x Abu Dhabi, UAEFriday 21 July 2017

Capital's investors are not that easy to read

Investors in Abu Dhabi hardly react to two major pieces of news from Aabar Investments.

The chief executive of Aabar Investments yesterday announced two big pieces of news, both of which could be read as positive - and the market basically yawned. First, Mohammed al Husseiny said Aabar had put on hold plans to increase its stake in the German car maker Daimler and, second, he was "hopeful" the firm could conclude its planned acquisition of Arabtec Holding next month, according to Bloomberg. It was the first time a top Aabar official has indicated a time for when the deal could be wrapped up.

"This is a significant disclosure by the company but the market reaction was surprising," said Ali Khan, a director at the investment bank Arqaam Capital in Dubai. Aabar shares closed flat on the Abu Dhabi Securities Exchange (ADX) on modest volumes. Mr Khan speculated that retail investors could respond to the news more aggressively today. But there is also the chance that investors still have their doubts about the Arabtec merger.

Aabar, majority-owned by Abu Dhabi's International Petroleum Investment Company (IPIC), in January said it planned to acquire 70 per cent of Arabtec through a convertible bond for Dh2.30 a share, valuing the deal at Dh6.4 billion. Both companies last month agreed to extend the due diligence process until April 16, and some perceived the extension as an indication that Aabar might reduce the strike price on the bond. Mr al Husseiny yesterday did not mention lowering the price.

Analysts said one of the reason Aabar was not increasing its stake in Daimler at the moment was that it needed to "keep the gunpowder dry" for the deal with Arabtec. Aabar last year paid US$2.7 billion for a 9.1 per cent stake to become the largest shareholder in Daimler. It has been a savvy move thus far - Daimler shares are up almost 60 per cent since then - but analysts lauded the move not to add to the position yet.

But it seems some investors question Aabar's deal with Arabtec. skhan@thenational.ae