Liabilities of the International Petroleum Investment Company (Ipic) rose more than 38 per cent to US$44 billion (Dh161.6bn) at the end of June compared with a year earlier as it took on huge amounts of debt, its financial statements show.
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Total borrowing by the Abu Dhabi Government-owned energy holding company, and companies Ipic controls, increased by more than $10bn to $31.8bn after it raised money in international debt markets for the first time last year and conducted another round of debt-raising this year.
Ipic paid $722.6 million in financing costs in the first half, including interest and fees, up from $402m in the same period last year.
The company's holdings include Borealis, a European plastics giant based in Austria, Nova Chemicals, a Canadian plastics and chemicals company, and Aabar Investments, a diversified investment vehicle based in Abu Dhabi.
Ipic issued a $2.5bn bond last November and tapped markets for an additional $4.4bn in March, accounting for the lion's share of the increase in borrowing. Ipic's debt has spiked as it begins to operate increasingly on a commercial basis after years of funding its businesses with injections from the Abu Dhabi Government.
Ipic is meeting with investors in Europe and the US in preparation for another possible bond sale. The financial statements, posted to the London Stock Exchange as part of Ipic's public debt sales, also revealed a threefold rise in profit to $988m for the first half of the year compared with the same period of last year.
A continuing dispute over Ipic's purchase in 2009 of 70 per cent of Ferrostaal, a German industrial services giant, also remained a thorn in its side during the first half of the year, the financial statements say.
Soon after Ipic bought the company from the lorry maker MAN, German investigators began a bribery investigation into Ferrostaal. Ipic tried to back out of the transaction last year, and has since been in arbitration with MAN.
Ipic set aside $168.6m as a provision for "legal disputes" by the end of June, including its tussle with MAN, saying in the statements that the outcome of German investigations was "highly uncertain".
Ipic "is also actively seeking a settlement with the other shareholder of Ferrostaal [MAN] and seller of the 70 per cent stake in respect of the arbitration filed by the company," Ipic's statements to the London Stock Exchange said. "However, the company remains prepared to enforce its legal rights through arbitration if an acceptable settlement cannot be reached."
The documents also shed new light on the activities of Aabar during the first half of the year.
Aabar, which owns stakes in Germany's Daimler and Virgin Galactic, a commercial space-flight venture that is part of the British entrepreneur Richard Branson's Virgin Group, was publicly listed in Abu Dhabi before being taken private by Ipic last year.
Aabar, the documents reveal, agreed to pay Dh1bn in June for land and buildings in the Shams development on Reem Island, one of the biggest projects under development in Abu Dhabi. The company paid Dh500m in July and is expected to complete the deal by the end of the year.
In the same month, Aabar agreed to pay $400m for "an aircraft", the statements say, without providing further details. A $100m deposit had been paid as of the end of June, they said.
Another major investment followed in July, when Aabar put $110m of additional funds into Virgin Galactic. Aabar had bought 32 per cent of Galactic in 2009 for $280m and promised to "potentially commit" a further $110m to fund a "small satellite launch facility".
The new money would be used "to develop orbital launches of small satellites", the statements say. "This is the second phase after Aabar's initial investment of $280m in the company which will provide sub-orbital space flights to the public."
Ipic did not respond to a request for comment.
afitch@thenational.ae
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Engine: Direct injection 4-cylinder 1.4-litre
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THE SPECS
Engine: 6.75-litre twin-turbocharged V12 petrol engine
Power: 420kW
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Company%20Profile
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The specs: 2018 GMC Terrain
Price, base / as tested: Dh94,600 / Dh159,700
Engine: 2.0-litre turbocharged four-cylinder
Power: 252hp @ 5,500rpm
Torque: 353Nm @ 2,500rpm
Transmission: Nine-speed automatic
Fuel consumption, combined: 7.4L / 100km
Citadel: Honey Bunny first episode
Directors: Raj & DK
Stars: Varun Dhawan, Samantha Ruth Prabhu, Kashvi Majmundar, Kay Kay Menon
Rating: 4/5
COMPANY%20PROFILE%20
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Kanguva
Director: Siva
Stars: Suriya, Bobby Deol, Disha Patani, Yogi Babu, Redin Kingsley
From Zero
Artist: Linkin Park
Label: Warner Records
Number of tracks: 11
Rating: 4/5
Electoral College Victory
Trump has so far secured 295 Electoral College votes, according to the Associated Press, exceeding the 270 needed to win. Only Nevada and Arizona remain to be called, and both swing states are leaning Republican. Trump swept all five remaining swing states, North Carolina, Georgia, Pennsylvania, Michigan and Wisconsin, sealing his path to victory and giving him a strong mandate.
