Abu Dhabi-government linked Aabar Investment completed a $1.82 billion capital raising on Monday after taking a surprise 9.1% stake in Daimler that made it the biggest stakeholder in the German car company.
Abu Dhabi’s International Petroleum Investment Company (IPIC) said in a statement it completed its planned purchase of the second and final tranche of convertible bonds issued by Aabar for a total AED 5.2 billion ($1.42 billion).
The conversion comes one day after Aabar took a 9.1% stake in ailing German car giant Daimler worth €1.95 billion ($2.67 billion) in a surprise move. The deal underscores the financial muscle that some energy exporters in Gulf Arab region can flex during the downturn.
The Aabar stake will push the Emirate of Kuwait down to second place on the Daimler shareholder roster with a stake of 6.9%.
Following the conversion, IPIC has invested a total of AED 6.68 billion ($1.82 billion) in Aabar through a bond deal unveiled in September, when IPIC said it aimed to help the firm invest in sectors across the region, including in energy.
Gulf Arab states are keen to diversify their economic base away from energy extraction into manufacturing and services and sovereign investors such as IPIC have assisted by taking stakes in companies abroad in exchange for jobs or know-how.
Daimler will issue some 96.4 million new shares to Aabar for a price of €20.27 each, a 5% discount to Friday’s closing price, through a 10% capital increase. IPIC will convert the mandatory convertible bonds into new ordinary shares in Aabar at a premium AED 3 per share, Aabar last traded at AED 1.76 per share.
Following conversion of both tranches of the bond issue, IPIC’s share in Aabar will rise to 71%, the statement said. (Reuters)