Cross Border Capital Markets Report: Middle East Investors and USA Investments in 2020
This report examines investments made by Middle Eastern investors into USA companies throughout 2020. Many deals in the region are unannounced so this data may under-represent actual deal volume and size. This report outlines the type, deal count, dollar volume, and industries of deals conducted by Middle Eastern investors into USA companies. Mubadala Capital Ventures is highlighted, and a recent Series G round conducted by Taulia is analyzed.
Middle Eastern Capital Market Overview: USA Companies
In 2020, 200 cross-border deals were announced between Middle East-based investors and USA-based companies for a total of $85 billion deployed. The charts below show volume and completion in this cross-border category. This data excludes the acquisition of SABIA by Saudi Aramco for approximately $69 billion
FIGURE 1: Investment Made by MENA Investors in USA Companies
- Deal count ranged between 15 and 75 per quarter.
- The private equity, venture capital, and corporate buyers proportion of deal flow remained consistent by quarter.
- Venture capital investors completed the most deals, accounting for approximately 80% of all deals announced in the region.
- Deal count peaked in Q3, largely driven by a more active private equity and IPO market.
- The largest deployment of capital occurred in Q2 of 2020, which amounts to 47% of annual spending.
- The acquisition of SABIA by Saudi Aramco for $69 billion was the largest cross-border transaction. The deal is not included in the charts above.
Middle East Investors and USA Investments: Investments by Industry
Middle Eastern investors continuously seek diversification from their predominantly oil-driven markets, as well as utilization of cutting-edge technologies in their domestic economies. Technology investments in the USA have given these investors access to diversification not readily available in their domestic capital markets. For this reason, J&A expects deal count and volume to steadily rise between Middle East-based investors and USA-based companies. J&A reviewed all deals by industry to determine which technologies were being exposed to the Middle Eastern markets through these investments.
FIGURE 2: Capital Breakdown
- Middle Eastern investors invested in the mobility industry more than any other industry. A total of $6.72 billion was deployed in 10 deals with a median deal size of $502.5 million. The deals included investments in a $2.16 billion second public offering conducted by Xpeng, which was a participant in the Qatar Investment Authority, and a $700 million growth-equity round conducted by REEF Technology in which Mubadala Investment Company participated.
- Autonomous cars, manufacturing, and artificial intelligence also saw large capital deployment in a relatively small number of deals. The deals included Waymo’s $3 billion Series A and IonQ’s $62 million Series C, in which Mubadala Capital’s Ventures was actively involved.
- The industry with the greatest volume of cross-border deals was TMT (technology, media, and telecommunications), although the median deal size was lower at around $20 million.
In general, Middle Eastern investors select a diverse set of industries in which to deploy capital. Investors in the MENA region often have a more flexible mandate than USA or European investors because of the less crowded fund management market in the Middle East. It is common for large Middle Eastern family offices or holding companies to be diversified into multiple industries and verticals.
Investor Spotlight: Mubadala Capital’s Ventures
Mubadala Capital’s Ventures is the venture capital arm of Mubadala, a division of Mubadala Investment Company, a sovereign wealth fund based in Abu Dhabi, United Arab Emirates. Mubadala Investment Company has over $232 billion in assets under management. The venture capital platform is globally focused, with offices in San Francisco, California, London, the United Kingdom, and Abu Dhabi, United Arab Emirates.
FIGURE 3: Mubadala Capital’s Ventures
Investment by Industry in 2016 – 2021 (announced deals)
- Mubadala Capital’s Ventures completed 24 deals in 2020 and increased assets under management to $1,287 billion.
- Mubadala Capital’s Ventures has an industry focus on healthcare, logistics, and software.
- The firm’s median capital invested in 2020 was $70 million, a marginal increase from their five-year average of $66 million.
Deal Spotlight: Taulia
Taulia is a USA-based financial technology firm and developer of an SaaS financial supply chain platform intended to help companies strengthen supplier relationships. The company’s platform helps businesses turn invoices into revenue opportunities, lower the barriers for e-invoicing participation, and allow suppliers access to self-service and management tools.
Most Recent Financing Status
- Taulia raised $60 million based on a pre-money valuation at $340 million of Series G venture funding in a deal on July 9, 2020.
- The deal was led by Ping An Insurance Company and Zouk Capital, Harmonic Growth Partners, and Prosperity7 Ventures. J.P. Morgan also participated in the round.
- Prosperity7 Ventures is a subsidiary of Saudi Aramco and is based in Dhahran, Saudi Arabia. The firm has participated in three investment rounds in 2020 with an average deal size of $91 million.
- The funds will be used to accelerate growth, as the company sets its sights on further global expansion.
- Payment software services were the most active vertical with USA-based companies, raising a total of $12.82 billion from Middle Eastern investors in 2020.