Hisham Malak, Head of Treasury & Investor Relations at Mubadala Investment Company, details how the treasury department has evolved following the merger between Mubadala Development Company and the International Petroleum Investment Company.
What are the key functions of treasury at Mubadala?
When I took on my current role I initiated a strategic review of the treasury function to ensure we are best placed to support Mubadala’s ambitious international investment strategy. This followed the merger between Mubadala Development Company and the International Petroleum Investment Company (IPIC) in May last year.
As a treasury team, we are very focused on providing integrated support across the business, ensuring that we have sufficient liquidity to meet our obligations while managing payments, receipts and financial risks effectively. As a company, we have worked hard to integrate the investment platforms and business units so collaboration within Mubadala is second nature.
Why has effective treasury management become so crucial following the merger between Mubadala Development Company and the International Petroleum Investment Company?
The biggest impact of the merger has come from the need to place a renewed focus on delivering commercial returns for our shareholder, the government of Abu Dhabi. Our financial mandate has always been central to Mubadala, but we are more active in international capital markets and focused on expanding into sectors and geographies where we think there is significant growth potential. Our treasury team is integral to realising this strategy.
The merger has expanded our global scale and breadth, creating new opportunities for strategic growth and expansion. However, to tap into these opportunities, we need to have a clear line of sight on the micro and the macro context of each investment strategy. That is the critical area I encourage my team to focus on – to become partners in enabling deals but also to provide advice and support to help guide investment strategies.
The critical thing for me is that we have alignment across our four global investment platforms, so we can improve our overall investment strategy and performance. Following the merger, we have continued to deploy significant capital, whether through our US$15bn commitment to the SoftBank Vision Fund or the US$2.1bn acquisition of one of the most extensive petrochemicals facilities in the US, the olefins plant in Geismar, Louisiana, marking a significant entry into the US Gulf Coast market for NOVA Chemicals.
For this reason, I have established an enhanced investor relations function which now sits across the entire team to provide a joined-up point of engagement for our stakeholders. This holistic approach is especially crucial for our bondholders through the GMTN bond programme, enabling more strategic insights into the business.
What work has been done to ensure treasury is more effective and delivers higher value to shareholders, and why have you focused on these areas?
When I joined the team, we’d only recently completed the merger. To ensure we are best positioned to provide the support needed, I worked with my team to create some initiatives that would help further develop and adapt the way we worked. The review included a focus on management information systems to ensure we are capturing better data and moving towards real-time insights. My vision is for a mobile app-based solution so that we can access business-critical data on the go.
We have also launched a project around balance-sheet optimisation to manage debt, our interest rate mix and FX risk as efficiently as possible. Other areas I have focused on include looking at our debt strategy more holistically to ensure we have the flexibility needed for the business to either pay down or raise debt quickly.
This work comes hand in hand with a focus on alignment and integration across the business – from the global investment platforms but also in areas like corporate communications and strategy. This has not only enabled us to be better connected to the organisation’s goals but also helped us to communicate with the investment community more effectively.
How do you hope to evolve the treasury department in the years to come?
Looking ahead, we will increase our access to capital across the global markets where we operate while maintaining optimal pricing, liquidity and gearing. Our department objectives are to move more towards a value-added treasury, creating value through capital structure optimisation, cash yield enhancement solutions and supporting assets through structured finance solutions.
Beyond this, one of my key ambitions is to ensure that we integrate technology into our operations in a more proactive way. We have a workstream under way to incorporate real-time data analytics and provide access to the critical information we need to make decisions.
Another area that will become increasingly important is our communication with investors and other financial stakeholders. We are committed to providing industry leadership in the way we communicate so that our bondholders are fully engaged with our strategy and progress.
However, other stakeholders like rating agencies and banks, also need to have a dynamic and open relationship with our organisation. Mubadala has led the way on investor communications for many years, and we are focused on building on this momentum to further enhance the understanding of our business and its performance.