Popular Vote Tally
The count is ongoing, but Trump currently leads with nearly 51 per cent of the popular vote to Harris’s 47.6 per cent. Trump has over 72.2 million votes, while Harris trails with approximately 67.4 million.
Company%20Profile
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The specs
Engine: 3.0-litre six-cylinder turbo
Power: 398hp from 5,250rpm
Torque: 580Nm at 1,900-4,800rpm
Transmission: Eight-speed auto
Fuel economy, combined: 6.5L/100km
On sale: December
Price: From Dh330,000 (estimate)
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Business Insights
- Canada and Mexico are significant energy suppliers to the US, providing the majority of oil and natural gas imports
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Scoreline
Swansea 2
Grimes 20' (pen), Celina, 29'
Man City 3
Silva 69', Nordfeldt 78' (og), Aguero 88'
PRESIDENTS CUP
Draw for Presidents Cup fourball matches on Thursday (Internationals first mention). All times UAE:
02.32am (Thursday): Marc Leishman/Joaquin Niemann v Tiger Woods/Justin Thomas
02.47am (Thursday): Adam Hadwin/Im Sung-jae v Xander Schauffele/Patrick Cantlay
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03.32am (Thursday): Abraham Ancer/Louis Oosthuizen v Dustin Johnson/Gary Woodland
Nayanthara: Beyond The Fairy Tale
Starring: Nayanthara, Vignesh Shivan, Radhika Sarathkumar, Nagarjuna Akkineni
Director: Amith Krishnan
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Wicked
Director: Jon M Chu
Stars: Cynthia Erivo, Ariana Grande, Jonathan Bailey
Disclaimer
Director: Alfonso Cuaron
Stars: Cate Blanchett, Kevin Kline, Lesley Manville
Rating: 4/5
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
The biog
Age: 32
Qualifications: Diploma in engineering from TSI Technical Institute, bachelor’s degree in accounting from Dubai’s Al Ghurair University, master’s degree in human resources from Abu Dhabi University, currently third years PHD in strategy of human resources.
Favourite mountain range: The Himalayas
Favourite experience: Two months trekking in Alaska
TOURNAMENT INFO
Fixtures
Sunday January 5 - Oman v UAE
Monday January 6 - UAE v Namibia
Wednesday January 8 - Oman v Namibia
Thursday January 9 - Oman v UAE
Saturday January 11 - UAE v Namibia
Sunday January 12 – Oman v Namibia
UAE squad
Ahmed Raza (captain), Rohan Mustafa, Mohammed Usman, CP Rizwan, Waheed Ahmed, Zawar Farid, Darius D’Silva, Karthik Meiyappan, Jonathan Figy, Vriitya Aravind, Zahoor Khan, Junaid Siddique, Basil Hameed, Chirag Suri
MATCH INFO
Syria v Australia
2018 World Cup qualifying: Asia fourth round play-off first leg
Venue: Hang Jebat Stadium, Malayisa
Kick-off: Thursday, 4.30pm (UAE)
Watch: beIN Sports HD
* Second leg in Australia on October 10
Business Insights
- As per the document, there are six filing options, including choosing to report on a realisation basis and transitional rules for pre-tax period gains or losses.
- SMEs with revenue below Dh3 million per annum can opt for transitional relief until 2026, treating them as having no taxable income.
- Larger entities have specific provisions for asset and liability movements, business restructuring, and handling foreign permanent establishments.
It
Director: Andres Muschietti
Starring: Bill Skarsgard, Jaeden Lieberher, Sophia Lillis, Chosen Jacobs, Jeremy Ray Taylor
Three stars
The specs
Engine: Long-range single or dual motor with 200kW or 400kW battery
Transmission: Single-speed automatic
Max touring range: 620km / 590km
Price: From Dh250,000 (estimated)
Mohammed bin Zayed Majlis
