ARTICLE: "GE Sets Abu Dhabi Partnership for $8 Billion," by Chip Cummins, Wall Street Journal, 23 July 2008, p. B1.
GE lets Abu Dhabi Mubadala Development Co (remember that name) plunk down an $8B investment to set up--jointly--a commercial finance division to focus on the Mideast and Africa.
Why allow such a big equity buy-in?
GE's future has long been in water (one senior exec told me a while back that there's just too much money to be made in water infrastructure for GE not to be heavily involved) and most of that will come in emerging markets--hence the Mideast and Africa focus (most water-deprived).
But the larger message?
Sovereign wealth funds like Mubadala will be the big dogs whose wagging tails will determine much about where money gets spent on Gap infrastructure.
Don't live under the delusion that U.S. military interventions drive anything by comparison.
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Comments (4)
Mubadala is familiar outside of finance. They're a primary sponsor or the Scuderia Ferrari F1 race team. Just look at the ballcaps on Kimi Raikkonen or Felipe Massa on the next race broadcast on Speed TV.
Posted by Paul Cajka | August 8, 2008 8:18 AM
As we pay higher gas prices, aren't we indirectly helping to improve the infrastructure (in this case Mideast and Africa). Kind of a stretch, but more money for the sovereign wealth funds to invest.
Posted by Bob L | August 8, 2008 9:48 AM
In regard to the last sentence, I think a case can be made that our military interventions in Iraq in 1991 and 2003 helped to stabilize the Persian Gulf region in a good way and thereby facilitated much of the investment we've seen in that area over the last couple of decades. Looking forward, our military capability in that area largely blunts threats from Iran to shut down the Persian Gulf. There would be a lot less tail wagging by sovereign wealth funds absent a US military with capability to intervene effectively when necessary in the gulf or other areas of the Gap.
Posted by Walt Lips | August 8, 2008 12:21 PM
So, in the end, we will fight over water, just as our ancestors did 50,000 years ago. Maybe I should get an extra case at Costco and bury it in the backyard.
Posted by Ted O'Connor | August 8, 2008 1:14 PM