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Aabar, Mubadala book profits by timing it right

Sell overseas assets when market is volatile

Gulf News

Abu Dhabi: Abu Dhabi-based government investment companies Aabar Investments and Mubadala Development Company are thought to have made a smart move in selling their stakes in two Europe-listed companies at a profit at a time when the market conditions are growing volatile, market analysts told Gulf News yesterday.

"Selling stakes at a profit when the market conditions are still good is a wise move. There are still a lot of uncertainties in the global economy," said Chahir Hosni, sales manager with EFG-Hermes.

"These were non-strategic investments and it looks like Abu Dhabi government-owned investment companies got their timing right in booking profits on their investments. They wanted the cash to invest their money elsewhere," said a Dubai analyst who spoke on the condition of anonymity.

Last week Aabar sold its stake in Banco Santander's Brazilian unit and made a profit of $25 million (Dh91.75 million), Mohammad Badawy Al Hussaini its chief executive was quoted as saying by the Financial Times.

Aabar seeks new investments in European infrastructure, western telecoms companies and agricultural assets.

Call option

As well, Abu Dhabi state investment firm Mubadala said on Sunday it is selling back its five per cent stake in Ferrari, which is majority-owned by Italian automaker Fiat Group SpA.

Mubadala said Ferrari's parent Fiat Group SpA exercised an option that gave it the right to buy back the stake Mubadala acquired in 2005.

"The call option, which was set to expire at the end of July, had been extended twice before by mutual consent between Fiat and Mubadala. We are currently in discussions to complete the transaction," Mubadala said in a statement.

Mubadala didn't provide financial details. But Fiat's third-quarter results released last month show the deal cost it 122 million euros ($167 million).

In 2005, Mediobanca, Italy's largest investment bank, sold five per cent of Ferrari to to Mubadala, which paid 114 million euros for the stake.