(Bloomberg) — Major United Arab Emirates wealth funds have discussed expanding into Israel to advance up to $10 billion in investments over the next decade, according to three people familiar with the talks, in what would be the biggest cash commitment since the nations normalized ties.
The sovereign investors include the $243 billion Mubadala Investment Co. and ADQ, said two of the people, who asked not to be identified discussing confidential discussions between Israeli and UAE officials. The talks are in early stages, they said.
Also on the agenda is the possibility that the funds could open offices in Israel to invest in local venture capital firms, businesses and public projects, according to one of the people. ADQ is looking at investing around $2 billion in total through Abu Dhabi Growth Fund, which sits in its Abu Dhabi headquarters, according to two of the people.
It was not immediately clear which funds would make up the rest of the $10 billion total. Abu Dhabi Investment Authority, the UAE’s largest wealth fund with close to $700 billion in assets under management, is also looking to invest in Israel, two of the people said.
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The ADIA and Mubadala declined to comment. ADQ did not respond to a request for comment.
By the time the UAE and Israel signed their landmark agreement in late 2020, years of quiet security cooperation had provided the bedrock for the diplomatic, defense and economic ties each sought to deepen. Shared concern over regional heavyweight Iran and its nuclear program provided much of the impetus. In January, Israel offered the UAE security and intelligence support after a deadly drone strike by Iran-backed fighters in Yemen.
In recent months, the diplomatic arena has been busy with Israeli Prime Minister Naftali Bennett and President Isaac Herzog both visiting the UAE. The Gulf nation’s de facto leader Sheikh Mohammed Bin Zayed Al Nahyan has been invited to pay a reciprocal visit.
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Cross-border trade has steadily grown, capped off by Mubadala’s recent $1 billion purchase of a stake in Israel’s second-biggest natural-gas field. ADQ, one of the UAE’s newest sovereign wealth funds with an estimated $110 billion in assets under management, has already invested in the Israeli lab-grown meat company Aleph Farms.
The figures mooted by UAE wealth funds would add to what’s been a record stretch of fundraising by Israeli technology companies, with startups alone attracting about $26 billion last year. Global investors from Soft Bank Group Corp. to Blackstone Inc. are opening local branches to better sniff out deals.
A number of UAE-based companies and funds have opened offices in Israel, including artificial intelligence and cloud computing company G42, and the state-run Abu Dhabi Investment Office. And one of Israel’s fastest-growing technology firms, Rapyd, is opening a Dubai office to lure international talent as a way around the chronic labor shortage plaguing the industry at home.
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Other bilateral deals have stalled and some of the large investments promised have yet to materialize. Israel’s energy minister wants her country to scrap an oil pipeline deal with a group of UAE investors out of environmental concerns, casting doubt over that politically sensitive agreement, reached with the previous Israeli government.
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