Khaled Al Shamlan Al Marri,, Deputy Chief Executive Officer, Disruptive Investments, Mubadala Dr. Ridha D. M. Wirakusumah, Chief Executive Officer, Indonesia Investment Authority In conversation with: Peter Vanham, FORTUNE
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00:00 "May Allah have mercy on the trees, just as He has mercy on man."
00:05 Mubadala's commitment to deploying capital purposely
00:12 echoes the vision of the UAE's founding father
00:15 through investments that are durable, global, and above all, responsive.
00:20 Our strategy to invest in industries shaping the future
00:24 supports our vision of a brighter tomorrow.
00:28 Ladies and gentlemen, please welcome Fortune Executive Editor Peter van Em.
00:33 Hello and welcome back everyone. I hope you enjoyed that break.
00:43 Well, it's time to talk about something very important.
00:46 Right now in the world, sovereign wealth funds have about 11 trillion dollars
00:51 of assets under management.
00:54 The Middle East, Asia, and North Africa have actually the largest set of sovereign wealth funds
01:00 and several of them are right here,
01:02 including of course the Abu Dhabi Investment Authority and Mubadala.
01:07 The funds are important sources of capital, of innovation,
01:13 and they help to spur growth.
01:16 That's obvious to anyone who knows them.
01:18 But in a world grappling with things like high inflation, geopolitical tensions,
01:23 digital transformation, and climate risks, all things we've talked about today,
01:27 sovereign wealth funds are navigating an increasingly complex landscape.
01:32 So they must adapt to these challenges,
01:35 seek diversification, sorry, and sustainable investments
01:40 to safeguard and enhance their wealth in an ever-changing world.
01:46 So let's talk about how they do that.
01:48 Joining us are Khaled Al-Shamlan Al-Mahri,
01:52 the Deputy Chief Executive Officer of Disruptive Investments at Mubadala,
01:57 and Dr. Rida Widakusama,
02:00 the Chief Executive Officer of the Indonesia Investment Authority.
02:04 Welcome to you.
02:05 Thank you.
02:16 Well, welcome to both of you.
02:18 And I should also say the same.
02:20 Thank you for having us here, of course.
02:22 We're talking about very important things.
02:25 But before we get to those very important things, I want to ask you,
02:29 what are disruptive investments?
02:34 Because you are responsible for disruptive investments.
02:36 Yeah, the name is very scary, but it's not as scary as it sounds.
02:39 Well, good afternoon to everyone.
02:42 It's a great pleasure to be here.
02:43 Thank you for the invitation.
02:44 My name is Khaled, and I'm here from Mubadala Investment Company.
02:49 Disruptive investments, to your question, is one of four platforms
02:54 within Mubadala that is mandated to oversee three businesses.
03:02 One is growth.
03:03 We invest in tech growth globally.
03:07 Number two, we oversee a credit business,
03:11 private debt, middle market, and so on.
03:14 Debt, middle market lending.
03:15 And three, we oversee dedicated country investment programs.
03:20 So the name disruptive really came from the fact that when we started,
03:24 we were more on the tech early stage growth,
03:27 focusing on disruptive technologies.
03:30 But it doesn't seem that the name is a reflection of what we do today.
03:38 And we are seriously considering looking at the name again.
03:42 That's excellent.
03:43 And of course, to be clear, that is perhaps also to show that you're different
03:48 from traditional sovereign wealth funds who are like portfolio investors,
03:52 who spread their money into the market,
03:54 take perhaps one or two percent in large public listed companies,
03:58 whereas you might take a much larger share, indeed, of scale-ups or other companies.
04:03 Listen, I think if you look at sovereign wealth funds today,
04:10 they have evolved in the past 10 to 15 years
04:13 in terms of the role that they play and in terms of their investment strategies.
04:18 If you look 10, 15 years ago, sovereign wealth funds were more focused on indirect investing,
04:26 more of the endowment model, investing in funds.
