A unit of Abu Dhabi's Mubadala Investment Co. purchased one of the largest Taco Bell Corp. franchisees in the U.S. underscoring the $243 billion sovereign wealth fund s growing appetite for private equity deals.
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None What the front line of The Lee Equity Partners Opportunities Fund, the fund s asset management arm bought K-Mac Holdings Corp. from Mubadala Capital on Thursday According to a statement : Financial terms were not disclosed. K-Mac has some 300 Taco Bells - outlets that are primarily located in the Midwest and South.
The deal reflects Mubadala Capital s expansion in the food and beverage sector, where it invested about $1.8 billion in the last seven years alone. It also underlines the buyout division s focus on U.S. capital, a destination for approximately 80% of its capital, said Adib Martin Mattar, who heads private equity at Mubadala Capital.
It remains the world s biggest market when it comes to doing private equity deals and finding investment.
Mubadala Capital advised Goldman Sachs Group Inc. regarding the K-Mac transaction. It represents another success for the U.S. bank in Abu Dhabi, where it wasn t welcomed following the fallout from its role in the 1 MDB corruption scandal. Bank of America Corp. and North Point advised the sellers.
In a rare move for a wealth fund, Mubadala Capital became the first such institution to manage third-party funds. It s now beefing up its presence outside of Abu Dhabi, capital of the United Arab Emirates, in London and New York, where it sees most future opportunities, according to Mattar.
Sovereign funds in the Gulf region normally deploy surplus government revenue to invest abroad and diversify the local economy. Mubadala Capital now holds $9 billion in assets under management and also manages two private equity venture funds, a public equity fund and another in Brazil focused on special situations.
Increasingly, other private investors are actively involved in the sovereign equity sector. The Abu Dhabi Investment Authority is the UAE capital's largest wealth fund and said recently raised its target allocation range for private equity. Its buyout division completed a record 24 investments last year.
Mubadala Capital recently raised its third fund at $1.6 billion in capital, including $500 million from its parent and a large commitment from BlackRock Inc. as well as other global institutional investors.
Other investors include sovereign funds, U.S. pension funds, college endowments and European insurers, Mattar said. Since almost 90% of the latest funds have been deployed, Mubadala Capital is planning a fourth fund of around $12.5 billion, he said.
That s part of our business, that is to constantly raise capital and find good deals for investors, Mattar said. Most of Mubadala Capital's investments are purely done on a financial return-only basis, he said.
Exceptions include Witherslack, a U.K. provider of special educational schools and children's care homes. Mubadala Capital vowed to invest 100% in the business this year and plans to open facilities across Middle East.
Another example is REEF Technology, a SoftBank Group Corp. backed startup that manages hubs in parking lots used for food delivery and other services such as Covid- 19 tests.
Mattar Al-Abrahim is expanding REEF in the Middle East as we speak.
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