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Mohammed Ali Yasin, Managing Director of NBAD Securities |
Abu Dhabi: The merger of International Petroleum Investment Company (Ipic) and Mubadala Development Company will create a very large influential company with investments in different sectors including petrochemicals, aerospace, semiconductors, aluminium, a source close to the discussions told Gulf News.
The two companies have combined assets of $130 billion with Ipic and Mubadala having $65 billion (Dh239 billion) each.
The operations of the two companies are spread across the globe including in Europe, Canada, the US and Asia. IPIC has presence in Austria, Spain, Canada.
Ipic has couple of hundred employees while Mubadala has a workforce of 500.
The source said the deal was about “capturing the synergies between the two portfolios and portfolio companies that is driving the decision.”
“I think the move increases the agility to diversify and invest in innovation not only in things like semiconductors and petrochemicals, oil and gas but also provide platform for innovation within those different sectors.”
“Ipic and Mubadala complement each other very well. You are creating very strong industrial investment champion both at home and internationally.”
The steering committee will look at what the future opportunities are for both companies, the source added.
Major shareholders
Mohammad Ali Yasin, managing director of NBAD securities said the merger may not have immediate impact on the local market and investments will continue.
According to him, Mubadala is a major shareholder in local companies like Tabreed, Aldar, FGB. Ipic is an investor in Arabtec through Aabar Investments.
“A unified strategy will probably be put forward for the new merged entity on how to go about these investments. I don’t think this will be immediate and will come later once the structure has been agreed and the new management in place.”
He said fiscal efficiency is prime in any merger and the focus would be more on increasing revenue in the longer run and on saving costs.
“Once the entity is settled and the management is place, you will know more,” he said.
People holding bonds of these companies will be happy as the merger sends a signal that Abu Dhabi is stronger and the two entities are together, he added.
Net profit
Mubadala’s 2015 profit rose 12.4 per cent on the back of high incomes from investments in health care, real estate and infrastructure activities, the company said in March.
The net profit attributable to the owner of the fund rose to Dh1.2 billion last year, compared with Dh1bn in 2014. The company has recently appointed Ahmad Saeed Al Calily as Chief Executive Officer of the group’s Energy platform.
Ipic and Mubadala did not issue an official statement on the merger.
The latest decision comes in less than two weeks after the merger talks of FGB and National Bank of Abu Dhabi.
The two banks confirmed on June 19 that they commenced discussions regarding the possibility of a merger or a combination of the two businesses.
