UAE state funds gear up for $30 bn S.Korean investment
The sovereign funds' group visit is a follow-up to the UAE pledging its single-largest overseas investment in S.Korea
SK Group Chairman Chey Tae-won (left, standing) signs a business cooperation MOU during President Yoon Suk Yeol's state visit to the UAE in January 2023
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.
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.
SK Bioscience research lab 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.
