise value of over $1 billion. The second-largest UAE sovereign fund has bet on assets deemed risky and shunned by other state funds.

“It is meaningful that senior officials of Abu Dhabi’s first and second-largest state funds came to Seoul simultaneously,” said an investment banker.

“We expect UAE’s investments in South Korea will materialize sooner rather than later.”

Those sovereign wealth funds are speculated to consider both direct and indirect investments in Korean companies.

This week, they had prepared meetings with some South Korean private equity funds but to no avail.

ADIA has allocated some of its funds to Seoul-based STIC Investments as a limited partner since 2014. The state fund also previously managed its assets via Korean financial companies such as Trust Asset Management and Samsung Asset Management.

Mubadala participated in the $1.5 billion purchase by an IMM Investment-GS Group consortium of a 46.9% stake in South Korea’s top botox maker Hugel Inc. as a financial investor in 2021.

ADIA, founded in 1976, manages $829 billion in assets. Set up in 2002, Mubadala manages $284 billion in assets.

Write to Dong-Hun Lee at leedh@hankyung.com

Yeonhee Kim edited this article.