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Middle East Report 2009| pfi| 9


What will help IPIC’s fundraising cause is the credit rating it received


IPIC CORPORATE STRUCTURE IPIC 19.6% 64.0% 47.1% 100.0% 16.5% Barclays 70.0


OMV 25.0%


36%


Borealis


Cepsa


Nova Chemicals


Hyundai Oilbank


75.0%


71.2%


100.0%


4.0%


17.6%


20.8%


Abu Dhabi Petroleum Investment Company (ADPIC)


40.0% 9.1%


Aabar Investments


Abu Dhabi Crude Oil Pipeline


50.0% 30.0% 20.0% 50.0% 15.0% 70.0%


Energies de Portugal


Oil Search Limited


Cosmo Oil Co., Ltd.


Refinery Ltd


Pak-Arab


Daimler


Gulf Energy Maritime


Polypropyane LLC


Oman


Cepsa Maghreb


Arab Petroleum Pipeline Co


Man Ferrostaal


Source: Moody’s


This final acquisition seemed to highlight perfectly the situation that IPIC, and much of the GCC, currently finds itself in. With the economic slowdown squeezing the major corporations of the Western world, the likes of IPIC, backed by petrodollars, can use the situation as an opportunity to acquire stakes in these companies at knock-down prices. Such an opportunity may not exist again for years and IPIC has exploited the situation to its, and Abu Dhabi's, considerable benefit. However, even though IPIC is able to pick up first-world assets without the old first-world price tags, there is still a question hanging over it that doesn't change; regardless of the economic situation. A question that also explains how IPIC has been able to move from being a steady downstream oil investor to an aggressive acquir- er of global assets. How is it going to pay for its shopping spree? Prior to 2008, IPIC got most of its capital from the Abu Dhabi government. According to a Moody’s analysis of IPIC, published in May 2009, the authorities in the Emi- rate have injected US$3.5bn into the fund since its incep-


Such a switch towards relying on the loan and bond markets shows the shift.


tion in 1984. Until 2008, the only other significant source of income for IPIC was from its investments. But as IPIC became more aggressive in its acquisitions approach, the policy of relying on these two income streams had to change and IPIC began to look towards debt-based funding. In May 2008, it took only its second foray into the loan markets when it closed a €975m one- year loan through Bank of Tokyo-Mitsubishi UFJ (BTMU), BayernLB, HSBC, National Bank of Abu Dhabi (NBAD) and WestLB. It followed this up soon after, in July 2008, with a ¥67.5bn term loan from BTMU and NBAD to fund the purchase of its 20% stake in Cosmo Oil. However, it has been since the beginning of 2009 that IPIC's use of the debt markets has mushroomed. Accord- ing to Moody’s, IPIC's debt liabilities are due to double to about US$9.5bn from their level at the beginning of the year. This is based on current commitments and announced acquisitions.


It has already closed one loan deal in 2009: a US$700m three-year facility, co-ordinated by Deutsche Bank. This loan, which was initially launched in January and aimed


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