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US national security officials are vetting a string of takeovers by Abu Dhabi investors over fears about its close ties to China.
The Committee on Foreign Investments in the United States (CFIUS), a secretive government group which scrutinises foreign takeovers of US companies, has ramped up the number of probes into Gulf sovereign funds in recent months.
Officials are concerned that takeovers of sensitive US assets from funds in the Gulf could harm national scrutiny because of China’s growing influence in the region. China and the UAE in particular have fostered much closer relations in recent months, spooking US officials.
Deals involving Abu Dhabi funds are particularly sensitive because national security and investment decisions are made by a small band of royals, Bloomberg reported.
Takeovers by groups including the Abu Dhabi Investment Authority and Mubadala Investment Company are reportedly at the centre of the investigations.
CFIUS is already scrutinising Mubadala’s proposed $3bn (£2.4bn) takeover of US asset manager Fortress Investment Group.
Washington’s growing scepticism of the UAE has been prompted by a surge of Gulf investment into China. The region has ploughed $2.3bn into the region so far this year, up from just $100m last year, according to figures from Global SWF, cementing the burgeoning relationship.
UAE’s relations with the Biden administration have also been frayed after US spies discovered China was secretly building a suspected military facility at a Abu Dhabi port. The plan was later abandoned after US pressure.
CFIUS has similar powers as the UK’s National Security and Investment Act. It can veto deals considered as a threat to national security.
President Biden last year ordered CFIUS to put a larger emphasis on scrutinising key technologies such as quantum computing and AI.
The Biden administration’s colder approach to UAE acquisitions stands in sharp contrast to previous UK investment policy.
The UK Office for Investment signed a deal with Mubadala Investment Company in 2021 pledging to attract £10bn of UAE investment into the UK until 2026.
Middle Eastern investors were among the most active investors globally last year, with ADIA splurging $26bn and Mubadala splashing out $11bn, according to Global SWF.
Mubadala owns UK companies such as smart metre maker Calisen, Cityfibre and software company Huboo.
The US Treasury, ADIA and Mubadala were contacted for comment.