Abu Dhabi’s Aabar state fund, a big investor in Mercedes-Benz, considers taking itself private

Monday, June 21, 2010

Abu Dhabi investment fund looks to go private

DUBAI, United Arab Emirates — A fast-growing Abu Dhabi investment fund that is the top shareholder in Mercedes-Benz maker Daimler signaled Monday it may take itself private, potentially shielding it from transparency requirements.

Aabar Investments announced it is considering the move in a brief regulatory filing on the Abu Dhabi Securities Exchange.

The firm is unusual among the Gulf’s often secretive investment funds in that it sells some shares to the public. The stock listing means it has to disclose more financial information than other government funds in the region.

Chief Executive Mohamed Badawy al-Husseiny said Aabar’s board would meet Thursday to discuss the possibility of asking shareholders to consider converting the fund into a private joint stock company and canceling its stock listing. Company officials were not available for further comment.

Some other state investment vehicles, including the Abu Dhabi Investment Authority, the world’s biggest sovereign wealth fund, have begun to provide details about their holdings to varying degrees.

Still, going private would allow Aabar to disclose less of its financial information than it does now, said Deepak Tolani, an analyst at Dubai-based investment firm Al Mal Capital.

“It gives them more ability to maneuver … and make decisions that are more strategic and long term in nature,” he said.

Aabar is majority owned by the oil-rich government of Abu Dhabi through another of its sovereign wealth funds, the International Petroleum Investment Co. IPIC owns more than 70 percent of Aabar outright, and holds convertible bonds that give it additional influence.

“They’re driving a substantial part of the company,” Tolani said.

Abu Dhabi is the capital and largest of seven sheikdoms that make up the United Arab Emirates, and controls nearly all the OPEC member’s oil reserves.

Aabar has quickly become one of the more prominent funds Abu Dhabi uses to manage its oil wealth.

It paid nearly 2 billion euros — then worth about $2.72 billion — for a 9.1 percent stake in Daimler last year, making it the Stuttgart-based automaker’s biggest shareholder.

Aabar also controls nearly a third of Richard Branson’s commercial space travel startup Virgin Galactic, and an equally large stake in Formula 1 team Brawn GP. It owns roughly 4 percent of San Carlos, California-based electric car producer Tesla Motors.

In April, Aabar backed out of a $1.74 billion plan to take a controlling percent stake in Arabtec Holding, the Dubai construction giant that helped build the Burj Khalifa, the world’s tallest tower. The companies did not say why they were scrapping the deal.

In its most recent financial report last month, Aabar reported a first-quarter profit of $430 million.

Online: www.aabar.com

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