Mubadala Development has sold a minority stake in the company that developed and manages the Paris-Sorbonne University Abu Dhabi to one of its private equity funds.
In transferring 49 per cent of Manhal Development Company to Mubadala Infrastructure Partners (MIP), Mubadala said yesterday it was realising returns for the parent company while sharing the risk of the public-private venture with its partners. Mubadala Development is a strategic investment company owned by the Abu Dhabi Government.
The university on Reem Island was completed last August and is now fully operational.
"The sale of a minority equity stake allows Mubadala to realise a commercial benefit while being in line with its strategy of sharing project risk with other parties at appropriate times, which is an important step in the development of the [public-private partnership] market locally and in the region," said Ali Eid al Mehairi, an associate director of MIP.
Launched in 2008, MIP is an investment fund that focuses on the Middle East, North Africa and Turkey. The US$500 million (Dh1.83 billion) fund is co-sponsored by Mubadala, General Electric and Credit Suisse, and its investors include local and foreign institutions.
"We believe [the Sorbonne] will deliver strong and reliable returns to our investors, while affording MIP the opportunity to actively participate alongside Mubadala in value creation through operational improvements," said Philip Haddad, the chief executive of MIP.
Although its backers say the Sorbonne's business is healthy, Mubadala recently said it expected its own revenues from educational developments that include the Sorbonne as well as branches of Zayed University and UAE University to decline this year. The company said in a bond prospectus it expected top-line income this year "will be significantly lower than in 2010, reflecting the fact that construction activity in relation to the Sorbonne university project completed in August 2010 and construction activity on the other two projects is scheduled to complete during the third quarter of 2011".
The projects had been especially lucrative for Mubadala during the construction phases, when it earned revenues from the Government for its role in arranging the developments.
Mubadala reported profits of Dh1.1bn for last year, down 76 per cent from 2009.