04:29 But today you'll find that they're becoming a lot more active in direct investing.
04:35 They're a lot more active in taking control
04:40 and you will also find that a lot of those sovereign wealth funds today
04:44 are forging much more effective, much stronger partnerships with private GPs.
04:53 And indeed with each other, you mentioned,
04:55 because you work together on some investments with your colleague in Indonesia.
04:59 Yes, and we continue to do so.
05:01 And Mr. Radha, I'm sure he's going to touch on some of the exciting investments.
05:06 I don't want to steal the thunder, but we've done some great stuff together.
05:09 But it's interesting evolution, isn't it?
05:12 And it really is also interesting in the perspective, in the context that we're meeting today,
05:18 which is a world, of course, in constant change
05:20 and where there's a need of someone driving the global economy in a certain direction.
05:26 One of the obvious directions that the world economy needs to turn in
05:30 is towards being more sustainable,
05:33 to being more aware of the climate changing and doing something about that.
05:38 Let me ask both of you and let me start with you, Dr. Radha.
05:40 How does that reflect in your investment strategy?
05:45 Does that mean that you now only invest in, let's say, green technologies?
05:50 Or does it still mean that you do that as a part, but you hedge your bet or your risk?
05:55 Yeah, well, thank you.
05:56 And thank you for inviting me here.
05:58 We are relatively a new sovereign wealth fund.
06:02 We just started almost three years ago.
06:05 We focus on four main areas.
06:08 Infrastructure, which includes transport and logistic infrastructure.
06:12 Digital, includes digital infrastructures and digital commerce.
06:17 Healthcare.
06:19 And lastly, the green or renewable energies.
06:23 We are extremely paying attention to the purpose of what we're investing.
06:32 We want to make a difference in every single thing that we do.
06:35 In fact, in all those four areas that we mentioned,
06:38 our fund has grown maybe over 80% in the last since we started.
06:44 But it is rather peculiar that the best performing areas of investments
06:49 is actually in the green energy.
06:52 The best performing investments are in green energy.
06:56 In fact, that's the one that we are co-investing.
07:00 I told you I don't want to steal the thunder.
07:02 We are investing in geothermal.
07:05 Alongside with one of the Masdar portfolio companies,
07:10 we invested in one of the largest geothermal company.
07:16 And as you know, Indonesia has a lot of geothermal energy
07:20 because it sits on the ring of fire.
07:22 The performance has been up 70% since we brought the company public in February.
07:30 That's very encouraging, of course, because sovereign wealth funds,
07:33 you have a large amount of assets under management individually,
07:38 but together we've heard $11 trillion of assets under management.
07:42 You can really move the needle.
07:43 So let me get back to you, Khaled.
07:46 When you do that, does that mean that you are in that sense different
07:55 than, for example, the revenue side of the UAE,
08:00 the oil companies, for example,
08:02 in that you do go all in on green technologies?
08:06 I don't think that we're different.
08:09 I think climate change is a global challenge.
08:15 It's a global mission.
08:16 And us being part of the global community,
08:21 we do feel the responsibility to contribute and play part
08:26 in addressing that challenge.
08:29 And I think every organization in its own capacity
08:33 has its own strategy in terms of addressing the climate change challenge.
08:37 And in Mubadala, this is very central to our investment strategy.
08:42 As a matter of fact, every investment that we look at,
08:46 it has to pass through an ESG/climate change criteria.
08:51 Does that include then that there is a timeline for you to no longer invest,
08:58 for example, in fossil fuels?
08:59 Well, there is a timeline for us to get to net zero.
09:04 That's 2050 in line with...
09:06 Yes, in line with the UAE government.
09:08 And there are a lot of measures that we have started taking,
09:11 and we continue to find new measures to take to reach to our goal.
09:16 And as a matter of fact, we have a fully dedicated function
09:19 within the organization that's overseeing and spearheading
09:23 these initiatives to make sure that we track well vis-a-vis our objectives.
