G42 to manage $10 billion tech fund

G42 enters fund management with $10 billion tech fund

G42 (a.k.a Group 42) today announced the creation of a new business unit to manage a $10 billion G42 Global Expansion Fund, a global technology growth fund formed in strategic partnership with Abu Dhabi Growth Fund (ADG). According to Bloomberg, the Abu Dhabi-based AI and cloud computing firm has expanded its investment team over the past year adding key employees from the country's sovereign wealth funds.

The move could mark the beginning of a new stage in the G42 group's development, if one that takes it away from its core business of developing technologies and solutions, leveraging AI and other emerging technologies. And G42 is hardly dipping its 'toe in the water' here, its creating a new division to manage a $10 billion fund!

However, there is much investment management expertise within G42's parent holding group, H.H. Sheikh Tahnoun bin Mohammed Al Nahyan's Royal Group and sister investment and holding company ADQ (which formed ADG last year). Meanwhile, as a result of global tech investment firm Silver Lake's $800 million investment in G42, arranged by Mubadala, Silver Lake co-CEO Egon Durban sits on the company board.

According to today's news, the new $10 billion fund will invest in late-stage growth companies with disruptive technologies, with a particular focus on emerging markets. 

Sound familiar?

It should. In January, Chimera Capital (also part of Royal Group) announced that it had closed a second round of funding for a new tech-focused global venture capital fund at $10 billion. Launched in September 2021 together with New York headquartered co-manager Alpha Wave Global (previously Falcon Edge Capital), the fund was called Alpha Wave Ventures II. 

As background, a $300 million Alpha Wave Incubation (AWI) fund was launched in early 2020 by then Falcon Edge Capital, funded by ADQ. The fund's mandate is to invest in early stage tech startups from India and South East Asia, on the condition that targeted ventures moved some of their operations and/or R&D to Abu Dhabi. It seems to have been highly successful so far, moving two dozen Indian startups to Abu Dhabi.

I speculated in Middle East AI News 27-Jan-22 that the new Alpha Wave Ventures II fund could have similar objectives, but instead, investing in pre-IPO tech ventures and incentivising them to set-up in Abu Dhabi and potentially list there.

This morning's press release states that the G42 Expansion Fund will operate as a private equity investor, and in "addition to providing investment support, G42 will leverage its operational assets and ecosystem of operating companies to accelerate value creation across the G42 Expansion Fund’s portfolio of investments". Which does seem to hint that the new fund could perhaps be used as a treasure chest to acquire companies and manage them under the G42 umbrella.

So, what does this mean for G42's overall strategy? 

The creation of the G42 Expansion Fund could end up transforming the whole company. Its move into venture capital could present acquisition opportunites that could build the group into something bigger than anyone had previously imagined.

The group already manages an enviable portfolio of technology concerns. As part of Mubadala's investment in G42 in 2020, the company acquired Abu Dhabi technology companies Injazat and Khazna Data Centers (Khazna). Then there is the Inception Institute of Artificial Intelligence (IIAI), Mohamed bin Zayed University of Artificial Intelligence (MBZUAI), the geospatial data and technology company Bayanat, plus G42 Healthcare and G42 Cloud, two businesses units that have been spun out of the G42 parent company.

Compared to the fast-growing new AI technology developer of two years ago, G42 now looks very much like a technology investment holding group. It will be interesting to see how the company's story plays out over the next year or two.

Find out more about this story:

• Read today's G42 press release.

• See Middle East AI News 27-Jan-22. (Linkedin version)

• Read Bloomberg's Feb-22 story on G42 hiring.

• See Middle East AI News 11-Nov21. (Linkedin version)