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Lunate is a unit of the UAE’s largest listed conglomerate International Holding Co

Abu Dhabi Investment Firm Lunate Takes On AI Firm G42’s China Fund

Monday 08/July/2024 - 08:16 PM
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A new investment vehicle in Abu Dhabi has taken over the management of artificial intelligence firm G42’s China-focused fund، according to people familiar with the matter، keeping the assets in the hands of a powerful member of the emirate’s royal family.

The fund، Lunate، plans to hire a small team to help manage what was G42’s 42XFund، an entity with stakes in units of Chinese technology companies including ByteDance Ltd. and JD.com Inc.، the people said، asking not to be identified discussing private information. 

A sprawling empire

G42 and Lunate are part of a sprawling empire overseen by United Arab Emirates National Security Adviser Sheikh Tahnoon bin Zayed Al Nahyan. The emirate’s move raises questions about sticking to the spirit of a secret deal G42 reached last year with the Biden administration to pivot away from Beijing.

Lunate is a unit of the UAE’s largest listed conglomerate International Holding Co.، which is chaired by the Abu Dhabi royal. The $250 billion IHC is majority owned by Sheikh Tahnoon’s private investment firm، Royal Group — the parent company of G42.

A G42 spokesman referred comments to the 42XFund. Representatives there didn’t respond to requests for comment. A spokesperson at Lunate declined to comment. The UAE government didn’t respond to a request for comment made through the foreign ministry.

G42 is seeking to become an AI superpower in the Middle East، and agreed to divest from China following talks with the US Commerce Department — part of a broader effort by Washington to rein in China’s technological prowess and line up support around the world.

The Abu Dhabi firm’s Chief Executive Officer Peng Xiao subsequently pledged to pare back its presence in the Asian country. That underpinned Microsoft Corp.’s move to invest $1.5 billion in G42، a deal that the Biden administration hopes will help the US counter Beijing’s tech investment throughout the Global South. 

Chinese assets

Officials in Washington have raised concerns about the partnership، Bloomberg News reported this month، including skepticism at the Pentagon that G42 will entirely uncouple from China. It’s not clear exactly what G42 promised to do with its Chinese assets، but Lunate’s involvement raises additional questions about whether the deal aligns with US strategic goals، people familiar with the matter said.

A spokesperson for Microsoft declined to comment.

The web of entities under Sheikh Tahnoon’s control includes sovereign wealth funds Abu Dhabi Investment Authority and ADQ. In a recent filing، IHC revealed it had acquired a controlling stake in G42، though an IHC spokesperson said that deal was subject to regulatory and board approvals and ultimately didn’t materialize.

Lunate has sealed several deals since its inception، including an investment in the glitzy Dubai office tower ICD Brookfield Place. It’s also agreed to buy a 40% stake in Abu Dhabi National Oil Co.’s oil pipeline network from BlackRock Inc. and KKR & Co.