(MENAFN- Gulf Times) Abu Dhabi is reviewing its largest state-owned companies as the slump in crude oil pressures the emirate's finances, four people with knowledge of the matter said.
Abu Dhabi National Energy Co and International Petroleum Investment Co are in talks with banks on options including strategic partnerships, share sales and asset disposals, the people said, asking not to be identified because talks are private. Mubadala Development Co, an investment fund, is considering further divestments after selling most of the assets in its joint venture with General Electric Co, according to the people.
Bank of America Corp, JPMorgan Chase & Co and Credit Suisse Group are among banks pitching for mandates, while some government-related entities have already appointed advisers, according to the people. Mubadala, Abu Dhabi National Energy Co, known as Taqa, and IPIC own about $150bn of assets, according to Bloomberg calculations.
The banks declined to comment or weren't available to comment, as were Taqa and IPIC.
"As a diversified and active investor, we're always looking for new investment opportunities in challenging times, as well as monetising assets, in line with our long-term strategic plan," said Brian Lott, a spokesman for Mubadala.
Abu Dhabi, capital of the UAE and source of about 6% of the world's proven oil reserves, is seeking to counter the erosion of its finances after crude prices halved in the past year. The UAE is Opec's third-biggest oil producer and may post a fiscal budget deficit this year for the first time since 2009, according to the International Monetary Fund. Economic growth will probably slow to 3% this year from an estimate of 3.6% in January, the IMF said this month.
"It makes sense that Abu Dhabi's GREs would review their asset portfolio, rationalise their spending and as important, diversify further their source of funding away from public money," said Philippe Dauba-Pantanacce, senior Middle East, North Africa and Turkey economist at Standard Chartered in London. "There is a re-assessment of public spending across the board in Abu Dhabi, amid the current oil price levels."
Mubadala's joint venture with General Electric Co is laying off people and redeploying others after assets shrank to about $1bn, a company spokesman said last week. That comes as the US company exits most GE Capital businesses. Mubadala is also exploring the sale of UAE consumer finance firm Dunia, people with knowledge of the matter said.
Taqa is exploring a potential sale of its car fleet manager Massar Solutions that could raise at least $500mn, people familiar with the matter said in September.
Mubadala is the top shareholder in chipmaker Advanced Micro Devices Inc with an 18% stake, according to data compiled by Bloomberg. The fund, whose investment portfolio is valued at about $66bn according to its website, is also a shareholder in US private-equity firm Carlyle Group. Taqa, meanwhile, has hired investment and advisory firm Blackstone Group to review options for about $24bn of its debt obligations, two people with knowledge of the matter said in June.
Abu Dhabi, in addition to the three state-owned companies, could also tap sovereign wealth fund the Abu Dhabi Investment Authority to help support its finances. ADIA ranks second behind Norway as the largest in the world at $773bn, according to the Sovereign Wealth Fund institute. ADIA itself doesn't disclose assets under management. The fund has been investing the emirate's oil wealth since 1976 and withdrawals "have occurred infrequently and usually during periods of extreme or prolonged weakness in commodity prices," according to its annual report.
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.