09:29 Right. But so there is no specific timeline to exit fossil fuel investments.
09:34 That's not part of that net zero?
09:36 There's a specific timeline to ensure that we reach net zero.
09:40 Right. And that's that 2050?
09:42 Exactly. That's 2050 in line with the UAE government.
09:44 Okay. That's very clear.
09:46 You mentioned the ESG framework as central to your agenda when you make investments.
09:52 I want to ask the same question to you, Dr. Rida.
09:55 Tell us how you use frameworks like ESG or the responsible investment framework
10:01 in your investments.
10:03 In the US, we've seen there's increasingly a backlash against the concept of ESG.
10:07 It seems to me like for both of you, that's absolutely not the case.
10:11 This is central to your investment thesis.
10:13 Could you elaborate on that?
10:14 Look, Indonesia is a developing nation.
10:21 If you talk about changing from fossil fuels to renewables,
10:25 many of Indonesians are not even having enough electrification, for example.
10:30 So a lot of things you have to put things in perspective.
10:33 We talk about building infrastructure still.
10:36 Whereas if you go into UAE, everything is extremely smooth in terms of the roads
10:40 and the port and stuff like that.
10:42 So when it comes to on the very topical investment topics of renewables,
10:51 you either talk about reducing carbon footprint or creating carbon credit.
10:58 Now, we have done quite a number of things on that area as one of our four pillars.
11:05 And in every single one of our investments, ESG has become not only part of our filters,
11:13 but also part of differentiations.
11:15 But those--
11:16 Differentiating versus other investors?
11:20 So we have what we call ourselves not only just an ESG team,
11:25 but we also put a filter in terms of ESG due diligence.
11:28 We will not get into the company where we cannot make a difference
11:34 in the areas of ESG, for example.
11:36 OK.
11:36 Differentiating towards the company,
11:38 you were able to make a difference to the company you invested in.
11:41 But you need to temper the expectation because, you know, at least in our market,
11:48 many companies don't even think along the lines of the ESG framework.
11:52 Yet.
11:53 Yes.
11:54 So we have a lot of work still needs to be done.
11:58 Yeah.
11:58 On the reducing carbon footprint, we've done the geothermal, for example.
12:05 We also have done the platform on the energy transition
12:09 because you cannot just jump into renewable energy without solving--
12:13 Right.
12:14 The coal-fired power plant, which we have now are going to transition a few coal power plants.
12:21 And so, of course, you have that responsibility not just for the world,
12:24 but specifically for your own country--
12:26 Correct.
12:26 --has its own needs, as you outlined earlier.
12:28 And that explains that you have that transition plan, including other technologies.
12:32 You mentioned geothermal as the one that is most relevant to you in your investments.
12:37 Which is the renewable that you are most interested in or invested in?
12:42 It is actually part of Masdar, which is one of our portfolio companies.
12:48 It is one of their core themes that they're focusing on out of many other themes.
12:53 Yeah.
12:53 I want to move--
12:54 And if there's any questions from the audience, please raise your hand.
12:57 We might have time for one question.
12:59 But if not, I want to move in this last part of the conversation
13:01 towards the other two trends that are shaping the global economy,
13:04 you know, globalization versus deglobalization and technology.
13:08 We've heard a lot about AI, and we're going to continue to hear about that.
13:13 How do those two filters play into your investments?
13:16 Do you seek out specifically to make investments in AI?
13:21 And if so, do you do that in a certain part of the world,
13:26 or do you remain committed to a truly global economy?
13:29 That's a very good question.
13:32 And I think, you know, AI is a hot topic, and everybody talks about AI these days.
13:36 Yes.
13:37 And we have to be also mindful of all the issues and the challenges
13:41 from a legal, ethical, business perspective that come with AI.
13:44 But also, we have to recognize that we are still at the beginning
13:50 of the AI kind of journey.
