Aabar aims to go it alone as it plans for delisting

Investment company seeks 'greater operational flexibility' to ensure success.

Aabar, Daimler's largest single shareholder, is about 70 per cent owned by IPIC.

ABU DHABI // Aabar Investments, the government-owned company that bought 5 per cent of Italy's largest bank earlier this week, will seek approval from shareholders and regulators to turn private. The company's board of directors signed off on the plan at a meeting on Thursday and called another meeting for July 26 to put the question of delisting from the Abu Dhabi Stock Exchange (ADX) to shareholders. Aabar has been listed on the ADX since 2005.
"The board of Aabar considers this step as essential in the life of the company to provide Aabar with greater operational flexibility required to ensure the ongoing success of the company's investment strategy and its ability to effect opportunistic acquisitions both in the UAE and abroad," said Mohammed Badawy al Husseiny, Aabar's chief executive, said in a statement. In addition to the go-ahead from shareholders, Aabar would need approval from the Ministry of Economy as well as a nod from the Securities and Commodities Authority, which regulates the UAE's stock markets, before officially becoming private. That process will probably take months, according to people familiar with the matter.
Aabar first indicated it was considering a delisting this week, when the board called its initial meeting to examine the proposal. Aabar is about 70 per cent owned by the International Petroleum Investment Company (IPIC), which in turn is fully owned by the Abu Dhabi Government. The remainder of its shares are publicly traded. Should the plan to go private meet shareholders' and regulators' approval, Aabar said minority investors would not have their shares cancelled.
The de-listing of shares was "not intended to affect the ability of the shareholders to trade their shares," Aabar's statement said. "Shares of private joint stock companies are traded outside the market and dealings in shares are registered with the company's registrar after the issuance of the ministerial resolution to amend the company's articles of association." Aabar said its shares would continue to trade on the ADX until the Ministry of Economy signed off on an amendment to its articles of association making it private.
The statement was the first word from the company on the rationale behind its plan to go private, a move that surprised investors and analysts when it was announced. Investors had been puzzling over why Aabar wanted to delist at a time when trading volumes on local exchanges were thin and markets needed a boost. The Dubai Financial Market General Index is down 14.7 per cent this year, while the Abu Dhabi Stock Exchange General Index has declined by 6.9 per cent.
But despite concern among some market watchers, Akram Annous, a deputy fund manager at Al Mal Capital in Dubai, said being public was more a burden for Aabar than a blessing given its lack of need for capital from outside investors and a misalignment of interests between IPIC and minority shareholders. "If anything being public has been nothing but a headache ever since IPIC took over," Mr Annous said. "Minority shareholders seem to want dividends while the majority shareholder wants to grow an investment portfolio."
IPIC has injected billions of dirhams into Aabar over the past two years to help finance a radical transformation from a small Gulf oil and gas holding company to one of the emirate's most visible investment vehicles. IPIC took its 70 per cent stake in Aabar in Feburary of last year through a bond that converted into shares. Since its transformation, Aabar has made a string of bold investments in young and sometimes troubled industries, putting millions of dollars behind European financial companies and buying up 32 per cent of Sir Richard Branson's commercial space flight venture, Virgin Galactic, last year. Aabar last March acquired 9.1 per cent of the German car maker Daimler, making it the company's biggest single shareholder.
Aabar said it bought 5 per cent of UniCredit, Italy's largest bank by market capitalisation, through purchases of shares on the open market. That stake is worth about US$2.3 billion (Dh8.44bn). Aabar shares closed down 3.4 per cent on Thursday at Dh1.7. [e-mail] [e-mail]