Abu Dhabi: The latest decision to merge International Petroleum Investment Company (Ipic) and Mubadala is a new sign of ongoing consolidation in Abu Dhabi and is part of a larger strategy to create stronger entities for the growth of the economy, analysts said on Wednesday.
“A merger of this scale is a positive development in the long term. It looks like there is a plan that is set up and is being executed in various sectors including in banking sector or sovereign wealth fund. We will be hearing more of these things in future,” said Mohammad Ali Yasin, managing director of NBAD Securities when speaking to Gulf News.
He did not specify which sectors he would see mergers taking place in the coming days.
He added that creating bigger companies is a strong signal that Abu Dhabi wants to be a major player in the international markets in the industries in which these two companies operate.
“Ipic was specialising in the energy sector while Mubadala is in energy and other sectors. It sends a strong signal that Abu Dhabi wants to be a major player in the international market in those kind of industries.”
Sebastien Henin, head of asset management at The National Investors said the merger is a new sign of ongoing consolidation happening in Abu Dhabi.
“It shows that more things will be rationalised for sovereign funds in Abu Dhabi. We have seen the merger discussions on FGB and National Bank of Abu Dhabi and now Mubadala and Ipic.”
“The consolidation is directly linked to drop in oil prices and its consequences.”
Oil prices have plunged by more than 50 per cent in the last two years as production decreases and demand increase across the globe. From $115 (Dh422) per barrel in June 2014, oil prices have dropped to less than $50 in recent times.