International Petroleum Investment Company revealed greater detail about itself than ever before in a new bond prospectus.
Barclays investment spotlights IPIC
Until its blockbuster investment in Barclays in 2008, the International Petroleum Investment Company (IPIC) was little known outside of energy circles.
Founded in 1984, IPIC quietly made investments in significant but somewhat esoteric companies such as the polyolefin producer Borealis, Hyundai Oilbank and Gulf Energy Maritime.
But that US$5 billion (Dh18.36bn) purchase of Barclays's convertible bonds turned out to be the kind of landmark deal that earned the company its reputation over the next two years.
IPIC made a profit of $2.2bn when it sold the bonds a year later, according to a bond prospectus released yesterday that gives the fullest picture yet of the increasingly powerful investment company.
Not long after the Barclays deal, Aabar Investments - an investment company that IPIC bought a majority share of last year - began a buying spree of trophy assets that caught the world's attention.
Last year, Aabar acquired a 31.8 per cent stake in the space tourism company Virgin Galactic and became the largest shareholder in the German car maker Daimler.
After the Brawn Formula One team won the championship last year, Daimler and Aabar together bought it out and renamed it Mercedes-Benz Grand Prix.
IPIC's chairman, Sheikh Mansour bin Zayed, is Deputy Prime Minister of the UAE and Minister of Presidential Affairs.
Aabar grew from Dh5.1bn of assets at the start of 2008 to Dh49.7bn as of June 30 this year, the prospectus shows.
It also invested in one of the first luxury property developments to start in New York City after the financial crisis, and bought part of the public offering of Banco Santander Brasil.
IPIC and Aabar have used substantial amounts of debt to grow rapidly in size. Between December 31 2007 and June 30 this year, IPIC more than doubled in size to $48.2bn worth of assets from $20.5bn.
Not all of its investments have been headline-grabbing trophies. IPIC has also made strategic energy investments in such projects as Abu Dhabi Crude Oil Pipeline, a 370km pipeline that connects Abu Dhabi's onshore oil fields with the deepwater port of Fujairah. The move will save Abu Dhabi billions on transport and insurance costs, bypassing the Strait of Hormuz.
IPIC has also invested in the ChemaWEyaat project in Al Gharbia to spin off a series of chemical complexes, and is involved in a joint venture with Qatar to invest around the world.
The Abu Dhabi Government fully owns IPIC and has supported it since its foundation with six injections of capital, totalling $3.5bn. The last injection, a total of $2bn, came in 2008.
But its evolving business model has meant the company sometimes sees its liabilities exceed its assets - a sign of the higher risk load it has taken on since its transformation in 2008. This happened twice in its recent history, as of June 30 this year and December 31 last year.
But the company said it "believes that, given the liquid nature of certain of the assets that it holds [among other factors] it is able to meet all of its short-term liabilities as and when they fall due".
The company was starting to scale back its strategy this year as it sought to find enough financing to support itself.
It said it was planning to use the next two months to "focus on integrating its recent investments into its existing portfolio in a manner that reduces costs, maximises efficiencies and enhances synergies across its investment portfolio". It would still consider opportunistic investments.