Aabar Investments announces a deal with the Algerian government to manufacture up to 10,000 cars and lorries a year.
Aabar in Algerian production deal
Aabar Investments, with interests spanning luxury cars and space travel, has struck a deal with the Algerian government and five German companies to manufacture up to 10,000 cars and lorries a year in the North African country. It represents the latest in a flurry of international deals involving the Abu Dhabi Government-controlled company, which has seen it take stakes in ventures that include the luxury car maker Daimler and the businessman Sir Richard Branson's Virgin Galactic. The spending spree has helped its stock soar more than 50 per cent in the past month. Daimler, in which Aabar holds a 9.1 per cent stake, and the machinery supplier MAN Ferrostaal, are also involved in the agreement with the Algerian ministries of defence and industry. Aabar's parent company, the International Petroleum Investment Company (IPIC), owns 70 per cent of MAN Ferrostaal. Assembly was expected to start next year from a network of three vehicle and engine manufacturing plants to be set up or modernised in Tiaret, Ain Smara and Oued Hamimine, Aabar said in a statement to the Abu Dhabi Securities Exchange. Algeria, the world's eighth-biggest oil exporter and fourth-largest natural gas exporter, is seeking to attract foreign investment in an effort to diversify its economy and expand its industrial base. But despite its drive, significant hurdles remain for foreign investors setting up business in the country, including regulations announced in the past few weeks that have limited foreign ownership of businesses within Algeria to less than 50 per cent. "With this important investment, Aabar continues to develop opportunities through our partnership with Daimler," said Khadem al Qubaisi, the chairman of Aabar. MAN Ferrostaal will lead the project as general contractor, with Daimler, Rheinmetall and the engine manufacturers Deutz and MTU Aero Engines Holding participating as technology partners, providing parts, licences and intellectual property. "At the beginning, the Algerian government will be the customer," said Brigitte Bertam, a spokeswoman for Daimler. It is possible the government may use some of the vehicles for military purposes, she said. "The main purpose of this project is for the Algerian government is to create jobs locally," she added. Mercedes's Sprinter, Unimog and G Class models are among the products to be manufactured, in addition to other four-wheel-drive vehicles and engines, according to MAN Ferrostaal. MAN Ferrostaal said it would manage the operation through joint venture companies that have yet to be established. Aabar purchased a 9.1 per cent stake in Daimler in March, saying then it would pursue joint strategic projects. The value of Aabar's stake in the project has not been disclosed and the company was not available for comment yesterday. "The fact that Aabar is continuing to be active as an investment company can only be positive for its stock in the long term," said Bobby Sarkar, an equity research analyst at Al Mal Capital Research. But the deal could also represent a challenge for the company as it enters a country with limited infrastructure. "It's quite difficult to do business outside of oil and gas as there's a lot of bureaucracy and regulations to get through," said Rory Fyfe, the Algeria analyst at the Economist Intelligence Unit in the UK. "There are attractions for Algeria, but investors have tried to invest in the automative industry before without success." The vehicle assembly project is not Aabar's first foray into the North African country. It won a contract in April 2007 from Spain's Repsol worth up to US$35 million (Dh128.5m) to drill for oil in Algeria. The company has been busy diversifying its asset base in the past month, investing in Tesla Motors, a technology and property joint venture with Austria's Berndorf, and most recently paying $280m for a 32 per cent stake in Sir Richard's Virgin Galactic commercial space project. Aabar is an investment company controlled by the IPIC, which is wholly owned by the Abu Dhabi Government. The company's shares closed 1.8 per cent lower yesterday at Dh2.67. email@example.com
Assembly is expected to start in 2010 from a network of three vehicle and engine manufacturing plants to be set up or modernised in Tiaret, Ain Smara and Oued Hamimine, it said in a statement on the Abu Dhabi Securities Exchange. "With this important investment, Aabar continues to develop opportunities through our partnership with Daimler," said Aabar's chairman Khadem Al Qubaisi. MAN Ferrostaal would lead the project, with Daimler, Deutz, MTU and Rheinmetall participating as technology partners in the deal, providing licences and intellectual property.
Sprinter, Unimog, GType, Fuchs and other four-wheel-drive vehicles and engines were among the products that had been identified for potential manufacture, it said. In March, Aabar purchased a 9.1 per cent stake in Daimler, saying then it would pursue joint strategic projects. The company has been busy diversifying its asset base in the past month, investing in Tesla Motors, a joint venture with Austria's Berndorf and most recently paying US$280 million (Dh1.03 billion) for a 32 per cent stake in UK billionaire Sir Richard Branson's Virgin Galactic commercial space project.
Aabar is an investment company controlled by the International Petroleum Investment Company (IPIC), which is wholly owned by the Abu Dhabi Government. IPIC also owns 70 per cent of MAN Ferrostaal. firstname.lastname@example.org