China, UAE to set up $10bn co-investment fund

China and the United Arab Emirates (UAE) have signed an agreement to launch a $10 billion strategic investment cooperation fund in a bid to strengthen economic and political ties between the two countries, according to Emirates' state news agency WAM. 

The two governments will each contribute $5 billion to the vehicle, which is to be managed by Mubadala Development Company (Mubadala), the Abu Dhabi-based strategic investment company, China Development Bank Capital (CDBC) and China's State Administration of Foreign Exchange. 

It will be looking at a range of alternative investment strategies, asset classes and special opportunities, including greenfield investment projects. It will aim to build a balanced portfolio with a focus on recurrent yield and principal capital protection, Mubadala said in a statement. 

The fund will be allocated to support joint investment ventures in industries such as semi-connectors, smart technology, aviation and infrastructure. 

The sourcing and diligence of new investments will be undertaken by a team which includes staff from Mubadala and CDBC, as well as newly hired investment professionals. The fund's board comprises representatives from the fund's management team and from each shareholder.

The agreement was signed during last week's official visit to Beijing by Sheikh Mohammed bin Zayed, the Crown Prince of Abu Dhabi.

“The fund will play a critical role in supporting the 'One Belt, One Road' strategic initiative, as we work towards improving connectivity and cooperation with our regional partners across Eurasia,” said Xi Jinping, President of the People's Republic of China, who also took part in the signing.

The Chinese government launched the $100 billion Asian Infrastructure Investment Bank (AIIB) and the $40 billion Silk Road Fund to help finance the initiative. The UAE became a founding member of AIIB in June. 

During the talks, Xi said China was ready to hold discussions with the UAE on exploring third-party cooperation in Africa. 

The UAE-China agreement follows a plan proposed by Indian Prime Minister Narendra Modi in August that would see the creation of a $75 billion UAE-India fund.