UAE-UK relations enter new chapter with expanded Sovereign Investment Partnership

Focus on energy transition, technology and infrastructure as well as life sciences

Lord Grimstone and Khaldoon Al Mubarak . Bloomberg, Pawan Singh / The National

The UAE’s relationship with the UK is expected to enter a new chapter this week, with a series of announcements of high profile investments and partnerships, to bring closer a greener, high-tech industrial revolution.

To set the terms of a “step change” in relations, the countries have agreed on an expansion of the Sovereign Investment Partnership, announced last March, with an initial £1 billion joint investment in life sciences. That investment cycle has already neared completion and, with rewards flowing, the partnership is set to be expanded to include joint investments in energy transition, technology and infrastructure. All four sectors have been identified by the UK and UAE as priority areas for the foreseeable future.

In a joint interview with The National in London, the UK’s minister for investment Lord Gerry Grimstone and Mubadala’s group chief executive and managing director Khaldoon Al Mubarak laid out the principle tenets of the Sovereign Investment Partnership, from shared investment to strategic tie-ups and preparing for the future. A key theme for the partnership is science and technology, in line with both countries' focus on developing their expertise. Mr Al Mubarak said that the investments are “high impact with high return”.

Mr Al Mubarak told The National: “We know the UK well and have been investing in it for some time”, including a track record of £4bn investments in renewables. He added: “We are looking to the future, using the strengths of what we know”. He said the four new sectors of focus of the partnership “match our ambitions ... we are all on the same page”, with the UK.

“Both countries [are] essentially taking a view on each other and saying we're going to bet on each other, we're going to double down and triple down in terms of growing this relationship to another level,” he said.

On how the sectors included in the partnership were identified, Mr Al Mubarak described it as a process of “logical conclusion”. And these are all sectors from an investment perspective in the UAE have a very important focus on.

“These are sectors that have tailwinds, and are sectors that the UK has a lot to offer in, with tremendous potential,” he said. “I think you will be able to see this year several very interesting investments so far and others that are in the pipeline that we will do before the end of the year in companies that are doing cutting edge research and development, that are producing incredible technology – products that are going to come and save lives and improve the livelihood of people.”

Noting the unique nature of the partnership between sovereign entities, Lord Grimstone said the UK government was keen to learn from collaboration with a UAE side that boast global expertise and established networks.

“These are priority sectors for the UK government as well, what we are seeing here is Mubadala helping us inject economic activity into every part of the United Kingdom. With an investor such as Mubadala, one of the world’s most sophisticated global investors, you get skills, sophistication”.

He highlighted the fact that “companies in which Mubadala invest get great benefit from that, separate from the pure investment” of funds.

“The more we can get from Mubadala’s global expertise, that is a huge opportunity for us,” Lord Grimstone said.

Both the UAE and UK see the expanded partnership as part of a bigger picture. Mr Al Mubarak said: “It is important to contextualise our partnership, the investment side is obviously important but this is a new approach as we agree a new partnership”.

As the UAE celebrates fifty years since its founding, it is also building on more than fifty years of relations with the UK and “a tremendous foundation”, as Mr Al Mubarak termed it.

“The UK has been a very important strategic partner for the UAE since its inception … in every aspect of society, from the economy to the government to education, health care, every aspect of society,” he said. “We have a wide and deep-rooted relationship and I think that is the foundation of what we are looking to for the future.

“Building on the historic relationship and looking to the next 50 years,” he added.

Mr Al Mubarak said: “The UK is in a different place than it was 3 to 4 years ago and the UAE is also in a different place”.

The UK has been seeking to build on its investment partnerships globally as it emerges from the Brexit period and the partnership with the UAE is seen as an important pillar in its strategy.

Lord Grimstone, a former banking executive with UAE boardroom experience, said that this week’s announcements show “confidence in the UK” at the international level.

He added a corner had been turned after “three years, the UK became obsessed with itself, obsessed with Brexit negotiations and people got fed up with us during that period. It got to a point where investors would say to me, we don’t care what you do, as long as you do something".

Lord Grimstone sounded an optimistic note, as the “UK is going through a huge period of change, we are having our new industrial revolution, with net zero [projects], life sciences and technology”.

The minister was noncommittal about the possibility of a Free Trade Agreement between the GCC and UK, a matter that has been discussed for some time in London and Gulf capitals. He said: “Investment and trade go hand in hand, everybody is excited about the possibilities”, making reference to the fact that the GCC is equivalent to the UK’s 4th largest non-EU trading partner, after the US, China and Switzerland.

The investments in the four sectors will be over an initial five-year period under the Sovereign Investment Partnership but the framing is over a much longer period of time. Lord Grimstone explained that with programmes such as these “they become self-sustainable, success breeds success. Familiarity with the investment landscape leads to more opportunities”. Mr Al Mubarak said since the announcement of the Sovereign Investment Partnership and the initial commitment in March, “we have both worked so hard with our respective teams in identifying the right opportunities, going through the proper diligence and then investing in an appropriate way”.

Since March, the UAE has made 12 investments in life sciences, deploying or committing to more than £1.1bn of invested capital already and by the end of the year, Mr Al Mubarak said he anticipated a line of sight of at least £2bn.

Mr Al Mubarak stressed the significance of the partnership with the UK.

“This is a very important new chapter in our relationship with the UK, future-driven, with a lot of excitement, confidence and based on a history that has been quite incredible.”