13:53 If you look at, for example, Chad GPT just went out in less than 12 months.
13:57 So still early kind of innings, right?
14:00 That's very early.
14:01 So, and we have not a single major company, you know,
14:04 or corporation has seen real use of AI yet or impact.
14:07 So it's still in the early stage.
14:09 So we're being very delicate and very careful with how we approach investing in AI.
14:17 We look at AI in two ways.
14:19 One is as an investment destination.
14:21 And we have a dedicated tech program that adopt AI as one of the themes.
14:27 However, we're more focused on the application side of AI,
14:32 rather than the core large language models.
14:37 Right.
14:38 So we look at...
14:39 Industrial applications.
14:40 Exactly.
14:41 We look at, you know, AI enabled businesses.
14:44 For example, we invest in drug discovery companies that use AI
14:50 to improve the timeline for drug discovery.
14:54 Yeah.
14:55 We invested in an AI company that actually work with call center operators
15:01 to make them do what they do better.
15:03 Yeah.
15:04 Because of course, you stress the importance of safety and having safeguards,
15:09 making sure that you are careful when you make these investments.
15:12 Do you have similar considerations when it comes to geopolitics that you want to play it safe,
15:17 for example, by investing in industrial applications,
15:20 rather than the more...
15:22 The elements that are more contested?
15:26 I think, listen, we're an investor, right?
15:29 We operate in the business and the investment world.
15:33 So we always try to look at things from an investment perspective,
15:36 while also being mindful of all other kind of, you know,
15:40 issues and challenges around it,
15:43 and try to navigate through these issues in a way that is, you know,
15:47 very careful and very deliberate.
15:49 Yeah.
15:49 Let me ask you the same question, Rita, but in another way,
15:52 because, you know, you've mentioned that your four criteria,
15:55 a lot of them are based on infrastructure, right?
16:00 Helping the economic development needs of your country and the place you invest in.
16:04 Where does AI track for you, where you stand in your journey?
16:09 I would say that we're not there yet.
16:12 Our needs and our investments are more basic.
16:16 But from the investor's perspective,
16:20 we've been partnering with the likes of the Mubadala and the ideas and GICs,
16:24 many pension funds in Europe and Canada and stuff like that.
16:27 Investments as investments.
16:29 We are applying technology in all of our portfolio investments.
16:32 A lot of our investments are more basic,
16:35 but much more rewarding in a number of areas,
16:38 because it is much more rewarding to invest in the developing nations at times,
16:45 as you can actually box in the risk and still getting the returns
16:49 that are actually above the market.
16:51 Right. And we should not forget that, of course,
16:53 you operate in a part of the world that still has a lot of those
16:58 basic infrastructure needs.
16:59 And does that also mean that in that sense,
17:04 there's not really an opportunity to leapfrog to AI?
17:07 There is. There's huge opportunities.
17:10 Now think about it this way, right?
17:12 Indonesia supposedly, if we are tracking right,
17:15 will become the fifth largest economy by 2040.
17:20 Right.
17:21 We have 280 million people.
17:24 Between 15 to 64 years age accounts for about 70% of our populations.
17:31 30 years and younger is actually about 50%.
17:35 And we are still growing very fast.
17:38 The younger generations are so much more tech savvy.
17:40 And we are using a lot of applications.
17:44 And we're actually one of the fastest growing
17:46 in terms of internet and data and stuff like that.
17:48 Our data centers are now, we invested in one,
17:52 and we are equipping them to make sure that-
17:53 It seems to me like you're doing both.
17:55 And I want to thank both of you because we've come to the end of our conversation
18:00 for letting us into your world, how you make investments
18:04 and how you move the needle in the global economy.
18:06 So Dr. Rita and Khaled, thank you so much for this discussion.
18:11 Thank you.
18:11 Thank you.
18:12 Thank you.
18:12 [BLANK_AUDIO]