As head of technology and software investments for Mubadala Investment Co., Ali Osman has been tracking companies that develop software to digitize human resources processes, customer relationship management, resource planning, financial suite applications and other tasks that make businesses more productive.

“We’re seeing digital transformation across a variety of horizontal software capabilities,” Osman said.

Mubadala co-invested with Vista Equity Partners LLC in the $8.4 billion buyout of tax compliance software maker Avalara Inc. and the $2.3 billion purchase of sales platform Salesloft Inc. for $2.3 billion, both in 2022. The firm also joined with Thoma Bravo LP to purchase customer and employee experience platform Medallia Inc. for $6.45 billion in 2021.

“These businesses, regardless of economic cycle, are able to deliver meaningful return on investments to the end user,” Osman said.

The deals reflect a deeper trend towards PE investment in horizontal software that crosses industries, as well as Mubadala’s experience collaborating with large software sponsors.

Funding Productivity

Headquartered in the United Arab Emirates, Mubadala is a sovereign investment fund for the government of Abu Dhabi.

Osman leads tech and software investments for the firm’s direct investment platform, which backs companies in technology, life sciences, consumer, financial services, energy, industrials and business services. The unit makes majority or minority investments directly in companies, rather than invest as a passive limited partner in a fund.

Mubadala’s direct investment arm generally deploys upwards of $500 million or $1 billion in situations where the firm has a higher degree of conviction. Other parts of Mubadala will pick up smaller equity checks.

As Avalara, Salesloft and Medallia reflect, the firm often invests alongside sponsors with experience in tech. The typical investments are large enough to require GPs to bring in other sponsors or institutional investors.

“We unlock the most value when situations require an element of fluency in software as a sector, understanding metrics and how to think about valuation, value creation plans and strategies,” Osman said. “A generalist institutional investor doesn’t necessarily have these things.”

The firm is agnostic to the type of transaction, he said, and looks at privatizations of public companies and acquisitions of private companies.

“We generally come in at the ideation phase of a transaction and are part of the group that that is diligencing a transaction before an eventual signing,” Osman said. “We don’t come in once a transaction has already been signed.”