Abu Dhabi doubles down on long-term capital strategy amid M&A surge
By Brinda Darasha
Abu Dhabi drove a wave of mergers and acquisitions (M&A), asset consolidations and strategic investments in the first nine months of 2026, defying regional geopolitical uncertainty to reinforce its strategy of allocating state-backed capital to long-term value creation.
While tensions in the Middle East prompted some inbound investors to adopt a wait-and-see approach, Abu Dhabi’s sovereign wealth institutions, including Abu Dhabi Investment Authority (ADIA), Mubadala and Emirates Investment Authority, alongside affiliated entities such as International Holding Company (IHC) and L’IMAD Holding Company, deployed capital across sectors viewed as critical to future economic growth.
“Gulf sovereign investors generally operate with much longer investment horizons than conventional private equity or venture capital funds,” said Srividya Gopal, Middle East Leader, Valuations & Opinions Group, at Lincoln International.
Consolidation drive
Abu Dhabi has also moved to streamline ownership structures and build larger investment platforms to provide greater scale, improve governance and give individual platforms clearer mandates to pursue strategic and commercial objectives.
Earlier this year, ADQ was consolidated into L’IMAD Holding Company, creating a $300 billion investment vehicle. Separately, IHC was brought under Fount Trust, a family office and investment vehicle of Abu Dhabi's ruling Al Nahyan family, which manages assets worth about $141 billion, according to Global SWF data.
In September, L’IMAD increased its ownership in AD Ports Group to more than 98.5% through a $632 million cash acquisition of shares held by minority shareholder Al Seer Marine, according to LSEG data.
AI is front and centre
Abu Dhabi’s investment focus is increasingly concentrated on artificial intelligence, digital infrastructure, power and utilities, logistics, advanced manufacturing and globally scalable operating platforms.
“These are long-duration areas tied to economic capability and productivity rather than simply a short-term view on financial markets,” said Gopal.
AI has emerged as the centrepiece of the emirate’s diversification strategy. MGX, the technology investment vehicle backed by Mubadala and G42, has secured $49 billion in commitments for MGX Fund I. The firm also joined BlackRock and Global Infrastructure Partners (GIP) in backing the $40 billion acquisition of Aligned Data Centers.
Abu Dhabi has committed $3.5 billion to transform itself into a fully AI-native government by 2027, with plans for complete sovereign cloud adoption and end-to-end digital government services.
According to Gopal, AI increasingly looks less like a standalone technology vertical and more like a new layer of economic infrastructure.
“Once viewed in that context, the investment requirement goes well beyond taking stakes in software or model companies. It extends across semiconductors, compute, data centres, connectivity, power and cooling, through to applications.”
For sovereign investors, AI’s appeal lies in its strategic importance and long development timelines. Building a domestic AI ecosystem requires substantial upfront investment across energy, infrastructure, computing power and applications, often with returns emerging over many years, while sovereign capital can back both companies and the ecosystems they need to scale.
Co-investments gain traction
Robert Mogielnicki, founder of Polisphere Advisory and a non-resident fellow at the Arab Gulf States Institute in Washington, said that risk-sharing mechanisms are likely to become increasingly important as Abu Dhabi pursues larger and more complex investments, noting as well that Abu Dhabi is in a stronger position than most of its regional counterparts to maintain a long-term capital allocation strategy.
Alongside traditional acquisitions, Abu Dhabi is increasingly using co-investment and partnership structures to accelerate the development of domestic capabilities, particularly in AI and digital infrastructure.
Gopal said such arrangements allow investors to combine capital with technology, operational expertise and market access while sharing risks and preserving capital for a broader range of opportunities. They can also be particularly effective where no single investor brings all of the capabilities required to build a large platform.
“Hence, we believe that control M&A has not disappeared but the toolkit around transactions has broadened,” she said.
(Reporting by Brinda Darasha; editing by Seban Scaria)