The Abu Dhabi investment giant behind some of the emirate's biggest overseas buys is set to pull back on acquiring assets after doubling in size to become a US$48 billion (Dh176.29bn) company.
International Petroleum Investment Company (IPIC) reported profits of $159.2 million for the first half of the year, compared with $2.65bn in the same period last year, according to a bond prospectus issued yesterday.
The document gave the most detailed description yet of how the company went from a quiet energy investor to a $48.2bn fund with trophy assets the world over.
The company, owned by the Abu Dhabi Government and led by Sheikh Mansour bin Zayed, Deputy Prime Minister of the UAE and Minister of Presidential Affairs, operates as a leveraged investment company that focuses largely on energy companies around the world, such as Borealis and Nova Chemicals.
It also owns 86.2 per cent of Aabar Investments, which has made a name for itself with high-profile investments in companies such as the space tourism operator Virgin Galactic and the German car maker Daimler.
Aabar is also funding the development of one of Manhattan's most prestigious new buildings, an 80-storey apartment tower near Central Park.
IPIC said it would slow down investment for the rest of the year and focus on "integrating its recent investments into its existing portfolio in a manner that reduces costs, maximises efficiencies and enhances synergies across its investment portfolio".
The bond it is issuing, likely to be about $500m, is for general corporate purposes.
IPIC secured more than $400m in loans over the past two months, including a Dh1bn Islamic murabaha facility and a $150m loan due in 2013.
IPIC is tapping the bond markets to take advantage of increasing appetite for emerging market debt, say analysts.
UAE companies have built up "huge" demand for financing, especially as local banks remain cautious about lending, said Suketu Sanghvi, a senior managing director at Essdar Capital.
"Bond issuances are really firing up right now because the sentiment has suddenly improved in the international markets," said Mr Sanghvi.
He added that more companies would come to the bond market this month before slowing down sharply in December and January. "Many of these companies have been waiting for a very long time."
The weakness of the US dollar and increased interest in emerging market debt should encourage more issuances in the region, said Tristan Cooper, a sovereign wealth funds analyst at Moody's Investors Service.
"This helps to explain the significant pick-up in capital markets activity in recent months," said Mr Cooper. "It is likely that the faster pace of bond issuance will continue, especially as local banks remain cautious about extending credit. Banks have traditionally been the primary source of financing for GCC corporates."
IPIC has dramatically changed its business model since 2008, when it began making more ambitious investments beyond its traditional focus on the global energy sector.
Between December 31 2007 and June 30 this year, IPIC has nearly doubled in size, with $48.2bn worth of assets.
It has also accumulated about $20.3bn in debt, compared with $14.6bn of equity, documents show. It disclosed liabilities of $33.5bn.
The bond prospectus also revealed IPIC was selling a 3.3 per cent stake in Atlantia, an Italian motorway operator, for €321m (Dh1.65bn). It also sold a 70 per cent stake in Hyundai Oilbank for $1.95bn.