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Mubadala to Invest $2 Billion in Eike Batista’s EBX Group as Part of Strategic Partnership

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The Mubadala Development Company and Mr. Eike Batista, the founder of EBX Group of Brazil, today announced the signing of a strategic partnership agreement. Mubadala will make a US$2 billion primary investment in exchange for a 5.63% preferred equity interest in Centennial Asset Brazilian Equity Fund LLC (CABEF) and other offshore holding companies of Mr. Batista. The CABEF is the investment vehicle of the EBX group, Mr. Batista’s overall holding company. Mubadala’s investment is structured as a preferred equity security that gives it, in addition to certain rights and protections consistent with a minority investment of this size, a 5.63% economic interest in EBX including an indirect interest in both its publicly listed holdings, OGX, OSX, MMX, LLX, MPX and core privately-held assets such as AUX, REX and IMX.

Mubadala has a history of partnering with companies, including General Electric. This is Mubadala’s most significant direct investment in Brazil. This is the first time Mr. Batista invited a strategic partner to invest at the holding company level.

The strategic agreement also gives Mubadala participation in both EBX and Mr. Batista’s pipeline of future investment opportunities, such as technology companies, cement, fertilizers, entertainment and others.

GIC Sells Arizona Biltmore to Blackstone

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Blackstone Real Estate Advisors, part of the Blackstone Group, acquired the 740-room Arizona Biltmore hotel, located in Phoenix, for US$ 403.4 million. The deal closed on April 20, 2018.[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Mubadala Acquires Stake in Growing Hedge Fund Phoenician Capital

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Mubadala Investment Company, through its unit Mubadala Capital, purchased a minority stake Phoenician Capital, LLC. Although terms and size of the deal were not disclosed, the agreement grants Mubadala Capital rights to invest in a fund managed by the New York-based firm, which generated respective returns of 40.8% and 33.0% in 2016 and 2017, against benchmarks of 12.0% and 21.8% for the S&P 500. The hedge fund runs the Phoenician Offshore Fund Ltd.

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Large Asset Managers Continue to Move Operations Out of California

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In the 2010s, Fisher Investments, an investment firm run by Ken Fisher, moved a large number of employees from the Woodside and San Mateo campuses to a town called Camas in Washington, near Portland. Vanguard has a large operational presence in Arizona, while Charles Schwab Corporation has expanded its technology operations and client services in places like Denver, Dallas, Austin and Phoenix. Dimensional Fund Advisors moved its headquarters in 2008 from Santa Monica, California to Austin.

While asset managers reap profits and try to lower employee head count costs, looking to fly-over country seems appealing.

The Pacific Investment Management Company (PIMCO), part of the Allianz family, selected Austin, Texas as its new office to hire more client services and technology talent. The PIMCO Austin office will open later in 2018. PIMCO is headquartered in Newport Beach, California, with an office in New York City.

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