x Abu Dhabi, UAEFriday 21 July 2017

Aabar snaps up AIG Private Bank

The acquisition comes less than three months after the US government rescued AIG from bankruptcy.

Aabar's purchase of AIG Private Bank comes three months after the US government took measures to rescue AIG.
Aabar's purchase of AIG Private Bank comes three months after the US government took measures to rescue AIG.

Aabar Investments, an Abu Dhabi-based investment company, will acquire AIG Private Bank from its parent company, the troubled American International Group (AIG), for 307 million Swiss francs (Dh931.2m). The acquisition comes less than three months after the US government took emergency measures to rescue AIG from financial difficulties. "This transaction represents a great opportunity to leverage AIG Private Bank's expertise in wealth management and to further develop it in our region," said Khadem al Qubaisi, the chairman of Aabar. AIG Private Bank will take a new name under Aabar's ownership but continue providing wealth management services to high-net-worth individuals in the Middle East, Asia and Europe. The exact terms of the deal will be revealed next year, but Aabar announced it would assume up to 100m francs of outstanding loans from AIG Private Bank.The new private bank will become an independent financial institution, based in Swizerland with branches and offices in Dubai, Hong Kong, Shanghai and Singapore. The bank's chief executive, Eduardo Leemann, and his management team will be retained, and Mr al Qubaisi will become the bank's chairman. Mahdi Mattar, chief economist at Shuaa Capital, a Dubai-based investment bank, said the move into banking came as a surprise for a company that had previously focused on the upstream oil and gas sector. "I'm sure investors would prefer to have more clarity on their strategy moving forward. It's good to have the cash and go out and buy things right now while they are cheap, but it has to be the right structure, the right strategy," he said. According to Mohammed Badawy al Husseiny, the chief financial officer of Aabar, the global financial crisis was presenting Aabar with attractive investment options as the price of buying companies fell below their real worth. "We are seeing now a lot of opportunities that are significantly much less expensive now than they were literally one year ago, in all kinds of sectors," Mr Husseiny said. "If you are sitting on cash, your ability to be able to go for good opportunities or getting good value investments will be better." Aabar was launched in 2005 with funding from government-owned entities, including Mubadala and the Abu Dhabi Investment Company (ADIC), with a mission to become "the Middle East's first publicly listed company operating in the oil and gas sector". But since selling its main energy asset to Mubadala earlier this year, it has made several investments outside the oil and gas sector, including a property purchase in the Al Raha area of Abu Dhabi for Dh500m (US$136.1m). The latest purchase marks the first part of AIG to be sold off to outside investors since it received $85bn of government aid in September after suffering massive write-downs and declines in its share price. AIG Private Bank managed 21 billion francs at the end of last year, compared with AIG's more than $1 trillion) in total assets as of September. Goldman Sachs International acted as financial adviser on the deal, and Clifford Chance along with Baer & Karrer provided legal advice. Aabar's acquisition of AIG Private Bank is one of several large investments made by Middle-Eastern investors in struggling western banks since the international credit crisis began last year. Last month, the Abu Dhabi Investment Authority invested $7.5bn in Citigroup. In October, a group of Gulf investors, including Sheikh Mansour bin Zayed, made an offer to purchase 30 per cent of Barclays for £7.3bn (Dh40.9bn). tpantin@thenational.ae