x Abu Dhabi, UAEWednesday 26 July 2017

Aabar drives a big profit on Daimler

Aabar Investments, the Abu Dhabi fund, has sold its remaining shares in the German car maker Daimler for more than €1 billion, almost doubling its investment in three years.

Aabar Investment retains 12.75 per cent of indirect voting rights at Daimler through financial instruments. Gero Breloer / AP Photo
Aabar Investment retains 12.75 per cent of indirect voting rights at Daimler through financial instruments. Gero Breloer / AP Photo

Aabar Investments, the Abu Dhabi fund, has sold its remaining shares in the German car maker Daimler for more than €1 billion (Dh4.75bn), almost doubling its investment in three years.

Aabar, a subsidiary of the Abu Dhabi-owned International Petroleum Investment Company (Ipic), sold its remaining 3.07 per cent of Daimler for €1.25bn.

Daimler's share price stood at €38.15 when the sale went through on Thursday, about 85 per cent higher than the €20.27 a share Aabar paid in March 2009, which represented a 5 per cent discount to the market price at the time.

"Aabar bought the shares relatively cheaply, so in terms of portfolio management they've made almost 100 per cent profit," said Juergen Pieper, an analyst at Bankhaus Metzler.

Aabar did not wish to comment.

The fund retains 12.75 per cent indirect voting rights at the car maker through financial instruments, according to a Daimler spokesperson.

The divestment brings an end to Ipic's direct involvement in a stock that hit its profits last year. Earnings at the investment company declined by 98 per cent in 2011, as it recorded a fair value loss of US$2.25bn (Dh8.26bn) on its stake in Daimler. In 2010, by contrast, the stake gained US$1.3 billion in value.

Fair value accounting is based on the stock market performance of a company, and in 2011, Daimler's shares were reeling from the effects of a turbulent global economy.

The Abu Dhabi fund bought a 9.04 per cent stake in Daimler for €1.95bn three years ago, and has since lent out 6 per cent of shares to unidentified counterparties, reducing its direct holdings.

Dieter Zetsche, Daimler's chief executive, last month said that earnings at the flagship Mercedes brand would decline this year.

The move may increase the pressure on Mr Zetsche, who is resisting shareholder demands to spin off Daimler's commercial truck division and focus on reviving the fortunes of the luxury car brand. Daimler will report its quarterly earnings on October 25.

Some analysts said the sale is not a withdrawal from Daimler, and amounts to an asset reshuffle, with the fund still invested in financial products related to the car maker.

Aabar is involved in the biggest takeover story of the year as an investor in Glencore, the Swiss-based commodity trader that is seeking to takeover the mining company Xtrata. Aabar's parent Ipic owns the strategic pipeline that connects Abu Dhabi's onshore oilfields with the Fujairah oil terminal on the Gulf of Oman.

fneuhof@thenational.ae