Abu Dhabi’s state investment fund said yesterday that it would become one of the largest investors in General Electric (GE) and that the two companies would set up an $8 billion (£4 billion) joint commercial finance venture in the Middle East and Africa.

Mubadala Development said that it would buy significant stakes in GE on the open market to become one of the American conglomerate’s top ten institutional investors. Both companies said that the tie-up signalled a long-term commitment, although their initial focus would be short-term, high-yield investments in infrastructure, property and commercial lending and leasing in emerging markets. Later, they would target “rich-nation opportunities”, investing in financial assets suffering in the credit crunch.

Under the terms of the deal announced yesterday, each company will contribute $4 billion in equity over three years to set up a commercial finance unit based in Abu Dhabi.

Jeffrey Immelt, the chief executive of GE, whose shares have fallen 25 per cent since April, said of Mubadala: “We can use our financial and industrial capabilities to establish profitable relationships across a number of businesses and welcome them as a long-term shareholder.” GE shares rose 81 cents to close at $28.50 in New York.

Khaldoon al-Mubarak, Mubadala’s chief executive, said: “GE has taken a clear position to build itself in the Middle East and African economies. Mubadala is one of the biggest business developers in the region. There’s definitely a clear match.” Mr al-Mubarak would not say how quickly the fund would seek to raise its stake in GE, or its ultimate share target.

Bank of America is GE’s tenth-largest shareholder, with 1.2 per cent, worth $3.3 billion. Barclays Global Investors is the largest, at almost 4 per cent. Mindful of criticism, notably from Washington, that sovereign wealth funds such as Mubadala lack transparency, Mr al-Mubarak said: “We’re going through the right steps . . . In terms of time frame, we’re flexible. We’re transparent, we’re open and checking all the boxes.”

Mubadala’s joint venture with GE is the latest in a string of high-profile forays by Abu Dhabi into the American market. The oil-rich emirate, which owns a 4.9 per cent stake in Citigroup, bought a controlling stake this month worth $800 million in the Chrysler Building in New York.

Mubadala, one of Abu Dhabi’s investment units that manages more than $10 billion in assets, has also snapped up acquisitions in the West. Last year, it paid $1.35 billion for a 7.5 per cent stake in Carlyle Group.

Mubadala and GE have worked together for nearly five years, operating an infrastructure fund. GE, which makes everything from aircraft jet engines to turbines, had previously signalled its ambitions to expand further in the Middle East, which accounted for $5 billion of its revenue last year.

The new partnership will also involve joint investment in green energy, aviation and education. GE will help to build a research centre in Masdar, Abu Dhabi’s planned carbon-neutral city, and invest $50 million in Masdar’s Clean Tech fund to develop clean energy and water technology. Mubadala will invest $200 million in GE Industrial Investment Partners. It provides seed capital to the healthcare, energy and transport sectors.

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