Abu Dhabi agrees multibillion-pound investment in British business

The United Arab Emirates has agreed a multibillion-pound investment partnership with the UK to invest in British health, technology, clean energy and infrastructure, delivering a significant post-Brexit boost to Prime Minister Boris Johnson.

As part of the deal, Mubadala, one of Abu Dhabi’s most active state funds, will pump £800m into the life sciences sector over five years alongside £200m from a British government fund. The investments in the other three selected sectors are expected to be of a similar or larger scale through to 2026, suggesting the overall investment could be up to £5bn.

Officials said the exact size of the total investment was not clear but that the $232bn Abu Dhabi fund “only deals in big numbers”. The partnership’s focus will now switch to tech, clean energy and infrastructure.

Lord Gerry Grimstone, the UK’s investment minister, told the Financial Times he was “expecting equal or better opportunities to be found in those sectors”. He added: “We think the future opportunities are very, very sizeable.”

Khaldoon al-Mubarak, Mubadala’s chief executive, said: “It will be a sizeable number, appropriate for these sectors in order for us to make the right scale and returns”.

Grimstone described the “sovereign investment partnership” as the first deal of its kind for the UK and the Office for Investment, which Johnson launched in November to improve Britain’s ability to attract foreign capital.

Grimstone has been given a remit by the prime minister to work across Whitehall to remove barriers to potential investments in the UK. The oil-rich Gulf and India are among his principal targets, but this is the biggest deal so far.

Grimstone is a former chair of Standard Life and one of the Treasury officials behind the Thatcher government’s privatisation programme in the 1980s. He said the government wanted to use the agreement to act as a “catalyst” to attract the world’s best venture capital funds to the UK’s life sciences industry.

He also hopes to secure investment for green energy projects, as Britain prepares to host the UN COP26 climate change summit in November. Chancellor Rishi Sunak’s Budget this month prioritised investment in life sciences, tech, green technology and infrastructure.

Mubadala’s initial investments will be alongside the UK’s £200m Life Sciences Programme, a public-private fund launched last year to boost venture capital investment in that sector and help develop national champions.

“We will look to bring other investors into life sciences. You should see it as a much more muscular and entrepreneurial approach to attracting investment,” Grimstone said.

“The issue we’ve had in the past is we haven’t always had the venture capital deployed in the market to turn these very strong innovation topics into viable businesses going forward.”

Mubadala, which manages a global portfolio, has a long record of investing in the UK. Grimstone said he hoped the investment in life sciences would be spread across Britain, including to industrial clusters outside London.

Mubarak said the coronavirus pandemic had reaffirmed life sciences as a “very attractive” investment. “We want to increase, substantially, our investment in that area because of our increased conviction both in the sector and in the country,” he said. “We think [the UK] is a very important market globally. We think it’s well poised, we see the opportunity in the post-Brexit era and it’s a market we know very well.”

Mubadala typically looks to invest between $50m and $500m in life sciences companies, which includes pharmaceuticals, animal health, medtech and biotech.

Abu Dhabi, the UAE’s capital and by far the wealthiest member of the federation, has been increasingly investing in technology-related industries and renewables as it seeks to modernise and diversify its oil-dependent economy.

Mubarak said Mubadala, which already has interests in clean energy in the UK, including stakes in the London Array, Hywind and Dudgeon wind farms, could invest on its own in certain deals and will expand its London office.

The agreement underscores that the UK and the Gulf state have overcome a low point in their relations three years ago after the UAE detained and convicted British academic Matthew Hedges of spying for London. Hedges denied the charges and was pardoned after the spat threatened to derail traditionally close bilateral ties between the longstanding partners.