Mubadala opens $25bn credit arm to outside investors

Mubadala Investment Co. is opening a $25 billion credit business to outside investors, shifting a large in-house lending book onto a fundraising footing as institutions keep putting money toward private credit. The Abu Dhabi sovereign wealth fund is transferring the portfolio to Mubadala Capital and allowing the unit to raise third-party capital for the first time, according to Bloomberg Law.

The fund will add $4.65 billion to help expand the platform, Bloomberg Law said. That gives Mubadala Capital a larger base for a fee-bearing business, the part of private credit that major asset managers have been trying to scale. Mubadala says its credit and special situations business already oversees about $30 billion across balance-sheet investments and third-party vehicles, enough to approach allocators with an existing book rather than a first fund.

Omar Eraiqat, president and chief investment officer for credit and solutions at Mubadala Capital, described the transfer in an interview with Alternative Credit Investor as a return to the platform that started the strategy.

“The credit business was incubated and built inside Mubadala Capital. This transfer, in many ways, brings it back to where it all began.”

• Omar Eraiqat, Mubadala Capital

For Mubadala, the practical shift is from holding a seasoned credit book mostly on its own balance sheet to marketing that book to outside investors.

Why the timing matters

Private-credit demand has held up better than lending volumes. Reuters reported in June that new loan issuance by private credit lenders fell about 40 per cent in the three months ended May from a year earlier. Deal flow has cooled, but pension funds, insurers and sovereign investors still treat alternative lending as a standing allocation. Opening a $25 billion book in that backdrop gives Mubadala Capital a scale pitch at a moment when investors are more selective about manager size and sourcing.

Since 2009, Mubadala has been investing in private debt opportunities, according to Reuters’ 2023 reporting, while also backing established lenders. In 2023, the fund committed $1 billion to Blue Owl Capital’s credit platform. The latest transfer goes further: Mubadala Capital is trying to win third-party mandates under its own brand, rather than mainly allocating capital to another manager’s platform.

The competitive set has widened. Reuters reported in February that Bank of America committed $25 billion to private credit deals, a sign that banks and large asset managers are trying to keep a foothold in a market once defined by direct lenders and private-equity sponsors. Mubadala’s own platform puts a sovereign wealth fund in the same contest for origination relationships, management fees and a larger role in structuring deals.

For allocators, scale is part of the sales pitch in a slower market. A $25 billion transferred portfolio, a fresh $4.65 billion internal commitment and an existing business that Mubadala says already spans about $30 billion create a stronger story than a first-time launch. The proposition is access to a credit platform that already has capital, track record and sponsor backing.

Across private credit, the announcement shows fundraising appetite has not disappeared even as underwriting has become more selective. The slowdown in new lending that Reuters documented can make established platforms more attractive, because allocators may prefer managers that already control assets and sourcing networks over newer entrants still proving themselves. Mubadala’s move is less a bet on a roaring lending cycle than a wager that institutional demand for alternative lending exposure will outlast the current lull in issuance.

Fundraising is the next test. If outside capital arrives, Mubadala Capital will have turned a sovereign balance-sheet strategy into a broader asset-management business at a time when private credit is moving from niche allocation to permanent portfolio bucket. If fundraising is slower, the transfer still gives the Abu Dhabi group a larger, more clearly branded platform from which to compete for future mandates.