Abu Dhabi’s Mubadala, a government investment arm, has sold its JBI property services unit to UK outsourcing company Serco as the emirate continues to rationalise its portfolio.
Mubadala, which in March bought the US developer John Buck’s 49 per cent stake in the JBI joint venture, sold the facilities management business in a deal estimated to be worth £5m to £10m ($8m to $15m), people with knowledge of the matter say.
Ali al-Muhairi, executive director of Mubadala Real Estate and Hospitality, said JBI had “developed to a point where it could continue to prosper under private sector ownership”.
JBI has 130 staff in Abu Dhabi, managing facilities such as the Sorbonne and New York university campuses and Sowwah Square, a semi-complete business district envisioned as the capital’s financial hub.
Serco, which earns 43 per cent of its revenues overseas, has said it was looking to expand its international operations. It already operates Dubai’s metro system and the Al-Ain university campus.
Serco will now provide real estate management services to a number of Mubadala assets, some of which remain under construction. Shares in the UK company closed up 1.2p at 473.3p in London on Wednesday.
The deal comes as Abu Dhabi continues to take stock of its sprawling investment portfolio, which has been hit hard since real estate valuations halved from the peak of 2008 as planned oversupply looms over the sector. On Wednesday the government extended a second effective bail-out package to Abu Dhabi’s largest developer, Aldar Properties, bringing the cost of state aid to the struggling company to almost $10bn this year.
Mubadala, one of the emirate’s most active investment arms, is looking to refocus on core competencies, writing off poorly performing assets, bankers say.
The investment vehicle, which reported a loss of $86m in 2010, owns about 49 per cent of Aldar, according to Moody’s, as well as having interests in aviation, renewable energy, industry and financial services.
The deal comes at an uncertain time for the private sector as the emirate carries out a spending review across departments and state-related entities, putting large projects on hold.
Question marks surround initiatives such as the Guggenheim museum on Saadiyat Island as timelines are extended for a cultural district that is meant to attract more sophisticated tourists.
Abu Dhabi state-linked companies have been shedding staff in recent months as businesses try to meet savings targets.